Q3 2022 Privia Health Group Inc Earnings Call

November 10, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

Good day and thank you for standing by welcome to the Premier Health Q3, 'twenty Two conference call. At this time, all participants are in a listen only mode.

If at any time you have a question. Please press star one one on your telephone.

After you press star one on your telephone you'll hear an automated message you said your hand hasn't been raised.

This conference call is being recorded I would like to turn the call over today to Robert Burgess SVP of Investor and corporate Communications. Please go ahead Sir.

Thank you Lisa and good morning, everyone.

Joining me today are Scott <unk>, our Chief Executive Officer, part Mehrotra, President and Chief Operating Officer, David Mountcastle, Our Chief Financial Officer.

Okay.

This call is being webcast and can be accessed in the Investor Relations section of pretty health Dot com.

Today's press release, highlighting our financial and operating performance in the slide presentation accompanying our formal remarks are posted on the Investor Relations page at <unk> Dot com.

Following our prepared remarks, 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 full queue in 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 September 32022 is filed with Securities and Exchange Commission.

The statements we will make today are forward looking in nature based on our current expectations and our view of our business as of November 10 2022.

Such statements, including those related to our future financial and operating performance and future plans.

Our 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'd like to turn the call over to Sean.

Thank you Robert good morning, everyone.

Pardon me it helps highly aligned providers partnership model continues to gain momentum and we delivered another strong quarter of growth.

We continue to execute on multiple fronts to extend our market reach and drive future growth and positively impact care delivery.

With our continued momentum in existing markets, we remain highly confident in our growth outlook for the remainder of 2022 and as we move into 2023.

We continue to expect to increase our number of provider partners expand attributed lives and enter new markets over the coming quarters.

This morning, I'll provide an overview of key highlights park will offer a business update and then David will discuss our third quarter perpetual formats and updated 2022 guidance before we take your questions.

Okay.

Health continues to execute at a very high level with implemented providers up more than 27% year over year and practice collections, increasing more than 52% in the third quarter to reach almost $612 million.

We generated another record quarter of adjusted EBITDA, which was up 12, 9% when compared to a very strong Q3 last year.

We continue to gain leverage from the scale of our operating model, even as we ended up across our enterprise.

This continued business momentum and high forward visibility is reflected in our updated financial guidance for 2022 with practice collections now expected to be greater than $2 3 billion.

Our balance growth was driven by a solid quarter of new provider additions in existing markets continued same store growth as well as strength in ambulatory utilization across all our existing practice locations.

We also expect to enter many new markets over the next few years and we've taken a couple of more steps towards the scope.

Our early in early September we announced the memorandum of understanding with our Ohio health to form a strategic partnership and launched our medical group for independent providers throughout the state of Ohio.

More recently, we announced a joint venture and strategic partnership with Nevada and.

And nationally recognized integrated health delivery system based in North Carolina together, we will launch premium medical group North Carolina for independent providers throughout the state.

These health system partnerships will provide a new alternative for independent community positions and provider groups in North Carolina, Ohio to care for their patients while supporting the transition to value based care.

New providers expected a joined the medical groups can access previous technology and services platform. The health system employed provide us will remain on their existing platforms.

These partnerships aligned well with Nevada health in Ohio helps long term independent provider strategies together. Our aim is to help build one of the largest medical groups in both North Carolina, and Ohio, and help align independent providers, while preserving their legacy ownership structures.

Our entry into these two large state significantly expands our addressable market and organic growth opportunity.

In addition, our continued efforts to grow in existing markets remains very healthy as does our business development pipeline to enter additional new states over the next few years.

As I noted our business momentum has continued to be extremely encouraging across both existing and potential new geographies. Our national footprint. Now includes nearly 3600 implemented providers caring for over 4 million patients in more than 920 locations across eight states and the district of Columbia.

Soon to be 10 states with the addition of North Carolina and Ohio.

Our scale and geographic density enables us to offer our provider and payer partners as well as consumers abroad ambulatory care delivery network that can improve patient outcomes and reduce costs across the value based care spectrum.

Now I'll ask Mark to review, our unique value proposition for health systems provide an update on our value based care footprint and our performance in the Medicare shared savings program.

Thanks, Sean for via <unk> flexible operating model and alignment strategy is uniquely suited to work across all provider types, all specialties and all reimbursement models.

Our recent announcements with Nevada, and Ohio Health are terrific examples of our distinctive value proposition to be a partner of choice for their statewide physician alignment strategies.

As you May recall, we partnered with our first health system Health first in Florida in 2019 to establish a single tax 80 medical group and accountable care organization.

Health versus more than 400 employed providers converted to the <unk> technology and services platform.

All new independent providers in Florida are implemented on the <unk> platform and joined our medical group and ACL entity today, we have over 700 providers across the state of Florida and growing.

In case of both <unk>, and Ohio Health, we will leverage each health systems already established single <unk> Medical group, our fee for service payer contracts and the risk bearing entities for value based care contracts to launch the <unk> model and each of those two states.

Both health systems will now have an ability to offer Privy has unique alignment model to independent providers across their states that would complement their employed group in.

In addition, <unk> would help enhance performance of the risk bearing entities in various value based arrangements across both employed and independent providers in the state and further accelerate transition to value based care.

We believe premier is uniquely positioned in the industry to be a strategic partner to health systems across the country as they redefine their physician alignment strategy and transition portfolio to various value based reimbursement models.

Previous operating model and strategy continues to be one of the broadest and most balanced and diversified value based care platforms in the industry.

Recover approximately 846000 attributed lives across more than 80 address payer contracts Marshall and government programs.

Our thoughtful move through risk continues to provide significant opportunities for topline and EBITDA growth.

Today, we take upside and downside risk and many of our payer contracts covering nearly two thirds of our attributed Medicare lives across our MSP and Medicare advantage program.

We conduct contract performance reviews periodically with our medical groups and by our partners and can witness some movement of providers and attributed lives. As a result, we saw a slight change in total attributed lives sequentially from Q2, primarily in the commercial group. This can happen from quarter to quarter. As we've noted previously our MSP and MAA attribute.

It lives increase from Q2, and we expect our total number of attributed lives to continue to grow.

Our success in the Medicare shared savings program continued in 2021 performance here.

Across our Acos in four markets. The results on the right that were publicly released in late August show that with lower utilization and cost significantly below that of beer acos. This.

This performance was even better when compared to fee for service Medicare all while achieving an average quality score of 93% across all of our Acos.

In the mid Atlantic region, we operate in one of the country's largest acos caring for about 63000 patients in the MSP enhanced track with significant downside risk.

We delivered 9%.

Percent in savings, which was the highest rate of all acos across the country with greater than 40000 attributed lives.

<unk> health is well positioned to enter into value based arrangements across the risk spectrum based on market dynamics in each state.

Our success over the last eight years is key to our collaboration with all of our payer partners that offer value based arrangements across commercial and government programs and.

In fact since 2014, our acos have delivered more than $740 million in total shared savings across all payers, including over $380 million through participation in the MSP.

Using the 2021 MSP performance data Premier House, Acos managed about 113000 patient lives representing over $1 $1 billion in medical spend however.

However, we only recognized our share of the <unk>.

<unk> savings and practice collections, and GAAP revenue, which was approximately $63 million.

This underscores the fact that our revenue recognition understates, the breadth scale performance and capability of previous value based care platform.

Our MSP lives were converted into full risk our capitation arrangements than I thought.

Hotline would capture a significant portion of the underlying spend rather than just our share of the shared savings.

Our financial results over the past two years have clearly demonstrated our success in transitioning to value based care and downside risk contracts over time as we generate increased profitability under those arrangements allow.

I'll ask David to review, our recent financial results and updated 2022 outlook.

Thank you Bart.

Scale of <unk> operating model and our continued business momentum again delivered strong performance in the third quarter of 2022.

Our 27, 2% growth and implemented providers combined with our capitation agreements and solid ambulatory utilization trends led.

Led to practice collections, increasing 52, 5% from Q3, a year ago to reach $611 9 million.

<unk> margin increased 26, 4% and adjusted EBITDA was $15 7 million up 12, 9% over a very strong third quarter last year.

Our topline continued to grow faster than EBITDA this quarter due to the new capitation arrangements as well as investments across our business enterprise.

To support this accelerating topline growth.

At the same time, the operating leverage in our model is clearly apparent as our topline and care margin growth is translating nicely into EBITDA growth.

Year to date practice collections increased 68% over the same period in 2021 to almost $1 8 billion.

<unk> margin was up 32, 9% and adjusted EBITDA grew 37, 6% to reach $46 6 million for the first nine months of 2022.

Our balance sheet and capital position continue to be very strong given the cash flow dynamics of our business for carrying no debt after paying it off in full last quarter and have a pro forma cash position of $342 million.

As noted in the table on this slide we received $62 8 million in cash from CMS on October 11th as payment for <unk> portion of shared savings generated in the 2021 performance here of MSP.

As you May recall, we received a CMS payment in our third quarter last year.

We then share approximately 60% or $37 7 million with our providers for their participation in our success in MSP.

Given our year to date performance and business momentum, we remain highly confident in our updated 2022 financial guidance.

We raised our practice collections guidance to a range of $2 $3 five to $2 4 billion the midpoint of which is a seven 4% above our initial guidance range provided in March.

We also range GAAP, we also raised GAAP revenue and care margin guidance to be at and above the high end of our initial guidance ranges.

Our adjusted EBITDA guidance was increased to a range of 59% to $61 million.

The midpoint of which is an 11, 1% increase from our initial guidance.

Our guidance includes new markets start up costs in North Carolina and Ohio.

As a reminder, we do not add back new market entry cost to get to adjusted EBITDA. Since this is an ongoing and recurring cost of our long term growth strategy.

We expect approximately 90% of our fully adjusted EBITDA to convert to free cash flow with capital expenditures up significantly less than $1 million in 2022.

Our yearend implemented providers guidance is now in the 3660 to 3680 range and our guidance for attributed lives within the 850 to 860000 range.

As Park noted, we can see slight movement of providers and attributed lives following periodic performance reviews with our medical groups and payer partners.

Importantly, our yearend attributed lives guidance shows that we expected increase from Q3 to Q4.

We remain focused on growing and expanding our business and continuing to execute on our multiple growth initiatives with that operator, we are now ready for the first question.

Okay.

Thank you one moment, while we.

Compile the Q&A roster.

The first question that we have today is coming from Joshua Raskin of Nephron Research. Your line is open.

Thanks, Good morning.

You both mentioned the reduction in value based commercial BBC lives sequentially. In these performance fees could you just give us a little bit more color those performances with providers that you're terminating or health plan contracts that are going away or what exactly is going on there.

Thanks, Josh for the question, yes, it's a combination of both.

We've conducted these in our board meetings with providers with overall review of the lives on the programs, we have and sometimes that can lead to quarter over quarter movement. As you know we are really focused on the performance in each of these programs and if we determine.

That.

Some of the programs may not stand up to our expectations.

And then we need to set up the views and some actions more importantly, as you can see this doesn't have any financial impact. In fact, we are we raised our guidance on all financial metrics, so pretty minimal or no financial impact in the commercial book.

Which is again in open access product, where we take only upside risk.

And so no material impact to the business.

Yes, I was going to follow up so that makes sense. The ones that are getting term, they're probably not providing any positive EBITDA right. So these are ones that we're to your point about meeting financial expectations.

Josh This is Sean.

Think about these.

Your peers working through these pod meeting so they've been working with people from time to time when they are not meeting their expectations.

The medical group, but us work together, sometimes we exit those providers are and so forth.

And then just a follow up on the MSP.

Rules final here the program changes I'd be curious to get your perspectives on some of the changes.

Let's take some some positive some negatives and then maybe specifically to your MSP payment for payment year 2021 was that above what you had been accruing for above expectations.

Yes, So 2021 performance was above our expectations, obviously, we get data each quarter.

And make the accrual estimates and.

When we got the final results in Q3, we those were above our expectations.

So just specifically on the.

<unk> schedule, an ACO type question the ballroom the final rule.

We've seen it's net positive for us closely aligns with what we kind of talked about for a few months ago.

These announced conversion factors.

<unk> seen and you'll continue to see I think significant opposition from groups like the EMA in the MGA and we work with these groups.

As we all know Congress has prevented some of these cuts in the past and we'll wait and see how that kind of shakes out but as it relates to the kind of the MSP program, where we are.

Feel pretty good about it very positive impact and we think it's a significant endorsement of the premium model and we work coffee, obviously closely with CMS.

All of this and you can see from our results the last this year and the previous years.

Operator, and one of the most successful acos in the country actually the number one ACO over lives over 40000 lives in producing the kind of shared savings. So we we.

We feel really good.

The program and how it is progressing.

Great. Thanks.

Thank you for your question.

One moment, while we get ready for the next question is.

The next question will be coming from <unk> Zhang of choose your line is open.

Thank you and thanks for taking my questions and congrats on a good quarter, just going back to Jos Josh question on MSP program. So can you can you quantify how much was the actual benefit in the quarter and is it all just about.

You guys were being deliberate in your savings accrual compared to some of the peers, who have reported some noise because of the <unk> adjustment just help us understand that.

Compared to the <unk> approach compared to some of your peers and what was actually a benefit for you in the quarter.

Yeah. Thanks, Andrew look I mean, we have a very diversified value based book.

We've stated it's 80 plus contracts across MSS BMA commercial so we're not breaking down results by by any one than what we accrue each quarter.

And then accruals of each quarter, obviously are a combination of performance in the current year based on the data we get as.

As well as any prior period adjustments as you know.

We try and be prudent about what we accrue each quarter based on the data you get and it comes with a lag basis.

And operating one of the largest value based book I mean, we have a very strong internal process that we go through not only in MSP, but in all other programs. So obviously can't comment on <unk>, but.

Given our depth of actuarial capability across close to 850000 lives in 80 plus contracts.

<unk>.

Streamline process and we just follow that each quarter and go through it.

Overall, we like to be prudent and at a business surprise, we hope its on the upside which it was this quarter.

We're not going to get into how many millions for any particular contract. If there is some anomaly that happens.

That is material, obviously, we'll point that out but overall it was pretty balanced.

Great. Thanks, and then my follow up with respect to the entry in Ohio, and North Carolina to your health system operating model partnership why do you think these health system arrangements by getting more attractive now versus a couple of years back from your perspective.

Our system perspective is it just a function of.

And then just hospitals are going through destocking over the function of you guys.

Getting to the scale that youre comfortable with this and just will this be your preferred way to enter additional states or markets in the future.

Yes, I appreciate the question. So look broadly our strategy is the same in every state that we go we want to over time over a decade, plus one would be one of the largest medical groups in that state.

Multiple hundred providers multiple 100 locations multiple thousands of attributed lives in all kinds of value based arrangements. That's a common strategy that we follow in every state that we want to enter we are not looking for some small scale to.

To do this so that's number one number two then I think when we evaluate how we enter a state.

As you've now seen our model is very flexible we're privy I can on the medical group. The ACO entity, we can partner with a big medical group or we can partner with a health system.

Our first one in 2019, so it's not a new concept to us.

And I think that depends on the dynamics of each state.

You have certain states, where there's a lot of health system concentration a lot of provider groups are.

Ciliated are aligned or employed by health systems overall in the country will take the study 50 plus percent providers are in that bucket, where they are aligned affiliated are employed by health systems, and we think our.

You cannot walk in the door and only talk about full capitation MA as an example, you're just going to walk in the door and just talk about one particular type of providers. So I think we just evaluate the state by state and if we can get an alliance partner forward leaning.

We establish those relationships the last thing I'd like to highlight is.

This is a decade plus play we're not getting into these arrangements.

For the near term, we're looking to build these medical groups over multiple years again back to the scale point and really establish something thats going to be truly lasting and then building in a pretty big scale in each of these states. So that's the whole gilenya.

Reference to the last part of your question, we've talked about it in the past it still remains true our pipeline is robust and it's pretty balanced so.

Part described the way we enter each one of these different types of examples very balanced amongst those three.

Great. Thanks, a lot.

Thank you for your question one moment, while we prepare for the next question.

Our next question will be coming from Richard close of.

And accord Genuity you can go ahead please.

Yes, thanks for the question.

Maybe just a follow up to that as we think about new markets and implemented providers, how should we be thinking about implemented providers.

In 2023, obviously during I guess, the IPO process and you called out Florida here.

Where you added 400 providers I think back to bass were yes.

A bolus of providers, obviously, these new market entrants youre starting from scratch. So how should we think about that.

Ramp and implemented providers that would be helpful.

Thanks for the question Richard.

So generically speaking, we can get implemented providers organically once we enter a market with the sales team.

And then we have a pretty brought dams in each of these new states that we enter our goal is to build 400 500, plus strong medical groups as we've stated in each of the states when we when we enter them.

In some states when we enter with a partnership.

We can have certain number of providers that join the platform and as you noted that happened in Florida that happened in California and in some other states. When we enter we are starting from scratch, which is the case with Ohio and North Carolina.

We've opened now we're now in 10 states and that leads us to a bigger Tam that our sales team can go and organically sell into so.

So generically.

Generically speaking you should expect.

Without any big medical groups, our health systems that come with a certain number of providers as was the case previously where we sit today you can expect four to 500 providers is what we'd look to add each year organically and then if a big groups. Our health system employer groups joined then we'll disclose that at the right diamond that'll be incremental.

Okay, and then can you just.

Sort of talk about the same store trends.

And maybe an update with respect to California.

You expect that you had the anchor in and bass.

Our.

Additions going outside of bass.

Yes, so with respect to the first question same store growth has been really strong in each of our locations.

Utilization strengths have been really strong we've grown providers same store in each of the 920 locations that we're in so a combination of those you can see as we've raised practice collections guidance pretty meaningfully from where we thought we would be at the beginning of the year and Thats reflective.

And then with respect to your second question.

We're often running in California. The sales activity is really strong it's a very big state Big Dam.

Really excited and we've started selling in <unk>.

Implementing new providers and that will happen over the course of the next few years and we look to build a pretty big medical group there as we as we originally intended.

Thank you.

Thank you for your question one moment, while we prepare for the next question.

Our next question will be coming from Lisa Gill of Jpmorgan. Your line is open.

Alright, thanks, very much and thanks for taking the question I just wanted to go back to a comment that David made in his prepared remarks around both new capitation arrangements as well as investments can you maybe just give us a little more color on each area of one how big are each of these when we think about a little bit of a headwind and then secondly.

Like what types of areas are you investing in at this point.

Thanks for the question Lisa.

So look again on the capital book.

After last quarter, we were accruing medical expense equal to revenue with no contribution this quarter, you'll see we've booked a little bit less medical expense about a couple of hundred thousands and nothing meaningful but we see some good good trends initially and again as we stated in our last earnings call that we will continue to get data.

Then hopefully update that as we close out the year.

So obviously that book is not contributing much towards.

Cash margin and EBITDA as a result, but we hope that that accelerates going forward. So that's a source of investment as we get into capitation and that'll happen. If we enter into new application programs, starting next year, if and when.

I think thats an area of investment.

<unk> is obviously as we are entering new markets.

As you understand where the business model, we launched the sales team launched the implementation theme and so thats obviously.

A drag on near term EBITDA contribution because we are actively selling implementing providers. Once they are implementing thats when the contribution topline contribution starts to happen, we don't add back those costs to adjusted EBITDA, we consider them ongoing operation. So our updated guidance of 59% to 61 million.

Include those costs.

And this year end and that'll be there going forward into next year as well.

And just going back to your comments about the key new markets, North Carolina and Ohio.

Does that that youre starting from scratch. There. So should we think that there'll be incremental investments in 2023 as well to get to that goal of four to 500 providers in those markets.

Yes, that's correct and then the first couple of years, you should expect those markets will generally be a drag on EBITDA and so that'll be in its operating expenses.

Pretty much in sales and marketing and implementation like I just said.

As you know our model is very capital efficient.

So we don't expect any capex investment that's going to be operating cost in the low single digit millions is currently the case, depending on the size of the market.

See some of that but we take that enables us to go in an accelerated way and big <unk>.

<unk> some of these big medical groups.

Okay, great. Thanks for the comments.

My choice.

Thank you for your question one for.

The next question.

Our next question will be coming from Ryan Daniels William Blair. Your line is open.

Yes. Good morning, Thanks for taking the question wanted to dive again, a little bit deeper into the health system partnerships can you talk a little bit about how the relationship progresses over time in regards to how you recruit providers is that kind of a joint marketing effort and you can leverage their brand equity in markets.

How much is on purview to do that recruiting versus the health plan assisting in that for the health system.

Okay.

Hey, Ryan Sean Yes, I mean these are these are true joint venture partnerships. I mean these are health systems are spinning these communities for <unk>.

<unk> multiple decades, they know that providers pretty well we're coming in.

As the lead partner and owner of the joint venture.

So you think about it I mean, 50% 60% of the providers today are in health systems and this is a very Mario we talked about in the past very attractive market opportunity for us and we think we are.

Equally positioned as that strategic partner with these health systems to redefine kind of how they move into their kind of future position alignment strategy and then more importantly, how to transition.

Existing as well as these new community doctors and the new medical group.

The future value based care models as park mentioned and as you know we've been this is not a new we've got a lot of experience doing this in Florida and is in there.

Mentioned earlier this is.

Part of our pipeline going forward and I think these.

These forward leaning health systems are really looking for a partner to the kind of breakdown havent different types of relationships with committed.

Positions without having to go buy them.

Yes.

Okay, and then as a follow up I wanted to talk about the existing book of business and as you talk to your implemented provider partners I'm curious if their appetite to move towards more risk in value based contracting has increased especially if we stare down a potential recession, there could be some impact on fee for service volumes are utilization is that.

Increasing the appetite and kind of actually a potential accelerant for your business going forward. Thanks.

Yes, Brian look I think it's a very balanced approach that we take and our providers have appreciated that balanced approach.

Taking risk does not necessarily as you have seen and know translates into.

Increased profitability, even at the provider level, sometimes it is called risk for a reason so it is just.

It depends on the markets. We are in the majority of those markets maturity of our groups our relationship with the payers.

Think providers in general want to be portfolio and in our model as you know we go at risk with them $60 40 up and down when we take risk we're not backstopping risk.

And that is important to get a very good provider alignment and I think that bodes well for our shareholders as we take that risk that providers are fully aligned and the goal is to.

Portfolio do it overtime, especially during times of recession, you don't want to do artificial things you don't want to do anything stupid and jump into risk when youre not ready. So I think we continue to take that balanced approach our focus on both FIFA service and value based we think resonates much better with provider groups in these times.

Whenever we have seen some financial stress whether it was during COVID-19, whether it's during the sessions we.

Then to generally benefit the interest in the model tends to grow as provider groups realize that they need a strong partner like ours for the entire book of business for all providers in that location.

And a partner that can offer everything and not just go sold one particular problem. So I think we're seeing a lot of momentum as reflected in our financial performance is reflected in our guidance and we continue to see the growth algorithm of the business continue.

With existing provider basis, and then with all the new discussions we're having in these states.

Thank you for your question one moment, while we prepare for the next question.

And our next question will be coming from Sandy Draper of Guggenheim. Your line is open.

Okay.

Thank you very much Matt.

<unk> is I guess, a little bit related to Ryan's question that from an inflation standpoint, I guess too.

Thoughts one.

What are you seeing in terms of just your own internal wage inflation for staffing whether it's at the corporate level or also.

At the end.

<unk> practice support level, and then also thinking through longer term as we see this wage inflation does that make providers potentially want to partner more with you guys and Keith can you help them solve some of the staffing issues because of your technology or platform.

And does that potentially make them more want to join you more just thinking about the inflation impact versus the recession impact. Thanks.

Yes, thanks for the question Sandy.

So on the first one we witness what most other companies witness again, we have a.

Pretty diversified employee base across multiple functions.

Given the book of business, we have.

And again, we've seen the same level of inflation most other high growth companies expect again, a recession here helps us as as other companies technology companies lay off employees and so forth, we are growing pretty well.

And I think the demand increases for us from a provider base as I've just outlined on my in my hands of Orion question.

So hopefully that abates, a little bit and we are the preferred employer of choice as.

<unk>.

Future employees see.

One a strong company to work for during recession times that is not laying off and it's growing so I think we will hopefully be a net beneficiary there and in terms of your second question totally agree I think again any financial stress on the doctor's practice, whether it's top line related.

Reimbursement model changes labor cost related so that squeezes profitability and ultimately take home pay benefits.

Benefits us.

When we go out and sell.

Very ROI driven approach, we take all of that data and we.

Financially demonstrate the impact on that take home pay for each <unk>.

Our partner in a particular practice.

And Thats, a net of both topline and bottom and expense.

So our ability to impact on the expense base, whether it's better technology stack better productivity, having them not spend the time that they were doing previously with payors.

And then making that practice more viable all bodes well for us and I think it's important that we do it across the book of business a lot of the practices. We get into today are predominantly fee for service, they're looking to transition into value based care and so the immediate need is to solve what they have today versus.

Go head on into risk as an example, so again it bodes really well for us and we continue to see a lot of demand and it is okay.

And a question to the first part of your question. We all realized my take home pay salary and benefits are all part of kind of a.

And employees.

Package, but really experience work experience participating in AR.

A company, that's growing and exciting.

They're helping us build our culture and.

We work hard.

Obviously, it others dealt but we work really hard with our each one of the Caribbean and the company to kind of be a part of that and.

Maybe like part said, we're growing and we think some of the stuff benefits us and other companies or a chef melt employees.

Great that's really helpful.

Then maybe one.

One follow up or unrelated follow up.

You're obviously in the Indian envious position now where you don't have any debt. So interest rates interest rates actually going up. He gives you. Some you can actually make some money on your cash.

About you don't have debt to pay down.

Youre doing partnerships, but an amazing thing is you're not having to commit lots of capital and there is some expense youre capex isn't big I mean, so the only thing that would leave us just build cash balances.

Possibly acquisitions that you would be able to grow without days would you ever consider the other obviously I'll turn it over to be some pointed to share repurchases come into consideration for the board.

The uniqueness of the model thanks.

Yes.

Andy for the question look.

I think we are in a very strong position.

Especially as the macro environment deteriorate.

Given the business model given the demand increasing.

And we are very conservatively positioned from a capital structure perspective.

I think it's very important.

To our physician partners to our health system partners that the counterparty that they are interacting with.

And partnering with from a long term basis is a very stable counterparty I think thats often less appreciated in this business.

And so we think there's a very good sleep at night bucket.

Because and provider entities, taking risk while there is no regulated capital.

As you know, it's called risk for a reason and Hurricanes happens pandemic happened. So I think our capital position really gives a lot of credibility to us when we speak with new prospects both in existing markets and new markets. So thats number one and I think we'll continue to have a pretty pretty substantial buffer with respect to that bucket number two is growth.

Given the Tam that's available to us.

Last quarter. We said we are in <unk> 42 to go we're in 40 States. We're in 10 States 40 to go now and I think as you've seen us deploy some capital.

With the bass deal in California, and other places will continue to use some of that capital to enter new states and thoughtful ways smaller is preferred for us.

And then obviously.

If there is anything large to do will again, we'd like to take advantage of the macro environment in distressed and and see what's available in the market and do it thoughtfully and then finally again, we have the flexibility.

The stock price DVS pretty meaningfully from intrinsic value.

For whatever reason, we have the option to return capital in a thoughtful way. So those are the four buckets. We continue to evaluate that I think it's hopefully a great position to be and where you can control your destiny and not have to rely on capital markets and the business is generating.

Very good free cash flow as you've seen we've guided to about 55 million of free cash flow at the midpoint of the range. So we continue to do that and see how it goes.

Great. Thanks, so much and congrats.

Thank you.

For your question one moment, while we prepare for the next question.

The next question that we have is coming from Whit Mayo of VB. Your line is open.

Yes can you talk about the AAR days in the quarter they increased.

A lot sequentially I think maybe four quarters in a row now and you've collected MSP the payment. So I would've thought that would've come down, but maybe there are some other factors sort of influencing that so I don't know if you could just maybe help understand.

Some of the dynamics there.

Yes, yes.

That's the Big reason, we put that pro forma cash number in there. Unlike last year, we didn't actually get the.

CMS cash until October so the AAR days are up right now and obviously as soon as we get that cash is going to come down by I was going to come down by 63 billion on the 11th of October . So we put that in there to try and hopefully show a little bit better guidance quarter versus quarter since CMS paid us in the last week of September last year and decided it.

In the second week of October this year. So we're trying to kind of bridge that gap, okay perfect. Okay. That's what I thought.

Second question, just the implied fourth quarter revenue guidance. It seems to suggest that you'd be down versus the third quarter normally you're up sequentially. So I don't know maybe help me understand some of the assumptions or factors that are driving your views there.

Yeah, Thanks, but I mean, it's similar to what we said last quarter.

We see we've seen really good utilization trends.

Across our book really strong utilization in pediatrics, which is about 300 providers out of.

<unk> 600.

And.

Again, our view.

As we are prudent with our guidance if those trends continue in Q4, it's a pretty broad range that we gave for the last quarter of the year.

Again, we're hoping that happens then you will see some upside, but we can see how it plays out.

But hopefully it should follow last year's trends, we don't have any reason to believe it should not but again utilization has been just hard to predict then.

Again on balance our approach is if we are wrong, there is upside versus downside.

Got it so maybe to put words in your mouth.

If I look at just the fourth quarter guidance or the assumptions still effectively the original assumptions that you use.

Coming into this year I just wanted to make sure I'm thinking about how you.

It may be adjusted from for March.

Yes, I mean, we've updated obviously our original guidance the high end of the range was $2 2 billion on collections.

You can see the high end of the range of $2 4 billion, that's a pretty meaningful move.

Within within three quarters.

So I think we've updated some but again, we will see how utilization plays out over the next.

Two months in how we close out the year.

We'll see where we are.

Fair enough thanks, guys.

Thank you for your question in a moment, while we prepare for the next question.

The next question is coming from David Larsen of BT.

Your line is open.

Hi, congratulations on a good quarter.

Can you talk about how current the CMS data is that you have as of right now two of your peers have received data from CMS I think it was like in August and there were changes in how savings rates or benchmarks were calculated and.

And that had a significant impact on their P&L.

How current is that data.

Are there any adjustments that might need to be made going forward in <unk>.

Im assuming youre doing well and your shared savings programs right. Thank you.

Yes, thanks for addressing David look I mean, we we get the same data I hope as others cant speak for any of our peers and when they get data and what they do with it.

But CMS, usually I'm, assuming since data out to all the participants around the same time in the same format. That's a very standard process.

Again, our process has been very consistent over the last many years as we've noted we participated in the MSP program for the last seven eight years, we've done exceptionally well we run one of the largest acos.

And our relative performance versus our peer assists shows for itself. We have really strong actuarial data science capabilities I think it's a core strength of the company.

You should expect any company that is in the business of taking risk on the provider side to have those capabilities.

We've always said, it's called risk for a reason.

You need to manage risk and we.

We do that through better actuarial capabilities data science capabilities operational capabilities and.

And I think Thats our guidance.

Updated guidance. This reflects that so we've taken all factors into consideration.

As we as we sit here today. So we haven't seen any impact that you might be alluding to with some of the other companies, so, but obviously can't speak for them.

Okay, and then just one quick follow up for the <unk> revenue ease their positive EBITDA year to date for that line of business and then what exactly is calculated revenue everything is some form of capitation I would think whether it's budgeted cap our direct comp are those direct contract models or is it commercial revenue just any more color there.

On a year to date earnings would be great. Thank you.

Hey, Dave I'll answer that last part because Sean.

Remember these are the Medicare advantage.

The three different arrangements, we have take various levels of risk in there that move onto the calculated arrangements now I'll, let david speak to them.

The dollar amounts of it.

Yes, yes, so again for the quarter we had.

About $55 million of revenue and we did have about $170000 and youll be able to see this in the queue.

From looking at a couple of different pieces of information, but we didn't up having our $170000 of positive care margin. So we are trending I would say.

A positive again.

I would say taking a very measured approach as we do with all of our value based care and especially with this being newer book of business for us.

Just being very measured in how we're evaluating these with the data that we receive.

Thanks very much.

Thank you for your question and while we prepare for the next question.

The next question will be coming from.

<unk>.

Phillips of Jefferies. Your line is open.

David Verizon Gila from Jefferies Hi, good morning, Congrats on the quarter.

Sean as I think about the <unk> deal for example, right I mean.

Are there still a lot of deals of that size in the market, where the hospital system Alright partner together arent really in discussions with.

Other value based players.

Is that sort of the way we should be thinking about your expansion strategy for new contracts or new partnerships more focused on the larger.

Our system groups going forwards.

Yes, I don't know that I would.

If you bucket them larger, but most of the health systems are very large.

Okay.

These are entities that over the years have become large in their region or state so but as I commented earlier. We've commented the last few quarters. I mean this is we think we're uniquely positioned we like this this book of business, we've been doing it now for three and a half years withheld firsthand.

These health systems are looking for someone they like the previous model, it's capital light. They see the results just like you see in the market sees of how we're transitioning in a really thoughtful way to value based care and a lot of these own and employ a big Big group.

<unk> this.

This is not doesn't mean, they want to shed these groups solid state but.

Every health system that youre going to talk to in the country with like they're employed providers.

Paul here employed providers to perform better and they want to they want to have a different relationship with the community docs.

And without having to go out and continue to use their balance sheet and ongoing.

Cash flow to support these and subsidizes community doctors, so I mean to think about hey look at the premium model, it's capital efficient it actually gets results, it's very thoughtful in how they transitioned to risk and we have great relationships and NPS scores with our doctors and minute if youre a health system, you look at that and say well there is a model.

There that helps me for the next five to 10 years and I want to be part of that so we think this is a huge opportunity out there for us.

Alright got it Thats all I got thank you.

Thank you.

Thank you for your question one moment, while we prepare for the next question is.

And the next question is coming from Adam <unk> of Bank of America. Your line is open.

Hey, Thanks for the question.

I feel like a broken record asking about this every quarter, but it sounds like a lot of the revenue outperformance year to date is related to.

Excess fee for service utilization and physician practices that youre, referring to.

No.

First of all what what about utilization makes you think that it.

Should we technically be thing that all of its revenue outperformance is now a headwind for next year.

Artificially elevated.

Yes. Thanks for the question Adam So first of all the outperformance happens both in fee for service and value based books.

So it's a combination it's just not fee for service.

<unk> is I think predicting the utilization out of Covid has been tough.

Especially as we went through the last 18 months and added.

The number of providers that we did.

All new providers, including our entry into California.

When you add.

1500 providers. They now 18 months 24 months period through Covid.

<unk> data that we get.

It's very patchy.

On a same store basis.

Patients are coming back into seeing their physicians and so forth and our general view is ambulatory utilization as go to utilization.

Patients in the community seeing their primary doctor, whether its a pediatrician Ob primary care.

Those are all good things you need to see.

For managing the population.

We don't think this will be a headwind I think it's just the baseline that is getting reset.

From the Covid periods of 2021 through the variance and so forth depending on the state.

And so I think our patient panels are getting pretty full.

We're adding providers on a same store basis to take market share and and we think both of those bode really well for US I think it's just resetting the baseline here and there's no reason for us to believe why ambulatory utilization for in the community doctors should.

Should go down.

Bob.

It doesn't work the same way as inpatient utilization, where you got to get a procedure and once the procedure is done you're not going to get it and there was some Latin demand I mean this is.

This is for general.

Primary care type visits as again as you can imagine.

Got it that makes sense.

And then separately.

It's Andrew.

CMS updated its white paper and value based care and they were talking about.

Our focus on creating accountable arrangements for specialists and I'm pretty sure you have a lot of specialists.

Of your practice to therapy, you could remind us how many specialists are are implemented today.

If youre in any similar value based arrangement focused.

Specialists.

If that makes sense and it move into down the road.

Yes general high level breakdown of auto.

Our implemented providers you can think of 60.

65% is what.

What we call tier one or <unk>.

Primary care providers in that definition is pretty broad for us.

Family Madison Internal Medicine primary care, but also obgyn speed edition, so somebody who is the primary point of contact for anybody in the family and then <unk> five percentage specialists, but even there. Our focus is on folks that are taken care of the chronically ill endocrinology pulmonology so forth.

We do have certain.

Cardiac ortho Gi.

But again, our focus is on folks that take care of the chronically ill and so again from our perspective they are different value based arrangements. We do do some bundles in a certain small way today.

I think.

The next wave will be how we do specialty focus value based these programs will evolve over time.

We think we're positioned well to participate in those as the case may be hey, Adam. This is Sean think about just how you.

You should consider us building a multi specialty medical group, we're always going to be primary care focus thats, where the attribution comes from but.

The more risk you take over a period of time, there are certain specialties that can really drive value with that and so where we have density and we were very thoughtful and begin to think about where are our.

Obviously, where do these specialty referrals go what type of spouses to are they how are they performing should these vessels will be in our group there should be should they be on our tech stack. So just think about that.

The consumer getting a completely improved experience access, which PARP talked about earlier, we talked a lot about access and how that drives health care costs down in consumer experiences improve NPS scores go up so yes.

You should see US we're building multi specialty groups that are always going to be primary care focused.

Really appreciate it thank you.

Thank you one moment, while we prepare for our last question.

And our last question will be coming from Jessica Hansen of Piper Sandler.

Your line is open hi, Thanks, Brian squeezing me in so.

I had to focus a little bit on MSP.

Is that 9% savings rate in the mid Atlantic something that you guys looking at that are a repeat of all of that kind of a target for the other less mature acos.

Hardwood destiny, there may be non repeating.

2020, one benchmark that allows you to achieve kind of that level.

Hey, guys. Thanks for the question look I mean, we've achieved that in the mid Atlantic for over 9% for two years now.

2021, 2020 in 2021.

Each market is different the underlying benchmarks different population cohorts are different.

I think this demonstrates in an open access type product that MSP is that.

That you can get to close to double digit savings rate I think we'll continue to do.

Chip away at it and Brian .

And do better.

As we always do and then other markets hopefully can follow that path, but again the savings rate is a function of multiple variables whether.

Whether we'll be able to achieve the same level just remains to be seen but again I think all other acos are at a much more immature stage and so we're hoping to move up from where we are today.

<unk> getting to enhance track and stock performing in them and build a bigger attribution basin and understand that population cohort better.

Got it.

Makes sense and my quick follow up is just on.

Yeah.

Open access products.

So for your full Cath lab is that 9% kind of a fair way to think about where the threshold might be and over one or two or maybe three years.

Performance.

Yes, I think it just depends.

If you do what may full capitation.

Arguably have more control on the patient.

And how you take care of the patients who are taking more risk.

Downstream, so again I think each each company each program is different each geography is different it just depends on how it evolves over time, but arguably you should be able to save all else being equal you should be able to save more on the NAMIC app life versus an MSP life.

Got it thank you.

Thanks, Jeff.

Thank you that concludes the Q&A session I would like to turn the call over announcements Tomorrow you may continue.

Closing remarks.

Thank you for listening for our call today <unk> capital efficient integrated delivery care model is already running at scale and has significant momentum and the position that <unk> market as we support all providers in all patients across all reimbursement models, we look forward to continuing to execute at a high level throughout the remainder of 2022 and for years to come.

We appreciate your continued interest and support for our company and we look forward to speaking to you again soon enjoy the rest of your day and happy Thanksgiving.

Thank you all for joining today's conference call you may all disconnect and have a great wonderful day.

You have been removed from the comp.

The conference will begin shortly to raise your hand during Q&A you can die.

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Thanks.

Okay.

Good day and thank you for standing by welcome to the Premier Health Q3, 22 conference call at this time.

Are in a listen only mode.

If at any time you have a question. Please press star one on your telephone.

After you press Star one on your telephone automated messages said your hand has been raised.

Please be reminded that this conference call is being recorded I would like to turn the call over today to Robert Burgess SVP of Investor and corporate Communications. Please go ahead Sir.

Thank you Lisa and good morning, everyone. Joining me today are Scott <unk>, our Chief Executive Officer, <unk>, <unk>, President and Chief operating Officer, David <unk>, Our Chief Financial Officer.

Okay.

This call is being webcast and can be accessed through the investor Relations section of pretty health Dot com.

Today's press release, highlighting our financial and operating performance in the slide presentation accompanying our formal remarks are posted on the Investor Relations page at <unk> Dot com.

Following our prepared remarks, we will open the line for questions. We ask you. Please limit yourself to one question and one follow up so we can get through the full queue in a timely fashion.

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 November 10 2022.

Such statements, including those related to our future financial and operating performance and future 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.

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'd like to turn the call over to Sean.

Thank you Robert good morning, everyone.

<unk> highly aligned provider partnership model continues to gain momentum and we delivered another strong quarter of growth.

We continue to execute on multiple fronts to extend our market reach and drive future growth and positively impact care delivery with.

With our continued momentum in existing markets, we remain highly confident in our growth outlook for the remainder of 2022 and as we move into 2023.

We continue to expect to increase our number of provider partners expand attributed lives and enter new markets over the coming quarters.

This morning, I'll provide an overview of key highlights parque la for a business update and then David will discuss our third quarter perpetual formats and updated 2020 guidance before we take your questions.

<unk> continues to execute at a very high level with implemented providers up more than 27% year over year and practice collections, increasing more than 52% in the third quarter to reach almost $612 million.

We generated another record quarter of adjusted EBITDA, which was up 12, 9% when compared to a very strong Q3 last year.

We continue to gain leverage and the scale of our operating model, even as we ended up across our enterprise.

<unk> continued business momentum and high forward visibility is reflected in our updated financial guidance for 2022 with practice collections now expected to be greater than $2 3 billion.

Our balance growth was driven by a solid quarter of new provider additions and existing markets continued same store growth as well as strength in ambulatory utilization across all our existing practice locations.

We also expect to enter many new markets over the next few years and we've taken a couple of more steps towards this goal.

Our early in early September we announced the memorandum of understanding with all Ohio health to form a strategic partnership and launched our medical group for independent providers throughout the state of Ohio.

More recently, we announced a joint venture and strategic partnership.

And nationally recognized integrated health delivery system based in North Carolina together, we will launch premium medical group North Carolina for independent providers throughout the state.

New providers expected joined the medical groups can access previous technology and services platform. The health system employed provide us will remain on their existing platforms.

Our entry into these two large states significantly expands our addressable market and organic growth opportunity.

In addition, our continued efforts to grow in existing markets remains very healthy as does our business development pipeline to enter additional new states over the next few years.

Okay.

As I noted our business momentum has continued to be extremely encouraging across both existing and potential new geographies. Our national footprint. Now includes nearly 3600 implemented providers carrying for over 4 million patients in more than 920 locations across eight states and the district of Columbia seem to be 10.

With the addition of North Carolina and Ohio.

Now I'll ask Mark to review, our unique value proposition for health systems provide an update on our value based care footprint and our performance in the Medicare shared savings program.

Sean <unk> flexible operating model and alignment strategy is uniquely suited to work across all provider types, all specialties and all reimbursement models.

Our recent announcements with Newmont health in Ohio Health are terrific examples of our distinctive value proposition to be a partner of choice for their statewide physician alignment strategies.

As you May recall, we partnered with our first health system Health first in Florida in 2019 to establish a single tax 80 medical group and accountable care organization.

Health first more than 400 employed providers converted to the <unk> technology and services platform.

All new independent providers in Florida are implemented on the <unk> platform and joined our medical group and ACO entity today, we have over 700 providers across the state of Florida and growing.

In case of both <unk>, and Ohio Health, we will leverage each health systems already established single tax 80 medical group for fee for service payer contracts and the risk bearing entities for value based care contracts to launch the premier model in each of those two states.

Both health systems will now have an ability to offer <unk> as a unique alignment model to independent providers across their states that would complement their employed group.

We believe premier is uniquely positioned in the industry to be a strategic partner to health systems across the country as they redefine their physician alignment strategy and transition thoughtfully to various value based reimbursement models.

Previous operating model and strategy continues to be one of the broadest and most balanced and diversified value based care platforms in the industry.

We cover approximately 846000 attributed lives across more than 80 address their contracts Marshall and government programs.

Our thoughtful move through risk continues to provide significant opportunities for topline and EBITDA growth.

Today, we take upside and downside risk and many of our payer contracts covering nearly two thirds of our attribute of Medicare lives across our MSP and Medicare advantage program.

We conduct contract performance reviews periodically with our medical groups, our payer partners and can witness some movement of providers and attributed lives. As a result, we saw a slight change in total attributed lives sequentially from Q2, primarily in the commercial group. This can happen from quarter to quarter. As we've noted previously our MSP and MAA attribute.

It lives increase from Q2, and we expect our total number of attributed lives to continue to grow.

Our success in the Medicare shared savings program continued in 2021 performance here.

Across our Acos in four markets. The results on the right that were publicly released in late August showed that we lowered utilization and cost significantly below that of <unk>.

This performance was even better when compared to fee for service Medicare all while achieving an average quality score of 93% across all of our Acos.

In the mid Atlantic region, we operate in one of the country's largest ACO scattering for about 63000 patients in the MSP enhanced track with significant downside risk.

We delivered nine.

Percent in savings, which was the highest rate of all acos across the country with greater than 40000 attributed lives.

<unk> health is well positioned to enter into value based arrangements across the risk spectrum based on market dynamics in each state or.

Our success over the last eight years is key to our collaboration with all of our payer partners that offer value based arrangements across commercial and government programs and.

In fact since 2014, our acos have delivered more than $740 million in total shared savings across all payers, including over $380 million through participation in the MSP.

Using the 2021 MSP performance data Premier House, Acos managed about 113000 patient lives representing over $1 $1 billion in medical spend however.

However, we only recognized our share of the <unk> savings and practice collections and GAAP revenue, which was approximately $63 million.

This underscores the fact that our revenue recognition understates, the breadth scale performance and capability of previous value based care platform.

Our MSP lives were converted into full risk our capitation arrangements than the topline would capture a significant portion of the underlying spend rather than just our share of the shared savings.

I'll ask David to review, our recent financial results and updated 2020 outlook.

Thank you Bart.

Scale of Caribbean helps operating model and our continued business momentum again delivered strong performance in the third quarter of 2022.

Our 27, 2% growth and implemented providers combined with our capitation agreements and solid ambulatory utilization trends.

Led to practice collections, increasing 52, 5% from Q3, a year ago to reach $611 9 million.

<unk> margin increased 26, 4% and adjusted EBITDA was $15 7 million up 12, 9% over a very strong third quarter last year.

Our topline continued to grow faster than EBITDA this quarter due to the new capitation arrangements as well as investments across our business enterprise to support this accelerating topline growth.

At the same time, the operating leverage in our model is clearly apparent as our topline and care margin growth is translating nicely into EBITDA growth.

Year to date practice collections increased 68% over the same period in 2021 to almost $1 8 billion.

<unk> margin was up 32, 9% and adjusted EBITDA grew 37, 6% to reach $46 6 million for the first nine months of 2022.

As noted in the table on this slide we received $62 8 million in cash from CMS on October 11th as payment for <unk> portion of shared savings generated in the 2021 performance here of MSP.

As you May recall, we received the CMS payment in our third quarter last year.

We then share approximately 60% or $37 7 million with our providers for their participation in our success in MSP.

Given our year to date performance and business momentum, we remain highly confident in our updated 2022 financial guidance.

We raised our practice collections guidance to a range of $2 $3 five to $2 4 billion the midpoint of which is a seven 4% above our initial guidance range provided in March.

We also range GAAP, we also raised GAAP revenue and care margin guidance to be at and above the high end of our initial guidance ranges.

Our adjusted EBITDA guidance was increased to a range of $59 million to $61 million.

Mid point of which is an 11, 1% increase from our initial guidance.

Our guidance includes new markets start up costs in North Carolina and Ohio.

As a reminder, we do not add back new market entry cost to get to adjusted EBITDA. Since this is an ongoing and recurring cost of our long term growth strategy.

We expect approximately 90% of our fully adjusted EBITDA to convert to free cash flow with capital expenditures up significantly less than $1 million in 2022.

Our yearend implemented providers guidance is now in the 3660 to 3680 range and our guidance for attributed lives within the 850 to 860000 range.

As part noted we can see slight movement of providers and attributed lives following periodic performance reviews with our medical groups and payer partners.

Importantly, our yearend attributed lives guidance shows that we expected increase from Q3 to Q4.

We remain focused on growing and expanding our business and continuing to execute on our multiple growth initiatives with that operator, we are now ready for the first question.

Okay.

Thank you one moment, while we poll.

Compile the Q&A roster.

The first question that we have today is coming from Joshua Raskin of Nephron Research. Your line is open.

Thanks, Good morning.

Thanks, Josh for the question, yes, it's a combination of both.

That.

Some of the programs may not stand up to our expectations.

And then we need to send them to views on certain actions more importantly, as you can see this doesn't have any financial impact. In fact, we are we raised our guidance on all financial metrics, so pretty minimal or no financial impact in the commercial book.

Which is again in open access product, where we take only upside risk.

And so no material impact to the business.

Josh Yes. This is Sean.

Think about these.

Your peers working through these pod meeting so they've been working with people from time to time when they are not meeting their expectations.

The medical group, but us work together, sometimes we exit those providers are and so forth. So.

And then just a follow up on the MSP.

Rules final here the program changes I'd be curious to get your perspectives on some of the changes.

Let's take some some positive some negatives and then maybe specifically to your MSP payment for payment year 2021 was that above what you had been accruing for above expectations.

Yes, So 2021 performance was above our expectations, obviously, we get data each quarter.

And make the accrual estimates and when.

When we got the final results in Q3, we.

We are above our expectations.

So just specifically on the.

The fee schedule, an ACO type question the <unk> final rule.

We've seen it's net positive for us closely aligns with what we kind of talked about for a few months ago.

These announced conversion factors.

<unk> seen and you'll continue to see I think significant opposition from groups like the EMA in the MGA and we work with these groups.

As we all know Congress has prevented some of these cuts in the past and we'll wait and see how that kind of shakes out but as it relates to the kind of the MSP program, where we are.

Feel pretty good about it very positive impact and we think it's a significant endorsement of the premium model and we work closely with CMS.

All of this and you can see from our results the last this year and the previous years.

We're operating one of the most successful acos in the country actually the number one ACO overlies over 40000 lives and producing the kind of shared savings so.

We feel really good.

About the program and how it is progressing.

Great. Thanks.

Thank you for your question one moment, while we get ready for the next question.

The next question will be coming from July Andre Chang of choose your line is open.

Thank you and thanks for taking my questions and congrats on a good quarter.

Going back to Jos Josh Good question that on MSP program. So can you can you quantify how much was the actual benefit in the quarter and is it all about.

You guys were being deliberate in your savings accrual compared to some of the peers, who have reported some noise because of the <unk> adjustment just help us understand that.

Compared to the euro approach compared to some of your peers and what was actually a benefit for you in the quarter.

Yeah. Thanks, Andrew look I mean, we have a very diversified value based book.

We've stated it's 80 plus contracts across MSS BMA commercial so we're not breaking down results by by any one than what we accrue each quarter.

And then accruals on each quarter, obviously are a combination of performance in the current year based on the data we get as.

As well as any properties with adjustments as you know.

We try and be prudent about what we accrue each quarter based on the data you get and it comes with a lag basis.

Given our depth of actuarial capability across close to 850000 lives in 80 plus contracts.

<unk>.

Streamline process and we just follow that each quarter and go through it.

<unk>.

Overall, we like to be prudent and at a business surprise of rehab.

Hope, it's on the upside, which it was this quarter again, we were not going to get into how many millions for any particular contract. If there is some anomaly that happens.

It is material, obviously, we'll we'll point that out but overall it was pretty balanced.

Great. Thanks, and then my follow up with respect to the entry in Ohio, and North Carolina.

System operating model partnership why do you think these health system arrangements by getting more attractive now versus a couple of years back from your perspective.

The system perspective is it just a function of.

Got it and just hospitals are going to be installed over the function of you guys.

Getting to the scale that youre comfortable with this and this will just be your preferred way to enter additional stats on market in the future.

I appreciate the question. So look broadly our strategy is the same in every state that we go we want to over time over a decade, plus one would be one of the largest medical groups in that state multiple hundred providers multiple 100 locations multiple thousands of attributed lives in all kinds of value based arrangements.

That's a common strategy that we follow in every state that we want to enter we are not looking for some small scale.

To do this so that's number one number two then I think when we evaluate how we enter a state as.

You've now seen our model is very flexible we're privy I can on the medical group. The ACO entity, we can partner with a big medical group, while we can partner with a health system.

We did our first one in 2019, so it's not a new concept to us.

And I think that depends on the dynamics of each state.

You have certain states, where there's a lot of health system concentration a lot of provider groups are.

Affiliated or aligned or employed by health systems overall in the country that will take the study 50 plus percent providers are in that bucket, where they are aligned affiliated or employed by health systems and we think.

Our model with the flexibility to partner with all types of provider groups. All specialties and then more importantly, do value based care across all segments commercial MAA MSB is very uniquely positioned for health systems, you just cannot walk in the door and only talk about full capitation MA as an example, you're just going to walk in the door and just talk.

One particular type of providers. So I think we just evaluate the state by state and if we can get an alliance partner forward leaning.

We establish those relationships the last thing I'd like to highlight is.

This is a decade plus play we're not getting into these arrangements.

Our pipeline is robust and it's pretty balanced so.

Part described the way we enter each one of these different types of examples very balanced amongst those three.

Great. Thanks, a lot.

Thank you for your question one moment, while we prepare for the next question.

Our next question will be coming from Richard close of.

In accord Genuity you can go ahead please.

Yes, thanks for the question.

Maybe just a follow up to that as we think about new markets and implemented providers, how should we be thinking about implemented providers.

In 2023, obviously during.

Yes, the IPO process and you called out Florida here.

Where you added 400 providers I think back to bass were yes.

Had a bolus of providers, obviously, these new market entrants youre starting from scratch. So how should we think about that.

Ramp and implemented providers that would be helpful.

Thanks for the question Richard.

So generically speaking.

You can get implemented providers organically once we enter a market with the sales team and.

And then we have a pretty brought down in each of these new states that we enter our goal is to build 400 500, plus strong medical groups as we've stated in each of the states when we when we enter them.

In some states when we enter with a partnership.

We've opened now we have we're now in 10 states and that leads us to a bigger Tam that our sales team can go inorganically sell into.

So generic <unk>.

So narrowly speaking you should expect.

Without any big medical groups, our health systems that come with a certain number of providers as was the case previously where we sit today you can expect four to 500 providers as what we'd look to add each year organically and then if a big groups, our health system employer groups joined them.

We disclosed that at the right diamond that would be incremental.

Okay, and then can you.

Sort of talk about the same store trends.

And maybe an update with respect to California.

You expect that you had the anchor and the NBA.

And bass.

Our.

Additions going outside of bass.

Yes, so with respect to the first question same store growth has been really strong in each of our locations.

Utilization trends have been really strong.

Grown providers same store in each of the 920 locations that we're in so a combination of those you can see as we've raised practice collections guidance pretty meaningfully from where we thought we would be at the beginning of the year and Thats reflective.

And then with respect to your second question.

We are often running in California. The sales activity is really strong it's a very big state Big Dam.

Really excited and we've started selling and.

Implementing new providers and they will happen over the course of the next few years and we look to build a pretty big medical group there as we as we originally intended.

Thank you.

Thank you for your question one moment, while we prepare for the next question.

Our next question will be coming from Lisa Gill of Jpmorgan. Your line is open.

Hi, Thanks, very much and thanks for taking the question I just wanted to go back to a comment that David made in his prepared remarks around both new capitation arrangements as well as investments can you maybe just give us a little more color on each area of one how big are each of these when we think about a little bit of a headwind and then secondly.

Like what types of areas are you investing in at this point.

Thanks for the question Lisa.

So look again on the capital book.

Last quarter, we were accruing medical expense equal to revenue.

No contribution this quarter, you'll see we've booked a little bit less medical expense about a couple of hundred thousands and nothing meaningful but we see some good good trends initially and again as we stated in our last earnings call that we will continue to get data and then hopefully update that as we close out the year.

So obviously that book is not contributing much towards.

Cash margin and EBITDA as a result, but we hope that that accelerates going forward. So that's a source of investment as we get into capitation and that'll happen. If we enter into new capitation programs, starting next year, if and when.

That's an area of investment the second is obviously as we are entering new markets.

As you understand where the business model, we launched the sales team launched the implementation theme and so thats obviously.

A drag on near term EBITDA contribution because we are actively selling implementing providers. Once they are implementing that's when the contribution.

Offline contribution starts to happen, we don't add back those costs to adjusted EBITDA, we consider them ongoing operation. So our updated guidance of $59 million to $61 million include those costs in.

And this year end and that'll be there going forward into next year as well.

And just going back to your comments about the two new markets, both North Carolina and Ohio.

The fact that youre starting from scratch there. So should we think that there'll be incremental investments in 2023 as well to get to that goal of four to 500 providers in those markets.

Yes, that's correct and then the first couple of years, you should expect those markets will generally be a drag on EBITDA and so that'll be in its operating expenses.

Pretty much in sales and marketing and implementation like I just said.

As you know our model is very capital efficient.

So we don't expect any capex investment that's going to be operating cost in the low single digit millions is currently the case, depending on the size of the market.

See some of that but we take that enables us to go in an accelerated way and big <unk>.

<unk> some of these big medical groups.

Okay, great. Thanks for the comments.

Thanks Louise.

Thank you for your question one while we prepare for the next question.

Our next question will be coming from Ryan Daniels William Blair. Your line is open.

Yeah. Good morning, Thanks for taking the question wanted to dive again, a little bit deeper into the health system partnerships can you talk a little bit about how the relationship progresses over time in regards to how you recruit providers is that kind of a joint marketing effort and you can leverage their brand equity in markets and how much is on previous view that recruiting versus.

The health plan assisting in that sort of the health system.

Hey, Ryan.

Hey, Ryan Sean Yes, I mean these are these are true joint venture partnerships. I mean these are health systems are spinning these communities for.

Decades, multiple decades, they know that providers pretty well we're coming in.

As the lead partner and owner of the joint venture.

So you think about it I mean, 50% 60% of the providers today are in health systems and this is a very Mario we've talked about in the past very attractive market opportunity for us and we think we're uniquely positioned as that strategic partner with these health systems to redefine kind of how they move into their kind of future position <unk>.

<unk> strategy, and then more importantly, how to transition.

Existing as well as these new community doctors into new medical group.

Kind of the future value based care models and as Mark mentioned and as you know we've been this is not a new we've got a lot of experience doing this in Florida and is in there.

I mentioned earlier.

As a part of our pipeline going forward and I think these.

These forward leaning health systems are really looking for a partner to kind of bring one haven't different types of relationships with the community.

Positions without having to go buy them.

Okay, and then as a follow up I wanted to talk about the existing book of business and as you talk to your implemented provider partners and I'm curious if their appetite to move towards more risk in value based contracting has increased especially if we stare down a potential recession, there could be some impact on fee for service volumes or utilization.

<unk> is that increasing the appetite and kind of actually a potential accelerant for your business going forward. Thanks.

Yes, Thanks, Brian look I think it's a very balanced approach that we take and our providers have appreciated that balanced approach.

Taking risk does not necessarily as you have seen and know translates into.

Increased profitability, even at the provider level, sometimes that is called risk for a reason.

It is just.

It depends on the markets. We are in the majority of those markets majority of our groups our relationship with the payers I think providers in general want to be thoughtful and in our model as you know we go at risk with them $60 40 up and down when we take risk we're not backstopping risk.

And that is important to get a very.

Hey, good provider alignment and I think that bodes well for our shareholders as we take that risk that providers are fully aligned and the goal is to.

Portfolio do it over time.

Specially during times of recession.

Don't want to do artificial things you don't want to do anything stupid, then jump into risk when youre not ready. So I think we continue to take a balanced approach our focus on both FIFA service and value based we think resonates much better with provider groups in these times.

Whenever we have seen some financial stress whether it was during COVID-19, whether it's during recessions.

Tend to generally benefit the interest in the model tends to grow as provider groups realize that they need a strong partner like ours for the entire book of business for all providers in that location.

And a partner that can offer everything and not just go solve one particular problems. So I think we're seeing a lot of momentum as reflected in our financial performance is reflected in our guidance and we continue to see the growth algorithm of the business continue.

With existing provider basis, and then with all the new discussions we're having in these states.

Okay.

For your question one moment, while we look to answer the next question is.

And our next question will be coming from Sandy Draper of Guggenheim. Your line is open.

Yeah.

Thank you very much Mike.

Question is I guess, a little bit related to Ryan's question that from an inflation standpoint, I guess too.

Thoughts one.

What are you seeing in terms of just your own internal wage inflation for staffing whether it's at the corporate level or also.

At the.

Princess practice support level, but then also thinking through longer term as we see this wage inflation does that Nate providers potentially want to partner more with you guys and Keith can you help them solve some of the staffing issues because of your technology or platform.

And does that potentially make them more want to join you more just thinking about the inflation impact versus the recession impact. Thanks.

Yes, thanks for the question Sandy so on the <unk>.

First one we witness what most other companies witness again, we have.

Pretty diversified employee base across multiple functions.

Given the book of business, we have.

And I think the demand increases for us from a provider base as I just outlined on my in my answer to Ryans question.

So hopefully that abates, a little bit and we are the preferred employer of choice as.

As future.

<unk> see.

One a strong company to work for the regular session times that is not laying off and it's growing so I think it will hopefully be a net beneficiary there and in terms of your second question totally agree I think again any financial stress on the doctor's practice, whether it's top line related.

Reimbursement model changes labor cost related so that squeezes profitability and ultimately take home pay burner.

Benefits us.

When we go out and sell.

Very ROI driven approach, we take all of that data and we.

Financially demonstrate the impact on that take home pay for each.

Our partner in a particular practice.

And Thats, a net of both topline and bottom and expense.

And so our ability to impact on the expense base, whether it's better technology stack better productivity.

<unk> them not spend the time that they were doing previously with Payors.

And then making the practice more viable all bodes well for us and I think it's important that we do it across the book of business a lot of the practices. We get into today are predominantly people service. They are looking to transition into value based care and so the immediate need is to solve what they have today versus.

Go head on into risk as an example, so again it bodes really well for us and we continue to see a lot of demand and it is okay.

The first part of your question, we all realize my take home pay salary and benefits are all part of kind of a.

Of an employees.

Package, but really experience work experience participating in a company that's growing and exciting.

They're helping us build our culture and.

We work hard I'm, not saying others dealt but we work really hard with our each one of the Caribbean and the company to kind of be a part of that.

Maybe like Bart said, we're growing and we think some of the stuff benefits and other companies are of shutting off employees.

Great that's really helpful.

It may be.

One follow up unrelated follow up.

Obviously in the Indian envious position now where you don't have any debt so interest rates interest rates actually going up.

You can actually make some money on your cash, but thinking about you don't have debt to pay down.

Youre doing partnerships, but an amazing thing is you're not having to commit lots of capital and there is some expense your capex is a big.

The only thing that would leave us just build cash balances.

Possibly acquisitions that youll be able to grow without that is would you ever consider the other obviously I'll turn it over to be some pointed to share repurchases come into consideration for the board.

The uniqueness of the model.

Yes, Thanks, Andy for the question look.

I think we are in a very strong position.

<unk> as the macro environment deteriorates.

Given the business model given the demand increasing.

And we are very conservatively positioned from a capital structure perspective.

I think it's very important.

To our physician partners to our health system partners that the counterparty that they are interacting with.

And partnering with from a long term basis is a very stable counterparty I think thats often less appreciated in this business.

And so we think there is a very good sleep at night bucket.

Because provider entities, taking risk while theres no regulated capital.

As you know, it's called risk for a reason and Hurricanes happens pandemic happened. So I think our capital position really gives a lot of credibility to us when we speak with new prospects both in existing markets and new markets. So that's number one and I think we continue to have a pretty pretty substantial buffer with respect to that bucket number two is growth.

Given the Tam that's available to us.

Last quarter, we said we're in eight states 42 to go we're in 40 States. We're in 10 States 40 to go now and I think as you've seen us deploy some capital.

With the bass deal in California, and other places will continue to use some of that capital to enter new states and thoughtful ways smaller is preferred for us.

And then obviously.

If there is anything large to do will again, we'd like to take advantage of the macro environment in distress and and see what's available in the market and do it thoughtfully and then finally again, we have the flexibility.

The stock price DVS pretty meaningfully from intrinsic value.

Very good free cash flow as you've seen we've guided to about $55 million of free cash flow at the midpoint of the range. So we've continued to do that and see how it goes.

Great. Thanks, so much and congrats.

Thank you.

For your question one moment, while we prepare for the next question.

The next question that we have is coming from Whit Mayo of VB. Your line is open.

Yes can you talk about the AAR days in the quarter they increased.

Some of the dynamics there.

Yes.

That's the Big reason, we put that pro forma cash number in there. Unlike last year, we didn't actually get the.

CMS cash until October so the AAR days are up right now and obviously as soon as we get that cash is going to come down by AI is going to come down by 63 billion on the 11th of October . So we put that in there to try and hopefully show a little bit better guidance quarter versus quarter since CMS paid us in the last week of September last year and decided it.

In the second week of October this year. So we're trying to kind of bridge that gap. Okay. Perfect. That's good that's what I thought.

Second question, just the implied fourth quarter revenue guidance seems to suggest that you'd be down versus the third quarter normally you're up sequentially. So I don't know maybe help me understand some of the assumptions or factors that are driving your views there.

Yes, thanks with I mean, it's similar to what we said last quarter.

We see we've seen really good utilization trends.

Across our book really strong utilization in pediatrics, which is about 300 providers out of.

<unk> 600.

And.

Again, our view is we are prudent with our guidance if those trends continue in Q4.

So pretty broad range that we gave for the last quarter of the year.

Again, we're hoping that happens then youll see some upside.

But we'll see how it plays out.

But hopefully it should follow last year's trends, we don't have any reason to believe that that should not but again utilization has been just hard to predict.

Again on balance our approach is if we are wrong theres upside versus downside.

Got it so maybe to put words in your mouth.

If I look at just the fourth quarter guidance or the assumptions still effectively the original assumptions that you use.

Into this year I, just wanted to make sure I'm thinking about how you've seen it.

It may be adjusted from for March.

I mean, we've updated obviously our original guidance the high end of the range was $2 2 billion on collections.

You can see the high end of the range is $2 4 billion, that's a pretty meaningful move.

Within within three quarters.

So I think we've updated some but again, we'll see how utilization plays out over the next.

Two months in how we close out the year end.

We'll see where we are.

Fair enough thanks, guys.

Thank you for your question in a moment, while we prepare for the next question.

The next question is coming from David Larsen of <unk>. Your line is open.

Congratulations on a good quarter.

And that had a significant impact on their P&L.

Like how current is that data like.

Are there any adjustments that might need to be made going forward and I'm, assuming you're doing well and your shared savings programs right. Thank you.

Yes. Thanks for the question David look I mean, we we get the same data I hope as others cant speak for any of our peers and when they get data and what they do with it.

But CMS, usually I'm, assuming since data out to all the participants around the same time in the same format.

Very standard process.

And our relative performance.

Performance versus our peer assists shows for itself.

Really strong actuarial data science capabilities I think it's a core strength of the company.

You should expect any company that is in the business of taking risk on the provider side to have those capabilities.

We've always said, it's called risk for a reason you.

Do you need to manage risk.

And we do that through better actuarial capabilities data science capabilities operational capabilities.

And I think Thats our guidance.

Updated guidance. This reflects that so we've taken all factors into consideration.

As we as we sit here today. So we haven't seen any impact that you might be alluding to with some of the other companies, so, but obviously can't speak for them.

Okay, and then just one quick follow up for the <unk> revenue Easter positive EBITDA year to date for that line of business and then what exactly is calculated revenue everything is some form of competition I would think whether it's budgeted cap our direct comp are those direct contract models or is it commercial revenue.

Just any more color there on a year to date earnings would be great. Thank you.

Hey, Dave I'll answer that last part with Sean.

Remember these are the Medicare advantage was through the three different arrangements, we have take various levels of risk in there that kind of move on to the calculated arrangements now I'll, let david speak to them.

The dollar amounts of it.

Yes, so again for the quarter we had.

$55 million of revenue and we did have about $170000 and youll be able to see this in the queue.

From looking at a couple of different pieces of information, but we didn't up having our $170000 of positive care margin.

So we are trending I would say.

The positive again.

I would say taking a very measured approach as we do with all of our value based care and especially with this being newer book of business for us.

We're just being very measured in how we're evaluating these with the data that we receive.

Thanks very much.

Thank you for your question.

While we prepare for the next question.

The next question will be coming from.

Kashi.

Phillips of Jefferies. Your line is open.

Hey, this is Brian <unk> from Jefferies. Good morning, and congrats on the quarter.

Yes, Sean as I think about there's a bond deal for example, right I mean.

Or is there still a lot of deals of that size in the market, where the hospital systems, Alright partner together arent really in discussions with.

Other value based players.

Is that sort of the way we should be thinking about your expansion strategy for new contracts or new partnerships more focused on the larger.

Our system groups going forwards.

Yes, I don't know that I would.

If you look at a larger but most of the health systems are very large.

Kind of.

These health systems are looking for someone they like the previous model, it's capital light. They they see the results just like you see in the market sees how we're transitioning in a really thoughtful way to value based care and a lot of these own and employ a big Big group.

<unk> this.

This is not doesn't mean, they want to shed these groups solved but they.

Every health system that youre going to talk to in the country with like they're employed providers.

Paul here employed providers to perform better and they want to they want to have a different relationship with the community docs.

And without having to go out and continue to use their balance sheet and ongoing.

Cash flow to support these and subsidizes community doctors, so I mean to think about hey look at the premium model, it's capital efficient it actually gets results, it's very thoughtful in how they transitioned to risk and we have great relationships and NPS scores with our doctors and if you're a health system you look at that and say well there is a model.

There that helps me for the next five to 10 years and I want to be part of that so we think this is a huge opportunity out there for us.

Alright got it Thats all I got thank you.

Thank you.

Thank you for your question one moment, while we prepare for the next question is.

And the next question is coming from Adam <unk> of Bank of America. Your line is open.

Hey, Thanks for the question.

I feel like a broken record asking about this every quarter, but it sounds like a lot of the revenue outperformance year to date is related to.

Excess fee for service utilization and physician practices that youre, referring to.

No.

First of all what what about utilization makes you think that it.

Should we technically be saying that all of this revenue outperformance is now a headwind for next year, if it artificially elevated.

Yes. Thanks for the question Adam So first of all the outperformance happens both in fee for service and value based books.

It's a combination is just not fee for service.

<unk> is I think predicting the utilization out of Covid has been tough spell.

Especially as we went through the last 18 months and added.

The number of providers that we did.

All new providers, including our entry into California.

When you add.

1500 providers. They now 18 months 24 months period through Covid, the legacy data that we get.

It's very patchy.

On a same store basis.

<unk> are coming back into seeing their physicians and so forth and.

Our general view is ambulatory utilization as go to utilization.

Patients in the community seeing the primary doctor, whether its a pediatrician Ob primary care.

Those are all good things you need to see.

For managing the population.

We don't think this will be a headwind I think it's just the baseline that is getting reset.

From the Covid periods of 2021 through the variance and so forth depending on the state.

And so I think our patient panels are getting pretty full.

We're adding providers on a same store basis to take market share and and we think both of those bode really well for US I think it's just resetting the baseline here and there.

There is no reason for us to believe why ambulatory utilization for in the community doctors.

Should go down.

Bob.

It doesn't work the same way as inpatient utilization, where you got to get a procedure and once the procedure is done you're not going to get it in there with some Latin demand I mean this is.

This is for general.

Primary care type visits as Ian as you can imagine.

Got it that makes sense.

Then separately.

Tangent.

CMS updated its white paper and value based care and they were talking about.

Our focus on creating accountable arrangements for specialists and I'm pretty sure you have a lot of specialists.

Good practice to therapy, you could remind us how many specialists are are implemented today.

If youre in any similar value based arrangements.

Sure.

If that makes sense and it move into down the road.

Yes general high level breakdown of out of our implemented providers you can think of.

65% is.

What we call tier one or <unk>.

Primary care providers in that definition is pretty broad for us.

Family Medicine internal medicine primary care, but also obgyn speed edition, so somebody who is the primary point of contact for anybody in the family and then <unk> five percentage, especially but even there. Our focus is on folks that are taken care of the chronically ill endocrinology pulmonology so forth.

We do have certain.

Cardiac ortho Gi.

But again, our focus is on folks that take care of the chronically ill and so again from our perspective, they have different value based arrangements. We do do some bundles in our southern small way today.

I think.

The next wave will be how we do specialty focus value based these programs will evolve over time, but we think we're positioned well to participate in those as the case, maybe hey, Adam. This is Sean think about just how are you.

You should consider us building a multi specialty medical group, we're always going to be primary care focus thats, where the attribution comes from but.

You should see US we're building multi specialty groups that are always going to be primary care focused.

Really appreciate it thank you.

Thank you one moment, while we prepare for our last question.

And our last question will be coming from Jessica Hansen Piper Sandler.

Your line is open hi, Thanks for squeezing me in so.

Just wanted to focus a little bit on MSP.

Is that 9% savings rate in the mid Atlantic something that you guys look consider a repeat of all of that.

For the other less mature acos.

Our with Destiny, there may be non repeating.

<unk> 2020, one benchmark that allows you to achieve kind of that level.

Hey, Doug. Thanks for the question look I mean, we've achieved that in mid Atlantic for over 9% for two years now.

2021, 2020 in 2021.

Each market is different the underlying benchmarks different population cohorts are different.

I think this demonstrates in an open access type product that MSP is that.

That you can get to close to double digit savings rate I think we'll continue to do.

Chip away at it and fine.

And to do better.

As we always do and then other markets hopefully can follow that path, but again the savings rate is a function of multiple variables whether.

Whether we will be able to achieve the same level just remains to be seen but again I think all other acos are at a much more immature stage and so we're hoping to move up from where we are today.

We get into enhanced track and stock performing in them and build a bigger attribution basin and understand that population cohort better.

Got it.

Makes sense and my quick follow up is just on.

In it.

Open access products.

So for your whole Cath lab is that 9% kind of a fair way to think about where the threshold might be over one or two or maybe three years.

Performance.

Yes, I think it just depends.

If you do that in April capitation.

And when you have more control on the patient.

And how you take care of the patient you are taking more risk.

Got it thank you.

Thanks, Jeff.

Thank you that concludes the Q&A session I would like to turn the call over announcements Tomorrow you may continue.

Closing remarks.

Thank you for listening for our call today, <unk> capital efficient integrated delivery care model.

Already running at scale and has significant momentum and the position of the bond market as we support all providers in all patients across all reimbursement models, we look forward to continuing to execute at a high level throughout the remainder of 2022 and for years to come. We appreciate your continued interest and support for our company and we look forward to speaking to you again soon.

The rest of your day and happy Thanksgiving.

Thank you all for joining today's conference call you may all disconnect and have a great wonderful day.

Q3 2022 Privia Health Group Inc Earnings Call

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