Q1 2022 Signify Health Inc Earnings Call
Hardware and strategic investments, we've made to generate results.
First quarter financial results were driven by significant positive momentum in our home and community services segment and continued solid execution against our corporate strategy.
We grew our overall topline in the quarter by 20% to $216 5 million and delivered $45 million of adjusted EBITDA, an increase of 31% from a year ago with a corresponding adjusted EBITDA margin of 28%.
We entered 2022 with two established and highly complementary segments home <unk> community services or HTS, an episode of care services or ECS, each an industry leader for their respective areas with.
With the addition of chairman hub, a leader and accountable care organizations or Acos into our ECS segment, we will be able to leverage both our ACF and ECS asset to provide total cost of care management services for our customer base and drive meaningful shared savings and the ACO Medicare shared savings program or MSP.
In home evaluations will be an important tool for condition management and cost containment for ACO clients.
Our established post acute management and transition to home services within our episodes business, while also drives better outcomes through beneficiary.
Caribbean customers have already shown early interest and excitement for these expanded services.
The ongoing strength in Etfs is driven by the growing momentum of clients expanding home evaluation delivered nationwide through our network of over 10000 clinician.
While clients have meaningfully increase their volume commitments with us theres ample white space for us to continue to grow with them.
In addition to the natural growth rate of Medicare advantage member enrollment, we have the opportunity to continue our expansion into other lines of business with our health plan clients and provide more eiichi to managed Medicaid and commercial plan.
Managed Medicaid and commercial plans are off to a great start and are a growing component of our <unk> volume.
We expect this market and our share of it to grow over time, especially as clients continue to focus on leveraging <unk> as a mechanism for engaging members identifying barriers to their health addressing health disparities and directing them to the right care.
Member conversion rate improvement is an important to drive future growth for both Medicare advantage and managed Medicaid we.
We continue to invest in advanced analytics and member engagement strategies to improve our conversion rates over time.
To ensure we can provide these comprehensive freedom remember clinical evaluation towards many eligible individuals as possible.
Expanding our diagnostic testing capabilities provides another meaningful avenue for growth among our client base as demonstrated by early pilot success for new diagnostic devices.
Diagnostic testing provides additional data to help health plans better identify and manage their members chronic conditions early before they result in an acute event and to engage members with the appropriate primary or specialty physician.
Turning to our ETF business ECS revenue increased 7% in the first quarter from a year ago, reflecting growth in program size and one month of <unk> revenue.
In April we announced a new episode of care program clients, Connecticut, a leading health plan in Connecticut.
This new program will be organized around financing of members entire health episode for both procedures, such as knee surgery, and chronic condition or condition, such as asthma and maternity.
The addition of Connecticut demonstrates our commercials stacking strategy build multi payer relationships with and drive meaningful volume to high quality low cost providers.
In Connecticut, our relationship with Connecticut will leverage and build on our extensive episode based provider network already in place through our work with the state of Connecticut, as a major self insured employer.
We deliver savings everyday to our partners in the <unk> program. Despite the ongoing headwinds from COVID-19.
We're proud of the work our team does to improve outcomes and reduce costs by influence in the next site of care and length of stay for individuals an episode and then managing their transitions back home to prevent readmission.
We're excited to be largely back out in the field with our clients after managing much of this work virtually throughout the pandemic.
We continue to engage with CMS on an episode strategy to the next iteration of the bundled payment program, which could include an integrated total cost of care model in line with our strategy of combining caravan health with our <unk> footprint.
Both existing PPA and ACO clients are very excited about this combination and creating an integrated model.
Our integration of Caribbean following the close of our acquisition of March 1st is proceeding well and we're thrilled to have the Caribbean team on board.
We recently held a two day onsite meeting with a key internal stakeholders and established our integration management office, which is centered around two work stream functional alignment and growth.
Thanks, Shaul alignment work stream is focused on emerging work a certain function that should come together like accounting and finance.
Growth work streams for focus on areas, where we will have new opportunities to grow as a combined organization by adding to our product portfolio and go to market activities.
As I mentioned before a notable growth synergy is our offering which we are adapting to conform to an annual wellness visits to complement and enhance the ability of our chairman client providers to succeed in the ACO model by extending the provider's reach and expanding our capabilities.
The savings levers in our ECS business have been primary related to next set of care for an acute event and post acute management a key savings lever in the MSP ACO program is identifying conditions early through an annual wellness visits.
Through our combined offering we believe we will be able to readily engage with Medicare beneficiaries, who historically have not visited their primary care physician as well as conduct our comprehensive in home evaluation as a part of an annual wellness visits for high risk members to identify risks and gaps in care.
From this work, we will be able to better drive patients to the next best action and their care journey and provide a more complete view of the patient to the PCP.
I am very pleased with the positive reaction from our clients who are excited about the prospects of signify helps provide any total cost of care model.
Since the close of the acquisition the Caribbean leadership team and I have been on the road meeting with customers about integrating care advanced extensive primary care provider relationships with signify specialty care provider relationships and industry, leading in home evaluation and episodes of care capabilities.
The combination enhances the value proposition to providers as our services are they multi payer applicability to a larger portion of the providers panel.
Multi player we are referring to our deep relationships in existing contracts with private insurers and state and federal government.
We now have the capabilities in house to create a total cost of care model to drive better patient outcomes and reduce costs in the system.
In addition, the CMS announcement for the ACO reach program creates another potential avenue of growth for our combined signify Caribbean business model.
We recently submitted our application to participate in the ACO reach and we will continue to assess the proposed program structure and how we can best leverage our combined capabilities to maximize the opportunity that launches in January of 2023.
As we think about our product roadmap the core of our strategy is to build out capabilities to connect health plans and other risk bearing entities with provider groups in an effort to accelerate transformation of U S healthcare system from fee for service to value based care.
We plan to contribute genuine care redesign and be a partner to risk bearing entities and provider groups to help bridge the gap that creates significant cost weight and poor outcomes within the health care system, we want to be at the industry forefront as an intermediary providing data and insights activating home managing chronic.
Condition and facilitated the launch of programs through a shared savings payment structure to make all parties accountable and work together to drive better outcomes through individuals throughout the country.
We believe we can accomplish this over time due to our current capabilities and those we are developing.
Data is the key to powering and creating value based programs.
We're able to capture hundreds of data points in each and home evaluation that our clinician network performance.
We have about 40 million members in our data chassis and we expect to perform approximately $2 4 million evaluation in 2022.
This is a meaningful amount of data capture that informs our health plan clients not only on the clinical and social needs of their Medicare advantage members, but also their managed Medicaid members.
Data becomes even more valuable to our clients as we continue to build out more value centric analytics integration with their system.
Our word capturing enhancing and driving results from our data and analytics capabilities is absolutely critical to our client success and the value based payment program.
The work, we're doing will support CMO and their goals around health equity through showcasing and doing analytics on our unique dataset, we are capturing across the continuum with the members and the patients that we are honored to serve.
Our enhanced analytics also drives better care management and outcomes for the individual supported by our clients.
We improve patient outcomes by attending clinicians and the patients home to better assess their needs and provide decision support as we drive action and return focused to care.
Reduced cost for insurers employers and health systems by deploying our data analytics software and contracted networks with health care providers.
As an organization we are very excited about the opportunity in front of us the positively impact a fragmented healthcare system in partnership with risk bearing entities and payers to provide patients with better outcomes for maintaining their health.
Before I turn the call over to Steve I want to make you aware that we recently published our inaugural quality and social impact report and endeavor about which the board and the management team are very passionate.
It establishes a framework for reporting on environmental social and corporate governance initiatives focused on driving value for shareholders and stakeholders across health care.
The report also includes key accomplishments through 2021 and establish a baseline from which the company will measure progress in several areas of focus.
Signify exist to give providers payers and the people they serve the information tools and support needed to achieve the best possible health outcomes and to do so efficiently and cost effectively.
The quality and social impact port as an important way for us to tangibly demonstrate how we live by our commitment and all that we do.
We hope that you have a chance to read the report which is available on our website and we look forward to receive your feedback.
I will now let Steve walk you through the first quarter financial results.
Thank you Kyle good morning, everyone. It's my pleasure to walk you through another quarter of positive improvement in our year over year financial results, reflecting our success in growing the business, while delivering significant value to customers and individuals I will be referring to the table that appeared in the earnings press release issued yesterday as well as the earnings press.
<unk> posted on the events page of our Investor Relations website.
As you can see in table, one we had record total revenue of $216 5 million in the first quarter up 20% when compared to the same period last year. The increase was primarily driven by Acs growth of 23% to a record quarterly revenue of $186 9 million, reflecting strong IAG.
<unk>.
Total evaluation volume for the first quarter with approximately 564000, including virtual evaluations compared to 462000 in the first quarter of 2021, the mix of in home evaluations continue to trend upward with approximately 14% of total evaluations being completed virtually.
Given the continued an encouraging level of the client demand for Ics, we are confident in our projections for IC volume of approximately $2 4 million for the full year 2022.
Our expanded agreement with Optum to stem their volume commitments through mid 2026 is a great example of strong customer demand as we shared with you last quarter Optum committed to volume for additional three and a half years in exchange for a floor agreement that guarantees and minimum dollar value of $118 5 million in relation to the <unk>.
Ultimate settlement of the original years.
We believe this will become a relevant over time as our continued success is reflected in the stock price as a reminder, GAAP requires us to record a charge against revenue based on the fair value of the floor agreement at inception and over the term of the contracts. We have completed our analysis of the floor agreement impact on revenue for <unk>.
22, and including the original years the charge to revenue will be a total reduction in Acs revenues of $26 million.
Where the volume commitments extension period 2023 through 2025, each year there'll be a $20 million revenue reduction and in the final half year of 2026, a $10 million revenue reduction.
Still on table, one ECS revenue grew 7% to $29 $6 million, reflecting growth and overall program size and one month of caravan revenue <unk>.
<unk> program first quarter revenue was within our expectations as we continued to see COVID-19 exclusion and high inpatient rehabilitation facilities utilization.
Given the recently relaxed mass mandates and news coverage about the spread of the latest variance. We expect program size to continue to be impacted by Covid exclusions.
CMS has not committed to reverse in the cobot exclusive but this remains something they continue to evaluate.
As a reminder, we received program reconciliations from CMS in the second and fourth quarters, which is when we typically perform a true up based on the reconciliation the <unk>.
Next detailed <unk> readout will be when we received the reconciliation for the performance period, which is expected during the second quarter.
Moving to table for total company adjusted EBITDA for the first quarter increased 31% to $45 million compared to $34 4 million for the first quarter of 2021, driven primarily by strong revenue growth in home and community services and in turn we had an adjusted EBITDA margin of 28.
<unk> in the quarter.
In total for the full year 2022, we expect margin expansion of between 25% to 70 basis points like everyone. We are experiencing impacts from increasing fuel prices and labor costs, but we've been able to offset inflationary trends with productivity improvements.
Back to table one the net loss for the quarter of 2022 improved to $16 3 million when compared to a loss of $51 7 million in the first quarter of 2021, we had positive operating income of $10 5 million, but the primary reason we reported a net loss was that we had $28 9 million of expense.
Related to marketing the ear to market as we do each quarter last.
Last year, the impact of revaluing the years with $56 8 million of expense in the first quarter of 2021.
Moving on as you can see in table two our balance sheet is strong as we ended the quarter with $451 3 million of unrestricted cash down from year end due to the $190 million cash payment portion of the caravan acquisition, we ended the quarter with debt outstanding of $338 million with an <unk>.
Additional $173 million of capacity under our revolving credit facility and once again, a negative net leverage position is our cash exceeded the debt levels.
Given that we just provided 2022 full year guidance in March we are maintaining those estimates and feel very good about achieving the results. We've outlined for 2022, which are as follows total revenue in the range of 948 million to $971 million.
And total adjusted EBITDA in the range of $212 million to $222 million.
We still expect 2022 revenue phasing for the second half of the year to be about 52% of full year revenue guidance as we anticipate stronger ECS program size and IC capacity to build into the back half of the year I look forward to updating you on our financial results next quarter now I'd like to turn the call back to Kyle for core.
<unk> remarks.
Thanks, Steve.
We're off to a great start in 2022.
Signify has relentlessly focused on the incredible market opportunity, we have in front of us.
Value based care models for it while expanding services to better serve our customers and individuals.
Caribbean provides us with important component, bringing all of our capabilities together to drive a total cost of care model.
With <unk>, we now have a solution set that covers risky extensively and fully enables us to use our episodes post acute and home capability to bridge the gap between providers and payers.
As a great platform for our client and a unified asset to further connect our HCS and ECS Division.
Additionally, we've had great conversations with CMS about the integration of these businesses and believe we are well suited to help them achieve their goal of having everyone in Medicare and an accountable care organization by 2030.
The Caribbean, we now have the ability to bring our in home services already scaled in Medicare advantage to the Medicare fee for service population through the ACO book of business, which should drive significant value for all constituents, including shareholders.
Now I will turn the call over to our operator to take your questions operator.
Thank you at this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Yes.
Sure.
Sure.
Yeah, he jumped in the queue.
Our first question today comes from Sandy Draper of Guggenheim.
Andy <unk>.
Thanks, so much and good morning, everyone.
I guess the first question.
Either for caller, Steve would just love some more commentary around how you view the size I believe last quarter you guided the program size to around five 1% to $5 6 billion.
I'm trying to understand from your comments is that still a reasonable range should we think about the lower end of that range, just trying to understand sort of how how that sizes looking today versus when you guided a few months ago.
Hey, John It's Steve Yes, good question.
I would say absolutely we're still and is still in that range, where we're encouraged by the program size coming back from last year.
And really the difference between whether we end up at the low end or the high end of that range is going to depend on how many co with exclusions, we have going forward. So right now we're still very comfortable with that range.
Okay, Great. That's helpful. And then my follow up and I'll jump back in the queue. Obviously, you have got caravan will be a bigger contributor in the back half of the year, but just remind us in terms of the higher second half weighting are there other impacts that we should make sure. We're factoring in besides just the higher.
<unk> revenue in the second half and just thinking about whether it's either volume trends pricing trends around and HCS or on ECS, excluding caravan. Thanks.
Yes, it's a little bit of all of the above.
Youre going to have the ECS, which is with the higher program size versus last year.
We just talked about Youre also going to have on the HTS side.
We just as you heard we had a record volume for quarter, one were trending towards a record volume in quarter two but.
We had never done over 500000 E valves in the quarter, we cross through that last quarter. So we're trending towards 600000.
Going forward. So the back half is all going to be about driving that capacity and the demand is we've never seen higher demand ever for Iot business and so we're going to see continued strong demand through that second half.
Great. Thanks, a bunch and congrats and ill jump back in the queue.
Okay.
Your next question comes from the line of Anne Samuel.
From JP Morgan.
P.
Hi, Thanks, so much for taking the question maybe just a follow up to <unk> question, you had some really nice outperformance in the first quarter.
But initially you had said you know once you would be a little bit lower you affirmed the guide and the waiting for the year. So just wondering if theres anything we should be taking into account for the second quarter that.
It might have been the reason for kind of holding onto the guide or is that just you have some embedded conservatism there.
Yes.
I'd say that we had a little bit maybe the slight upside I'd say, there's a little bit of a pull forward from Q2 back half as we just talked with Sandy is looking really strong and so that's how I'm thinking about Q2 as far as full year feel really good about the numbers and we're going to get the recon in quarter two.
Which will give us more inside of where we're going right now internally all numbers are tracking to our expectations, but were waiting to get that recon hopefully in the next few weeks.
It makes sense, it's still early.
You said that the caravan integration is progressing well I was hoping maybe you could share some learnings that you've had so far from that.
Yes, absolutely.
I spent a lot of time out in the customer base with the Caribbean leadership team as I alluded to in the prepared remarks, and it's been fantastic I mean, when you go out to these clients they are facing.
<unk> issues they are facing.
And the inability to get into the post acute they don't have the ability to go out and get into folks' homes defined conditions and <unk>.
Capture those conditions or to manage them appropriately after they've been identified and so what we're bringing to that client base really is all of these services that we built out inside of our home and community service Division with all of that network density going into homes and then all of the specialty in post acute where via episodes in other post acute workflows.
We have as part of the upstream business all of those things when combined have a tremendous ability to drive better patient outcomes and to remove costs and drive better shared savings and so it's been really great.
Off on just the synergy cases that we've talked about that.
Pursuing as we bring all these businesses together number one number.
Number two.
Their model and how they.
Collect revenue from the revenue from the clients is similar to how our episodes program work. So they have a shared savings construct and so it's easy for us internally to merge together a lot of the financials and Steve's world of out of the system and analytic work that we're doing.
We picked up frankly, just a bunch of engineering and product and analytics talent as a part of this acquisition the coach platform that I mentioned last.
Quarter.
When we mentioned the acquisition being closed.
Is it really big software asset for us that sits on top of physician workflow and helps identify key needs that they need to work on and we see a bunch of synergies with that as we think about taking more risk to our health plan clients and as we think about tying together post acute specialty and some of the in home workflows as well. So it's been a really good kind of <unk>.
<unk> and unifying.
Asset to the business, bringing together so many of the capabilities that we have so yes integrations plugging along really well and we've got the same team.
<unk> done a lot of M&A in a lot of integration together.
Start with the people first in the culture first and don't just manage it off spreadsheets, so I've been very happy.
Thrilled frankly with the progress that we've had to date.
That's terrific glad to hear it thanks guys.
Yes, Thanks Ann.
Thank you and your next question comes from the line of Cindy much.
Of Goldman Sachs. Cindy Your line is now open.
Thanks, and thanks for taking my question and congrats on a very strong quarter and welcome Jason.
So my question is on the ACS business, obviously, that's very very strong and it's not just in terms of the record visits rate just looking for a little clarification. It looks when I look at the numbers that your revenue per visit is also rising at least according to what we had sequentially in both year over year. So just looking for a little more.
Color on that and just in terms Steve of the thing you said about optum.
And then the ears.
You always report and your guidance is.
Ex the ear effect on revenue correct, and then I might have one more follow up thanks.
Yes, so a couple of things there Sidney let's start with the first one on the revenue per <unk> HCS.
We continue to see really positive trends there and when you look at it in Holistically. It looks like it's slight increase relatively flat, though and as I've said previously just want to make sure to remind everyone.
There is some client mix impact with some of our largest clients are outpacing the growth rate of others with a with different price points, but when we look at our individual.
The values in our attachment rates of our diagnostics and preventative.
The devices, we feel really good about where we're going and where we can go with that number.
'twenty three and beyond.
As far as the.
Year impact that's included in all of our numbers. So we can all our guidance and everything that we sell it's included in there. It's our it's our GAAP revenue and so we.
No Theres no surprises there I'm just trying to make sure everyone has those numbers.
So you can put them in your models, it's been averaging about 20 $20 million a year. This year, it's going to be 26 2023 of the dropdown to <unk>. So that's all in our numbers.
All our guidance great great.
Great and then also too just even on the cost control.
With the ATF Division.
Probably $290 I mean, it was very significantly higher than we were expecting and I.
I guess youre, leaving guidance the same for the year, just because the ECS, which is obviously much smaller but still has a lot.
I guess.
What we can expect a similar cadence to what you were saying.
First quarter, and then maybe look to where it is if those trends are continuing because I would think with with Covid abating. Some.
And if that margins can stay up.
Ahead of our expectations and ACS then there is a possibility at the backend. It feels like you might go ahead and tweak that later on just any color there would be great. Thanks.
Yes.
I think one of the things that.
US and every company out there is worried about as inflation and the impact.
But we're really proud of the productivity initiatives that we've put in place to really offset a lot of that and so thats why youre seeing.
Some of those input inflationary pressures that we have that we're still driving really nice margins.
Points that we look for the upside case of where we cannot even outperform that is exactly the items that you just mentioned.
Great. Thanks again good quarter.
Thanks Randy.
Thank you Cindy Your next question today comes from Kevin Caliendo of UBS, Kevin Your line is now open.
Hi, This is actually James <unk> on for Kevin You mentioned in your valves were 14% of total mix in the quarter, just maybe where do you see that mix between in home until all trending for the remainder of the year.
Yes, I would expect that it's somewhere in that range that we've kind of come down from our peaks of fields less than 40% a couple of years ago, So I feel that that <unk>.
14 percentage of where we were this quarter is kind of in line of where we would expect that there would be in the 2014 was virtual just to be clear not the in home.
Does it reverse or yeah, sorry make to make sure that's clear, yes, 14% was virtual.
As we've said on previous earning calls our clients are really pushing us to do as much in home as possible and so over time I would expect that it will go down as long as there is still some variance out there I think its fine in the model to keep it around that rate.
Great. Thanks, and maybe just one quick follow up and more big picture question around ECS, how should we think about the pathway to profitability, maybe in 2023 and beyond thanks.
Yeah, a couple of things that are going to be helpful for us in 'twenty three one is.
We are assuming that we will get back to breakeven or profitable in 2023 in the ECS segment Standalone and when the drivers of that are really going to be the.
Program size coming back to its full run rate, which we've called out is around $6 billion.
So we feel good that that will happen in 'twenty. Three we also feel that some of the Covid exclusions that CMS has in place today will go away, which is also going to be beneficial for us and.
And driving that savings rate backup as well so those are going to be a couple of key components and then we.
We continue to make traction in our non <unk> business as far as our commercial side of the house and so we feel good about getting the additional revenue out there and then last but not least as caravan Act.
Acquisition that we feel is going to be a nice driver of additional revenue and EBITDA for us in 'twenty three and beyond.
Yes.
Okay.
Okay.
Your line is two items.
I'm all set thank you.
Thank you we'll take our next question from Gary Taylor with Cowen Gary. Please go ahead.
Hi, Good morning, just had a few questions.
For your care.
<unk> revenue EBITDA expectations for 'twenty two for this year still.
Intact is there any change to what you had given us previously on that.
Yes, no no changes, we still we still feel good about the.
Caravan and where they're at and where the sales process for 'twenty three right now and so they focus on that but expectations are that will be able to deliver.
What we talked about in previous calls for 'twenty two.
Got you and in terms of you had mentioned a little bit of <unk> pull through from from <unk>.
What do you think thats related to I mean, how did omicron impact.
The quarter was I would imagine that sort.
Wade to some degree on.
Some of the in home or willingness to do in home. So I guess I would've thought maybe the opposite of that such wanted to understand.
Kind of what that what that pull through might've been.
Yes, it wasn't a significant impact on our Acs side of the house. It was really on the on the ECS, where it continued to reduce reduce program size.
Elimination of episodes that were had a diagnosis of COVID-19.
Ucs side it wasn't it wasn't a lot of.
A lot of that.
And then last one.
I haven't really heard you guys talk about fuel before obviously fuel prices are up so it makes some sense is there any way you could give us like a quarterly fuel.
Reimbursement.
Or some way to sort of size that just so we can keep an eye on it if it were to become material.
It's not material here, it's pretty small in the Grand scheme of things, we just called that out as like one of the things that we look at for inflation area, that's a little bit higher but it's certainly we are.
Obviously, we do have folks that are on the field, but it is a.
It's not material, even if gas prices doubled like it's not going to we're not going to change guidance for it.
Got it okay. Thank you.
Thank you Gary.
Question today comes from Jessica Thompson of Piper Sandler Jessica. Please go ahead.
Hi, Thank you so much for taking my question.
So just interested to know on the quarterly cadence.
<unk> volumes is there anything different this year relative to last I think you guys mentioned capacity.
So just maybe you could elaborate on that a little bit.
Yes, I think it falls a little bit more I don't I'm not sure I know what typical is anymore, but as far as a more typical year.
Year, the one thing thats, probably going to make it a little bit off of a standard years is kind of what I was alluding to.
Earlier is the fact that we've just got so much volume to build and so much demand that we expect a pretty significant back half of the year and we'll probably still have our drop off in Q4 that we have every year, just as we wind that down but it might not be.
Quite as significant as in the past just because theres so much demand that we're keeping up with.
Got it.
Is the 10000.
Or are the 10000 people in the field today sort of enough to support that demand or do you guys anticipate.
Some additional hires or need to do some additional hiring over.
Over the course of the year in order to support that.
Yes.
Yes. The answer is both we have we feel great about the capacity to hit our numbers. This year, but we always are making hiring and moving capacity around and credentialing new providers in new market, so that never stops.
And frankly towards the end of the year, we try to load a lot of capacity going into the next year right because as we've talked about we get a lot of our.
Remember files and other things towards Q4, and so we start capacity planning hiring in laying out our ground game across the nation.
In every county in the U S on how we're going to deliver that capacity I will.
Will mentioned, though.
Something I alluded to earlier there is a new wrinkle to all of this because we're now going to be doing in homes inside the fee for service book right and so this is a big Tam expansion for US we are moving the in home evaluations into the fee for service ACO book that is Caribbean and Theres, a tremendous amount of value to be.
Have there and so our value prop now when we go into a market is going to be doing in homes for all populations inside Medicare regardless, if they are in fee for service for Medicare advantage and so.
This is a really big exciting expansion.
We're excited about.
And something that we're going to be investing in more capacity upgrading our technology, making sure that we're connecting these folks back into the health care system better than ever right. Because now that we're in the total cost contracts with these provider groups. There's a ton of incentive to go out and do condition identification and to make sure that they're being managed proactively with those provider partners that we have shared.
<unk> contracts with and so it's a pretty large Sam expansion for us and one of the reasons. We're so excited about this caravan integration unifying so many of the capability set that we have as a part of our business.
That's helpful and then my.
Last one would just be I guess first off you are.
Are you going to be reporting that caravan.
Keith any overall 80 number and then can you just remind us of caravans historical performance and FSP, both in terms of dollar and percent.
Thanks.
Yes, we won't be breaking it out separately, because theyre going to be into the shared savings fee structure I think we're going to be doing them as a part of the ACO service model that sits in the ECS Division.
We won't be breaking them out.
Separately and see if you might comment on historical savings rates, yes, I mean, historically, it's been around in the 3% range and so one of the things that we're really optimistic about is when we start adding all these additional services and assets around this business that we can drive significantly higher savings rate.
For the business going forward.
Got it thank you.
Yes. Thank you.
Yes.
Thank you Jessica our next question comes from Matt Leery of William Blair.
Your line is open.
Hey, good morning Hugh.
Our response to Gary's question.
Sort of reiterated the outlook for caravan in 'twenty. Two you previously talked about EBIT doubling in 'twenty three so I guess I just wanted to gauge your confidence in that.
And maybe how much of that is from <unk>.
Success in the selling season, as Steve alluded to versus improvements.
The savings rate, which you just referenced.
Yes, we're still confident in everything in fact is what <unk> been talking about we're even more confident on our ability to be able to do that and some of it will be through some of the new sales but.
A lot of it is going to be just improving.
Improving the savings rate and our shared savings ability whats the program going forward in 'twenty three so very confident in that.
I have gone out to the clients to just to reiterate that I mean, I always start with a question like what are some of your biggest gap. Some of your biggest needs in this community and they are like look we have no access into the home and the post acute is a black hole for us and if you look at two core competencies of signify and we were one of the best in the nation of getting doctors and nurses into homes.
Perform a battery of complex task and we are managing more post acute risks than anybody right and so it's a really good capability set for us to bring to these organizations, where they know that they have gaps and they are looking for a partner to help.
That's great.
Kind of curious what are your key technology goals for this year, obviously, you have caravan coach under the Hood.
Curious how much of an opportunity to create some interoperability with your platform or if there are learnings from your platform versus Caribbean that you can share or improve upon.
Yes, absolutely first and foremost as technology hiring right.
Company in the country that I'm aware of especially in the health care Tech space is making sure that they are staying on top of the hiring curve and so we've bumped up incentives.
Compensation and benefits flexible working environments.
A whole battery of things there to make sure that we're getting the best and brightest and feel great. We've got a really strong leader, Mike who is running our recruiting efforts there and he's continuing to just bring in fantastic talent. So we feel like that has been managed extremely well.
It's not a key risk for the business and something I'm really proud of what those teams are doing is really twofold. One to your point is data level integration, making sure that we're bringing in all of the existing data feeds that we get from our health plan clients and from our health system clients from the federal government and from employers that were missed.
And that data, creating a longitudinal view of these individuals going and then number two going out and filling in the gaps as I, just mentioned where folks arent collecting data theyre not getting data inside the home, they're not getting data inside the post acute theyre not connecting well with specialists signify really exists to round out all of those gaps where the traditional system.
It has not been agreed and getting data and access and activating individuals on their care journey, so that kind of data aggregation and insight piece would be number one number two we are continuing to do well.
Expansion inside of our existing products, so connecting to new devices expanding new.
Returned to care options to make sure that if we go in and diagnose someone with dementia that we're able to get them to see a behavioral specialist with one of our partners in short order. So a lot of that integration work and extending workflows to take better care of these individuals.
Is where our product teams are spending a lot of time.
Okay. Thanks, Kevin helpful. Sorry, if I could just sneak one more in.
You referenced hiring on the technology side.
On the HCI side over the last year. So you have not had any issues given your workforce really differentiate and specialized just curious given the sort of record demand you've had.
What sort of hiring you have in place for 'twenty two.
Assessment side, and if you've noticed having to pay more or longer fill times in terms of the open roles there.
Yes.
We've actually.
Taken it from the top I mean, we've had more client demand as skus points than ever because of our great ability to manage and grow this capacity and so when they're running into issues across the gamut from doing our traditional evaluation work to the work I just mentioned and the Acos that we are seeing as a key.
Technology and service enabler that can fill that gap to really bring folks into the home into facilities and to post acute areas again, where folks can't get to and so that is our big differentiator.
<unk> continued to ramp and scale that nicely I mean, you guys saw how margin performance we've done that.
And have managed through that really well with the team.
As Steve has mentioned and I've mentioned on numerous calls we always have special incentives in certain markets, we move volume and capacity around part of our model that makes it so beautiful that it's flexible rate people are not static in a single market. If there is a surge in demand in a particular county, even in rural County, like we can move folks there inform that demand and make sure that.
Sure.
Making our clients in those members lives that we touch those patients' lives that we touch successful and improve their health outlook and so we've been able to grow substantially we've kept all kind of incentives.
And.
Any any bonuses paid things in line with all of our expectations.
And feel very very great about our ability to continue to recruit and grow this business to meet all of our client demand.
Okay. Thanks, a lot.
Yes.
Thank you Max.
As a reminder, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from Vikram <unk>.
But not all.
Vikram <unk>.
Okay.
Alright, Thanks for taking the question I just wanted to follow up on your prior comments on the labor side. I guess are you seeing any incremental wage pressure. So far this year and your provider network relative to what you expected and what are you assuming in the guidance for how the labor environment is going to trend throughout the balance of this year and then as a follow up to that from a higher level. When you go through these periods.
Higher inflation on some of your cost inputs, whether it's labor or fuel Ed you talked about are those things you are typically able to pass through to your customers over time on the revenue side or are those things that you typically have to manage through just through efficiencies in the business.
David.
Take that one so.
Back to my in place Eric comment Everything's within our expectations and as you saw in Q1 were managing with nice margin improvement.
As Kyle said, we will always figure out to meet the demand. If there is special incentives that we need to do.
For a particular market to drive that.
Would impact our gross margins, but the beauty of what we've been doing is we've.
We saw this coming and we do this every year, we've got productivity initiatives that are always trying to drive the efficiencies and youre seeing that in the numbers that we're covering off on all of the inflationary pressures that we have so we do feel good about that.
Far as passionate.
Passing on to clients during Covid there were some things we had to do with PPE and so forth that we are able to pass through and our clients are very open to that I mean at the end of the day, there really want us to drive the volume for them. So that's not a question that that's always an avenue. We can explore at this point for this year, we havent gone down.
That road.
In a significant way and we've been covered most of it through our productivity initiatives.
Yeah.
Okay. Thank you.
Thank you. Our last question today is a follow up question from the line of Cindy Motz with Goldman Sachs Cindy back P.
Alright. Thanks again, yes, I just wanted to follow up you had mentioned something and I've been hearing more about like clinical trials and you were talking about the diagnostic testing.
That market I guess, what you are talking about doing there it makes sense because the you're already going to leverage the in home part of the business with ECS and everything else you're already there in the home. So I'm guessing that you have the data you can identify people you can look at that obviously you don't have anything in your numbers, but when would we maybe start to see that kind of thing.
Would that pick up it just call you had mentioned something that too about the overall Tam growing is that is that part of that and are you talking about growing the Tam because I think I had seen a slight a while back about maybe 400 billion or something so just curious about how the diagnostic testing clinical trial.
Like when we might see that and then how that might impact cam. Thanks, a lot yeah.
Yeah, Great Great question, Sandy So I'll take the Tam question first so without a doubt. This is the Tam expansion as we're moving from just Medicare advantage with the in home visits to the Medicare fee for service book two so now we are doing in homes across the entire population right now on a fee for service side, they need to be and one of the acos.
Obviously, but there's a ton of folks millions of folks inside acos across the country. So this really gives us the ability to go in and partner with a health system or partner with a plan and say anyone.
That's over 65, we want to we want to do these comprehensive visits on so we're really excited about that number one.
Number two the diagnostic diagnostic testing that revenue and EBITDA flows into our Acs business today, and it's a very material part of that business. It's a fast growing part of that business. You know when I started four years ago, we were.
Effectively doing zero there today, we are doing a tremendous amount of volume there for our clients and driving a ton of value. The nature of the majority of that today is focused on.
Going in and identifying chronic conditions that aren't being managed appropriately getting them on care plans getting them back to a specialist closing gaps in care, helping with starz and heated measures. So a whole battery of things that really matter for the health plans and the members that they are honored to serve.
All that being said if you take a step back and look signify has the most comprehensive clinical dataset anywhere because we're getting all of the traditional data as I mentioned from the health systems Health plans employers, but then we're going into these areas of healthcare where there is.
<unk> been call it as I mentioned on the call today Black holes no. One has great data on the home, what's the social condition of the individual what are they actually doing when they take meds.
Extreme fall risk it hasnt been documented how are they.
Doing with their smoking cessation program and we can see that there are obviously still smoke and when we go into the home.
And in the post acute world.
Seema Verma, when she was running CNS mentioned, it's an area where meaningful use never got to rates of interoperability standards and the ability to have standardized systems and have great visibility into the post acute is not something that many health systems, even those that own post acute facilities enjoy and then finally that handoff in many of the new value based.
Care entrants in the market have talked about how difficult its been for them to connect with specialist that's something that signify excels at as well so bringing all of those things together all of that rich data without a doubt has not only extreme benefit for existing clients and the risk models that we underwrite, but we believe we will continue to have a big.
<unk> play in the future with life Sciences real World evidence and clinical trial delivery across these various populations. Both on the identification side, we can find that needle in the haystack, but we also can bring health care to folks and that makes them come into our facility.
Executing keep a trial on on the right track and so we've frankly been continuing to focus on the two divisions and the big growth that we have but it is without a doubt something we're working on and it's something that we're excited about in the future to continue to expand on them.
Plenty of conversations.
Work going on in that space today.
Okay, great. Thank you.
Yes, Thanks, Andy.
Yeah.
There are no further questions at this time, Mr call breast I tend to cool.
Okay.
Great. Thank you everybody and thank you to our customers our employees and all of our shareholders for supporting us through another great quarter.
You all for your interest in signify health and for joining the call today and if you have any additional questions. Please reach out to reach out to Jason. Thank you everybody.
This concludes today's conference call you may now disconnect.
Okay.
Yes.