Q1 2022 Privia Health Group Inc Earnings Call
Good day, and thank you for standing by and welcome to the Peruvian Health Q1, 2022 conference call.
This time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require further assistance. Please press star zero I would now like to.
The conference over to your Speaker today, Robert Borchert, SVP of Investor and corporate Communications. Please go ahead.
Thank you Gigi and good morning, everyone. Joining me today are Sean Morris, our Chief Executive Officer, <unk>, <unk>, President and Chief operating Officer, and David <unk>, Our Chief Financial Officer. This call is being webcast and can be accessed from the Investor Relations section of <unk> Dot com.
Today's press release, highlighting our financial and operating performance and the slide presentation accompanying our formal remarks are posted on our IR website.
During our prepared comments, we will open the line for questions. We ask that you. Please limit yourself to one question and one follow up so we can get through the Q3, a timely fashion.
The financial results reported today and in the press release are preliminary and are not final until our Form 10-Q for the quarter ended March 31, 2022 is filed with Securities and Exchange Commission.
Some of the statements we will make today are forward looking in nature based on our current expectations and our view of our business as of May 12, 2022, such statements, including those related to our future financial and operating performance and future business plans and objectives are subject to risks and uncertainties that may cause actual results to differ materially.
As a result these statements should be considered in conjunction with the cautionary statements in today's press release and the risk factors described in our company's most recent SEC filings.
Finally, we may refer to certain non-GAAP financial measures on the call and reconciliations of these measures to comparable.
GAAP measures are included in our press release and the accompanying slide presentation posted on our website now I'll turn the call over to Sean.
Thank you Robert and good morning, everyone. We are very proud of the success that pretty good health and our provider partners have achieved prior to and since our IPO a year ago.
Physician patient relationship is the cornerstone of our health care ecosystem, and we are honored to be one of the nation's leading position enablement organizations. This past Tuesday, we were excited to celebrate our one year anniversary as a public company at the NASDAQ marketplace, along with 17 physician leaders, representing our more than 3300 physicians and providers.
Across eight states and the district of Columbia.
With our continued momentum in existing markets prevail posted another strong quarter of financial and operating performance in the first quarter of 2022, we remain highly confident in our growth outlook for 2022 and beyond as we continue to organize physicians in a scale provider networks across our country.
This morning, I'll present, an overview of the key highlights.
To provide a business update and then David will conclude with our recent financial performance and updated outlook for 2022 before we take your questions.
<unk> health is continuing to execute at a very high level in our first quarter results clearly highlight this our practice collections increased more than 63% year over year and our operating model is already working at scale. Adjusted EBITDA was a quarterly record and was up over 48%, while we're investing.
Across our enterprise to support this accelerated topline growth.
Business momentum and high forward visibility into our growth metrics as reflected in our updated financial guidance for 2022.
Our growth is being driven by a balanced set of strategic initiatives. This includes continued same store growth driven by the strength in ambulatory utilization across all of our existing practice locations. This patient volume as a benefit to both our fee for service collections as well as supporting the performance in our value based arrangements as we serve patients and lower call.
Scare settings.
As we align with and enable our provider partners and expand our number of attributed lives our operational execution and clinical performance is continuing to drive strong results across our value based arrangements, we generated another solid quarter of new provider additions in existing markets and in combination with our sustained high level of provider.
Retention.
In addition, our active business development pipeline remains robust as we look to enter many new markets over the next few years with that let me ask park to provide more details on market position and expansion.
Thanks, Sean <unk> Health is building one of the largest primary care centric ambulatory care delivery networks in the country. Our business model has a number of distinct attributes that are replicable across all 50 states as we partner with all provider types serve all patients across all reimbursement models and participate in value based arrangements in the broadest possible way.
Our model offers a tremendous market opportunity for growth and the physician enablement space as we scale nationally and partner with independent providers as well as health system or other facility affiliated or employed providers.
We introduced <unk> partners in the second half of 2021 as a highly complementary partnership model. This.
This is offered to provide our practices looking to partner with trivia, but wanting to start first with a risk bearing entity only such as our acos.
One advantage of our platform is that we contract across commercial Medicare and Medicaid programs. This offer is much broader value based care opportunities for a payer and provider partners and many states. It also brings balance and diversity to previous overall operating and financial profile.
Our unique component of our growth strategy is our ability to monetize our at scale medical groups and risk bearing entities as we gain density in our markets. We are able to offer a number of these value added services to our physician and payer partners as part of an integrated ambulatory get in the <unk> system.
Underlying our integrated medical groups and risk bearing entities in each of our geographies as previous tech enabled clinical and management services platform.
This enables us to maximize physician alignment and deliver superior outcomes and value based arrangements without owning the underlying practice.
As Sean noted our business momentum has continued to be extremely encouraging across both existing and potential new geographies. Our national footprint. Now includes 3370 implemented providers caring for more than $3 8 million patients across our 870 practice locations in eight states and.
The district of Columbia.
One of the largest provider groups in the country our scale and geographic density is also defined by a breadth of medical specialties, while approximately 65% of our practice partners. Our primary care focused including internal medicine family Medicine, Pediatrics and Obgyns, we actually partner with more than 50 specialty.
Types.
This provides <unk> with some unique advantages as we partner with payers to offer a broad ambulatory care delivery network that can improve patient outcomes and reduce costs across the value based care spectrum.
Our operating model and strategy has led <unk> to have one of the broadest most balanced and well diversified value based care platforms in the industry.
More than 80 at risk by our contracts now cover approximately 848000 attributed lives across commercial Medicare and Medicaid programs. This is up 17, 6% from a year ago and more than 10% since the end of 2021, giving us a lot of momentum and visibility for the remainder of 2022.
We take upside and downside risk in many of our payer contracts covering nearly two thirds of the attributed Medicare lives across MSP and Medicare advantage programs. This thoughtful move to risk continues to provide significant opportunities for topline and EBITDA growth as we execute on our goals and on greater shared savings in the years to come.
So I'll ask David to review, our first quarter financial results and updated outlook for 2022.
Thanks Barb.
Our outstanding first quarter performance highlights in our operating model is already working at scale.
And our business momentum continued into 2022.
Practice collections increased to $561 9 million up 63, 3% from Q1 a year ago.
As we noted last quarter, we will report our <unk> revenue is a new line item in our sources of revenue section of our 10-Q.
<unk> revenue was $48 3 million in Q1.
Care margin increased 36, 4% and adjusted EBITDA was a record $14 8 million up 48, 8% over the same period last year.
Our expected as expected our top line grew faster than EBITDA this quarter due to the new capitation arrangements as well as investment across our business enterprise to support this accelerating topline growth.
At the same time, you can clearly see the operating leverage in our model as our topline and care margin growth is translating nicely into EBITDA growth and margin expansion.
Our adjusted EBITDA margin as a percentage of care margin increased 180 basis points from a year ago to reach 27%.
Given our first quarter performance business momentum and visibility through the rest of 2022, we have a high level of confidence in our updated financial guidance.
We now expect practice collections GAAP revenue and care margin to be in the mid to high end of our guidance ranges with platform contribution and adjusted EBITDA expected to reach the high end.
Our guidance for implemented providers and attributed lives are unchanged at this early stage of the year.
We remain focused on continuing to execute on our multiple growth initiatives. This includes growing existing practices, increasing attribution and risk based contracts, adding new providers identifying opportunities to expand our platform and opening new markets over time.
Our underlying assumptions are unchanged from our previous 2022 guidance and I wanted to note that our outlook includes only previously announced new market entries.
One of <unk> key Differentiators is our solid balance sheet and positive annual free cash flow.
We ended Q1 with a net cash position of more than $283 million with capital expenditures of less than $1 million.
We continue to expect more than 90% of our adjusted EBITDA to convert to free cash flow for the full year 2022.
This financial flexibility and strength gives us confidence to invest in our growth initiatives and fund all strategic opportunities in the foreseeable future.
Without reliance on any external sources of capital to continue to expand our platform nationally.
We continued to grow and expand our business with all types of health care providers that are looking to partner with scaled financially sound organizations to improve outcomes for their entire patient population.
With that operator, we are now ready for our first question.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question Brett Lasalle key please standby, while we compile the Q&A roster.
Our first question comes from the line of Josh Raskin from Nephron Research. Your line is now open.
Hi, Thanks. Good morning, just first numbers question I think I heard you say.
Gave us any we're going to put it in the Q the practice collections to $5 61, how much of that was value based care was that the.
$48 million that you mentioned and what was that number a year ago and if you could just remind us the assumptions you make in terms of accruals for value based care earnings sort of this early in the year.
Thanks, Josh for the question look.
You'll see the disclosure in the Q, where we clearly mentioned the gap of data piece of.
The revenue or the practice collections.
There is obviously other shared savings accruals and the care management fee that we have also broken out so youll see that in the queue.
But roughly youll see that are creating much faster than last year because of the capital arrangements.
That started this year.
But we stayed with it that revenue from Capitate Capitation was $48 3 million $48 3 million from the new capitation revenue correct.
Theres a table in the Q, that's going to break out the revenue.
Okay, but the total value based care portion of practice collections would be higher than that and that $48. Three is that right. Yes. That's absolutely correct right. So for example shared savings increased as an example.
Right, Okay, and then of your providers I'm just curious if you could give us just to sort of look at the pipeline, but how many providers are sold as of today, but not yet in that were as of March 31st, but not yet implemented and maybe if you could just have broad comments on that pipeline for positions.
Yes, definitely so we don't disclose solar providers, but as you understand our model. It takes about five to six months to implement providers credential them and non medical groups and so forth. So at this point sitting in May we almost have visibility through the end of the year.
And the pipeline is pretty full and we had a record sales year last year.
One of our best first quarters this year.
A lot of momentum we continue to see in our existing geographies and obviously the business development pipeline is pretty robust. So all of that will translate into the implement to provide a growth for the rest of this year and then going into 2023.
Okay. That's helpful. Thanks.
Thank you. Our next question comes from the line of a J Rice with credit Suisse. Your line is now open.
Hi, everybody.
First of all I guess just on the captive lives I think at one one you said Medicare advantage at about 23000 looking at your 106000 today of 28% are in full risk that puts you at about 30000 can you give us a sense of how that is likely to trend over the rest of the year, where they have a view of where you'll end the year.
You're on.
Caffeinated MMA lives is there seasonality to the additions of those lives.
Yes, so ourselves we started with 23000, obviously the intent is to grow that year.
Year over year.
As we stated previously we will be very thoughtful and adding lives to the <unk> arrangements.
Once we are certain that the financial profile is appropriate. So you should see an accretion and while we're not going to break out specifics.
That has trended up from the 2000 3000 number so our estimate is ballpark right.
And then again as we enter into this is this should be pretty front end loaded in the beginning of the year given the nature of these contracts relative to for example, the commercial or the MSB attributions. So so pretty much you should see that stable now going into the rest of the year and then as we add lives and likely be at the beginning of next year.
Okay, and then maybe just a follow up.
Another sort of clarification question on the Q1 practice collection that came in above the high end of your range is there any seasonality or step down that occurs in Q2 Q3 that we should think of given the strong start.
No. In fact Q1 is typically the lowest quarter, we are seeing a lot of momentum.
Both in terms of our physician adds.
Ending last year beginning of this year. So that's reflected in the strong brand also utilization has continued to be ahead of our expectations has been Dr. Predict but we've tried to be on the conservative side and if that comes in.
Ahead of our expectations that flows into the practice collection numbers and then Dow.
The P&L and the operating leverage with our with our EBITDA performing and then finally the.
<unk> based arrangements continue to perform well across all our programs. So are accrual estimates reflect that.
For each of our programs so it's a pretty broad based.
Sure.
Growth.
We'd like to see it that way.
Okay, great. Thanks, a lot.
Okay.
Thank you. Our next question comes from the line of Lisa Gill from JP Morgan. Your line is now open.
Great. Thanks, very much and good morning, I, just first wanted to start with cash flow I. Appreciate your comment around 90% of adjusted EBITDA for the year, but cash flow in the first quarter with negative and it looks like you had a nice increase on the receivable side is that just a timing issue can you maybe just talk about how to think about cash flow. It would be my first question.
Yes, Thanks Lisa.
Yes.
It's definitely just the timing issue, we're expecting the trend this year to kind of mirror last year.
We do have one unique item in Q1, where we pay our annual bonuses. So that's a relatively large cash outflow in Q1.
And then just the timing of our value based arrangements and when we receive that cash we expect it to be similar to last year. So Q1 is generally are equal to or negative cash flow quarter and then it just builds from there, but we are still expecting sort of 90 plus percent by the end of the year.
Okay great.
And then just another question as we think about just the <unk>.
Timing of things and you had a nice beat congratulations in the first quarter and as we think about the guidance for EBITDA for the rest of the year is there a seasonality.
Do you have some kind of increased expectations for example around rising labor rates is there anything you would call out specifically as to how to think about first quarter beat and the guidance for the rest of the year.
Surely that's part.
It's a great start to the year and gives us a lot of confidence we gave you our guidance six weeks ago.
We are here guiding to the high end on EBITDA and margin so and platform contribution. So the bottom line metrics are really showing the operating leverage in the business as topline performs our hope is that continues obviously stuff to predict utilization and things like that but the EBITDA friendship mirror last year again, we should.
To hopefully see that same seasonality so.
Our hope is that.
This strength continues into the year and we will update the guidance is as it goes but again, it's pretty early in the year, but we're excited to guide towards the high end at this stage great.
Great. Thanks very much.
Thank you. Our next question comes from the line Ryan Daniels from William Blair. Your line is now open.
Yes. Good morning, Thanks for taking the question, maybe one financial and one more strategic just on the financial obviously strong start to the year, but I'm curious what the delta is between the reiteration of lives at risk lives.
<unk> and then the revenue and profits are you seeing better.
Utilization is that the key driver of better risk adjustment just any color there does give us some feel for that delta would be great.
IRI, thus far so.
On practice collections like I mentioned, it's fairly broad based beat across both utilization on the fee for service.
Good performance on value based care and then provide our ads.
Strong ending last year.
We've implemented providers and attributed lives those metrics, it's still Q1 and the year end.
And we are nicely ahead sequentially from Q4 last year.
Early in the year. So we are maintaining our guidance. Our hope is we keep seeing that momentum and we will update it obviously the guidance does not include any new markets that we may add during the course of the year, we have a pretty active BD pipeline. So hopefully we'll update that as we did last year. When we entered those markets, but again given the visibility on those two metrics.
The slowest in terms of just how providers I implemented how lives are added during the course of the year. So much more stable, but it's great to see the outperformance on both collections and then flowing through the P&L down to EBITDA.
Okay, absolutely Thats helpful and then.
More strategic question and maybe I'm overthinking this a bit but your partnership with surgery partners. It seems like interesting case study for your business model.
And a pretty small state, which I assume you can only move into with your type of multi payer platform and then number two kind of speaks to the ability to manage a wide number of specialist in maybe downstream and ambulatory care. So.
Can you speak to that a little bit again, I know, it's not a huge revenue driver, but it seems pretty strategic to the strength of the model. Thanks guys.
Definitely I'll start and Sean can add look at just broadly speaking if you take a step back our strategy is to build these very large scale medical groups focused on primary care providers and then we surround them with the right specialist we partner with lower cost health systems, and then obviously entities like surgery, Barcodes and providing these value added <unk>.
Salaries as part of this broader ambulatory care delivery system, if you will.
This is what we believe is fundamentally going to be a very valuable entity and where the buckets moving.
It allows us to have a very broad access to the dam participate in 50 states all patients all payors all reimbursement models.
The only other company.
That does this at somewhat national scale, given the assets, we have acquired as Optum care as you know.
But very similar strategy, we are a fraction of the size, obviously don't have the balance sheet, but we are trying to do that in a very thoughtful capital efficient partnership model and what we're trying to achieve the same result.
Yes, Ryan I would add or reiterate.
As you mentioned or noted two apartments is the ability to move into a state like Montana and get there early teach the doctors kind of value based levers.
It really to your point out with a company like surgery partners.
Our strategies align really well I mean, there are a low cost setting and we can go up kind of build the medical group as we go kind of direct that care to the lowest cost setting and are value based arrangements and move that market over a period of time as we kind of work and align with payers that want to take the market that way so it's up.
We would obviously seek other partners like that it makes a lot of sense for us to get into a market early and establish ourselves with the relationships with those types of providers.
Perfect, Thanks, and congrats on the momentum.
Thank you Sean.
Thank you. Our next question comes from the line of Whit Mayo from SBB Securities. Your line is now open.
Thanks.
I think I just want to start first with the investments that you guys were making coming into.
2022, I think given a lot of the growth and momentum the new markets. The acos the risk platform you.
You needed to stand up some infrastructure has anything changed on those investments do you need to make more or less just any early observations or thoughts would be helpful.
Yeah, Hey, thanks for the question no. They stand as you stated and as we have communicated at our last earnings call, we're continuing to make those investments.
It is obviously great to see the organization execution across the board you are seeing that in the financials very clearly as we've outperformed on the top line and the beauty of the business is despite those investments.
We are outperforming on on EBITDA and free cash flow and I think theyre getting this business given our guidance that is now growing 35%. This year on the topline and 35% plus on EBITDA and we're not sacrificing that.
Any compression from those investments.
It speaks to the scale of the business already and where we are with the with our margin profile pretty much halfway there are more than halfway there from a long term margin. So.
We feel pretty good about where we are with the investments. We've obviously theres a big Tam out there looking to enter new markets, but we are thoughtfully investing in the business, but the momentum is helping us.
<unk> EBITDA as we as we make those investments.
Yes, no thats helpful.
You've sort of alluded to this a couple of times sort of wanted to get more directly and specific on.
The ACO performance in the quarter I know it's early.
Getting some feed of data in from CMS that should give you some visibility into sort of how you're tracking versus expectations. So.
How are you tracking versus your internal plan there just with the new Acos and also those that are.
Converted into the extended track thanks.
Yes, definitely so the data we typically get is lagged as you know so the data we get now is reflective of our performance in the performance year 2021.
It's still early stages for the new Acos, but all the data we received as reflected in our accruals and as we stated Thats a little bit ahead of our expectations and that's reflected in the financial statements and then both the top and the bottom line. So I think we've.
We expect to perform pretty well when when it's all said and done by the time August comes in.
We get the final true up.
And hopefully our accruals, reflecting that as far as the new Acos are concerned again pretty early stage.
Just got started Jan one so we'll continue to get that data over the course of this year and we'll reflect that appropriately in our guidance.
Okay, great. Thanks, guys.
Thank you. Our next question comes from the line of Jessica <unk> from Piper Sandler Your line is now open.
Hi, Good morning, Thank you for taking my question. Thank.
So I just have one quick one on the implemented provider count and then the follow up so on implemented providers you guys announced Montana in early February can you just.
Confirm whether or not those 65 and <unk>.
Tanner providers are now included in the implemented provider count.
Hey, Jess.
They are expected to be implemented that some point in Q2 so.
Likely be reflected when we report our Q2 results.
Got it that's helpful. And then just maybe any comments on fee for service volume trends.
Quarter to date relative to <unk> and then maybe just on a historical basis.
Now if we should be thinking about service profit question for providers normal in 2018, our 2019, but.
Pumping.
<unk> quarter to date relative to historical periods would be helpful. Thank you.
So we continue to see the trend.
With utilization well above our expectations.
That continued from Q4 last year into Q1 this year.
Nothing nothing has changed in.
In the first couple of months here in Q2, so hopefully that continues again, we'd like to be conservative it's been tough to predict these last 24 months.
Hopefully that momentum continues, but we have well over prequel with baselines.
Bye Bye bye wide respect, we think our practices are gaining market share.
On a same store basis, given the strength of the platform and the strength of these practices during that time. So I think we see a lot of momentum and hopefully that continues.
Got it thank you.
Yes.
Thank you. Our next question comes from the line of Sandy Draper from Guggenheim. Your line is now open.
Thanks very much.
Good morning, just.
I think still a clarification here I'm not quite sure I think you may have addressed it but I didn't quite get it to apologize it looks like in the first quarter.
<unk> margin was about 12, 7%, but if you look at your full year guidance here.
It's close to 13 and a half.
So I'm more thinking about that trending up just remind me what are the key drivers and do you expect that to be linear or there are there any sort of notable quarters, where you get true ups for any of the the cap Cana lives or shared savings where you can the big jump that pushes that up and then it comes back down just trying to.
Think about pacing that line and the trajectory going from $12 seven in the first quarter to get to sort of a $13 five.
For the year. Thanks.
Yes, Andy Thanks for the question so the trend should pretty much mimic 2021, our previous years, where youll see.
<unk>.
Is low in the beginning of the year and then ramps up by Q3.
The one thing that that does get true up is our accrual estimates for prior periods. When we get most of our value based care results later in the year.
If there's a big deviation on the positive side, you should see that care margin as a percentage of practice collections trend up.
Obviously, we entered the capital arrangements. This year. So we are accruing for those and not expecting much to flow down to care margin from those this year. So so there'll be some anomaly driven by that but again that should be the trend in.
And thats reflected in the guidance.
Great. That's helpful and then the follow up and this relates to.
I think some of the questions the very beginning when one of the ways I look at it as practice collections per provider and that was up really nicely on a year over year and sequential basis.
Should we generally think about outside of a really big add that that should be the level. You think you saw this quarter of practice collections per provider should be relatively stable unless obviously, if you add a big chunk of providers you may actually Tejas state based on the math it dropped down a little bit or.
Anything that.
Not related to individual providers again going back to some of the shared savings other stuff that maybe not be purely provider base to think about what is on building that out.
So generally speaking it should be stable accounting for any health care inflation or.
Contractual adjustments that we have on the fee for service book I do think it should be important that you separate out the <unk> revenue and then calculate that number from the from the practice collections because that started this year. So there'll be a big jump in practice collections due to those capital arrangement. So I think once you normalize for that you should see you should see.
Fairly stable trend ticking upwards slightly but hopefully that should remain fairly stable over time.
Okay. Yeah, that's helpful I guess, Q and maintenance adjustments to that going forward. Thanks Park.
Thank you. Our next question comes from the line of Adam <unk> from Bank of America. Your line is now open.
Hey, thanks.
Going back to the discussion about multi specialty groups and the comparison to prepare.
You too I guess for one of the only ones that I cover.
And value based care that our connectivity gross primary care assets specialist.
And you mentioned that create some synergies and value based care, but to me I still don't really understand how exactly that works like it makes a lot of sense on the commercial side.
Scale and get negotiating leverage and higher unit costs, and you mentioned utilization being stronger than you expected. So how exactly is it creating efficiencies on the value side and two specialists get any of the shared savings for example.
Yes. Good question, Adam So I'll start and Sean Sean will add so look fundamentally what we recognize is.
In any value based arrangements, 80% of the cost downstream from a primary care provider are largely fee for service or whether it's the specialists.
Facilities inpatient outpatient and obviously, obviously the drug spend and the strategy is therefore to have a broad delivery system that can impact some of that cost trend with alternative site of care strategies.
Lower cost higher quality specialists, and so forth, but then more importantly lay the value based team.
The primary care provider may not be fully at risk.
And pools like the commercial pool that we have or even an upside only MSP were the primary care provider doesn't need to take full risk, but youre impacting enough of the cost trend that is accruing to the payer of health care.
I think thats our strategy.
And then obviously, we do participate in bundles and programs like that where appropriate where the specialist can really impact with an alternative site of care strategy.
Something we are looking closely with our partnership with <unk> as an example, so obviously that helps us participate much more broadly than most Adam This is Sean so.
So if you think about kind of.
Just at a high level, what we do we build medical groups.
Always primary care focus thats, where the attributed lives come from over 80 value based arrangements, but at the end of the primary care focus.
That's what we're always going to be but at the same time as we build these medical groups were very strategic about when we begin to see density in a market and a state what type of providers should we be adding depending on the level of risk, we're taking and what that cohort of patients looks like I'll give you. The example of Medicare advantage as we get dense and bill.
Density.
In a certain geography that you would say there is five to six specialties that you really want to you want to I guess.
The right volume to the right providers think about sites of service in ambulatory surgery. All those type things that are the levers of just traditional any kind of traditional managed care but.
Our primary care physicians have compaq's does what we say with these types of doctors in than we are.
Kind of looking to add those specialists to our group. So you are beginning to manage the professional we risk and then you have a huge input.
Yes outcome than on the institutional pools, and so thats really when we talk about taking risk in a thoughtful manner. That's what we're talking about maybe its primary care risk initially, but then we're moving upstream to professional than 50, 50, and really starting to kind of think about how we impact that institutional pool and we've been very open about.
We think the best long term, most sustainable arrangements or where the payer is accepting risk with us and they have incentives to build the right benefit structure for their patients. They have incentives to go out and get the most competitive arrangements with the acute care facilities and so on so that's.
That's what we I mean, we're in the business of building.
Really aligned primary care focused medical groups that can take care of every type of patient regardless of the type of program there in <unk>.
That's helpful.
Yes, no it does.
Sure.
And then one more follow up to what you said earlier, you said that you wouldn't expect practice collections per Doctor I think two to rise over time aside from cost inflation, but.
My understanding was that you were helping the doctor go about their patient panels and maximize the revenue lift there.
Right, so why wouldn't that number trend up significantly overtime.
Yes over two or three year period, you should expect that to happen absolutely.
On a quarter by quarter basis.
You would not see that kind of movement and again youll have to as I mentioned a sandy.
Separate out the value based components. So if youre looking at just the fee for service line.
Obviously, there is a good uptrend when the doctors join US and then it stabilizes and then creeps up with with better productivity and with the with any contract adjustments that we have again at our size.
With <unk> 300 provider, that's a much more stable metric now than it was a few years ago, but again its impact impacted by specialty mix and the maturity of each of our markets.
Okay got it thanks.
Thank you. Our next question comes from the line of David Larsen from <unk>. Your line is now open.
Hi, congratulations on the good quarter can you talk a little bit about the nature of the value based care deals that you are.
That you are working in.
We've heard from Washington, There is a little bit of exhaustion from legislators.
Sound like the provider relief fund and sending dollars to providers.
There is there sequestration, where I think there was a 1% doing in April there is another 1% in July .
And there is less sort of tolerance for upside only risk deals.
How is that impacting your book.
If at all are or your provider clients or is it a headwind or is it actually a tailwind. Thanks.
David Thanks, This is Sean.
Yes.
We talk a lot about <unk>.
Important in the.
Type of providers that are attracted to <unk>.
<unk>.
Value based arrangements across their whole panel.
And so maybe that gets into the 80 plus it gets into today.
Look at these kind of breaking those pools out commercial tends to be.
The country upside I can tell you.
Any sophisticated provider and Youre doing well you are wanting to move upstream and so.
Payers are coming to you and said hey, how can we share risk in certain core doors are in some way on the commercial so that's there's discussions about that we have those discussions. So then you take when you start breaking down the other Medicaid Medicaid tends to be upside, it's very state specific what opportunities you have what up to how you can affect that.
You get into the Medicare population do you break that out into two buckets.
Honestly, we have been in the government business a long time the team here at <unk> is a lot of experience in government programs, we like them, we break those out and do we participate in MSP lot of discussion about the success recently.
By CMS being pretty vocal about kind of stopping doing as many programs that they don't feel they're getting shared savings getting savings for the taxpayer and doing more of the programs that are being successful we've been in MSP I guess since the beginning seven years ago really successful run.
The number one top 100, acos and that is in the mid Atlantic and the shared savings the percentage. So a lot of success. There Medicare advantage of team has a lot of that we've moved into that.
Yes, I think what.
Just me speaking I don't want to speak for <unk>, and CMS, but they're narrowing their programs we support.
Because these programs are built over decades are not built over two or three years.
And we think that as these programs continue to improve you will see us and those programs were going to do analysis and should we move.
Physicians and from one program to the next we do that with our doctors, they're sharing risk with us or putting up money and they have skin in the game. So we're very thoughtful in how we move from program to program. When we we were measuring the headwinds and the tailwind when we make those decisions. So we're pretty supportive of the decisions that's coming out of CMS now in that be.
Thoughtful be very supportive continue to improve upon the programs and I think the other thing I haven't mentioned is I think you would agree what theyre, saying is they'd like to see more I guess Sim.
Similar the payer or the commercial payers doing programs such as they are in and I think youre going to start seeing some of that where their programs I don't want to say the quality metrics are the same but theyre going to be upside and cms's you shouldn't they want to start off upside, but they want you to move to risk.
Your last question is I think that's exactly what we're built to do we're very thoughtful about it and we have scale, maybe we're kind of not in us in our discussions, but we that's what we believe the worst thing you can possibly do is take risk too soon and fail and you set yourself back with doctors and they lose confidence. So this is we're bearish.
Supportive of what they are out there, saying it the way they are taking the programs.
Okay, great. Thanks, very much and then just one more quick one theres a lot going on in the market with inflation labor costs rising interest rates and a slight pullback in the stock market, which I imagine is impacting the physician groups that probably half the capital invested in the market.
How is that impacting.
Volumes to your practices in your cash collections.
Like how our April March April and May volumes, how do they compare to January did you get a bump up from Covid in January and Thats, what drove the sort of cash collections upside or are you just sort of seeing continued strong volumes as we progressed through the year.
Yes, I think its two things for US one is obviously, we continue to see utilization much higher than what we expected so as the world normalizes and.
We're seeing that come in much much stronger we said that last quarter, we see the same trend continuing so that's obviously, helping on the fee for service book. We also think our practices our are gaining market share.
On a same store basis, and thats reflective of how well, they're doing with us with a platform where we.
To enhance productivity and they are able to add patient panels and so forth.
Add other providers to the same practice, so I think that's helping us on a same store basis, and then look the model today is really set up well, where we're seeing this flywheel effect with our existing physicians.
Asking their colleagues to join an entity like Bravia, where.
They are all of these challenges complexity of value based programs the infrastructure the technology stack and so forth and I think independent physicians are realizing our model of being best of both worlds, where they bought or something bigger.
Yet maintain their autonomy and are supported by.
A bigger entity from all of these things.
And have a real governance structure around our Singleton medical groups. It gives them the best of both was dynamics, which is hard to get.
Relative to selling their practice to somebody whether it's a health system, whether it's a private equity entity and so forth. So I think we're seeing all that momentum our way in terms of that's all reflected in the growth of the financial statements.
What parks last point was what I was going to.
Adam.
I mentioned in my prepared remarks, we spent I've spent.
Time at the NASDAQ with 17 of our physicians we invited in.
Theres no.
No one is immune to what's going on in the inflationary markets are seeing but it does it's reflecting on kind of I think our growth where physicians are seeing pressures that they probably haven't seen in the last few years and our positions have performed really well.
They understand the value based care is in their market. They want to perform better than peers are seeing them be successful and they're telling their peers about it and a lot of our pipeline is full of where our providers have spoken with their colleagues about joining so.
Yes.
No not immune to it.
In an odd way, it's driving some in fueling some of the I guess some of our growth.
Helpful.
Great. Thanks, very much congrats on a good quarter. Thank you.
Thank you. Our next question comes from the line of Richard close from Canaccord. Your line is now open.
Yes, Sean I wanted to just expand on that obviously.
You've been around this business for a long time seen ups and downs in the.
Our economy and whatnot, how do you think.
Two things.
Things deteriorate from here, how do you think that changes the pipeline for you guys do physicians choose different models or preferred different models, just curious based on your experience.
Richard you almost offended million, calling me old.
Just kidding.
That's kind of I guess in addition to the last question.
I mean, they are not immune to it but.
But I mean it is.
Providers, we've been pretty open over the last year, but the providers that come to us are kind of they still so they self select and theyre not looking to sell their practice.
They're not looking to join a hospital some are actually leaving systems in some markets. We've seen some of that in some markets, we're out in and talking to different positions, but.
I think it's like I said, I don't know odd way I hate to admit it almost it is helpful.
Doctors are looking too.
It is a little bit of the best of both worlds they want they want their autonomy in EMEA at least these doctors who came to our recent board meeting and the board members had why do you joined as I said number one autonomy number two is we performed better.
This market and it's better to be part of something larger, but we won't that autonomy and hay and we're getting the tools necessary to move into arrangements that we've either been kind of somewhat successful, but we know those type of arrangements are going to grow over time, so and.
The Great thing is is we've got a lot of sales momentum and the pipeline is very robust as we continue to say so.
I think it's.
It's driving some growth, but at the end of the day, we've got to be successful and results are what drive.
Drive success for physicians, Richard the one thing I'll add is.
We offer something to also health systems and other facility affiliated or employed providers as we mentioned and as you know.
They are facing a lot more of these pressures that are much more acute manner than the in the community independent Doctor practices. If you obviously, the staffing issues and facial refreshes in the hospitals and so forth.
Inc.
40%, 50% of the providers are in that ecosystem in the country today, and our ability to offer and partner with health systems and entities like surgery partners as an example.
Is also really positive for our business as we go through this period.
That's a good point.
It's just discussions have really grown over the last 18 months and I think the pressures of Covid and now inflationary.
Factors, we're seeing are going to continue that momentum.
Do you think that.
Valuations come down from the perspective.
Selling your practice that ultimately benefits you guys in terms of.
Deciding to.
Partner with someone like yourself is that a tailwind for you.
I think in summary, it should be we've all obviously shied away from buying practices as you know in our model and we think that Miss aligns interests.
So obviously as physicians those who were looking to sell or we are on the borderline and are not getting what they expected.
I think it's a tailwind for us.
Okay. Thank you.
Thank you.
Last question comes from the line of Kenneth.
Your line is now open.
Hey, guys. All my questions have been answered. Thank you so much I appreciate it.
Thanks, Brian .
Thank you.
Thank you at this time Im showing no further questions I would like to turn the call back over to Mr. Moore for closing remarks.
Thank you operator, I want to thank everybody for joining and listening in today.
We're excited as you can tell we're looking forward to continue to execute at this high level through the remainder of 'twenty two and we look forward to speaking to you again after the next quarter, but I. Appreciate your continued interest support a preview enjoy the rest of your day.
This concludes today's conference call. Thank you for participating you may now disconnect.
We do.
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