Q3 2022 CareMax Inc Earnings Call
[music].
Good morning, My name is Chris and I'll be your conference operator today.
This time I'd like to welcome everyone to the <unk> third quarter 2022 financial results.
Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
To withdraw your question. Please press star one again.
Thank you Samantha Swerdlin, Vice President of Investor Relations you may begin.
And good morning, everyone welcome to <unk> third.
Third quarter 2022.
And Anthony <unk>, Vice President of Investor Relations and I'm joined this morning by Carlos our.
Our Chief Executive Officer, and Kevin Horgan, our Chief Financial Officer. During this call we will be discussing certain forward looking information.
Forward looking statements are based on assumptions.
Made by <unk> management.
Their experience and assessment of historical trends current conditions expected future developments and other factors they believe to be appropriate.
Any forward looking statements made during the call are made as of today and Cemex undertakes no duty to update or revise such statements whether as a result of new information future events or otherwise important factors that could cause actual results developments and business decisions to differ materially from the forward looking statements are.
It's in the company's filings with the SEC, including the section entitled Risk factors in.
In today's remarks by management, we will be discussing certain non-GAAP financial metrics. A reconciliation of these non-GAAP financial metrics to the most comparable GAAP measures can be found in this morning's earnings press release with that I'd now like to turn the call over to Carlos.
Thank you Samantha and good morning, everyone and thank you for joining our call today.
Pleased to report that we delivered another quarter of solid results demonstrating the consistency in our operating model and continued execution of our strategy revenue growth was strong with revenue up 51% year over year.
Medical expense ratio improved to 75, 2% from 75, 4% in Q3 last year.
Notably any honor centers for the first nine months of the year remains below 70%.
Adjusted EBITDA grew to $9 2 million for the third quarter up from $1 2 million for the prior year.
We ended the quarter with 39500, Medicare advantage members up 49% year over year.
This growth exceeded our expectations, which is a testament to our differentiated care model and the value we provide to our members.
As a result of our continued momentum we are raising our full year revenue outlook, which Kevin will provide some detail on shortly.
We continued to see strong performance on the operational side, we put tremendous effort into ensuring members across our care Max family.
Access to consistent high quality care.
Are there initiatives this quarter, we expanded specialty offerings at our newer centers and we underwent an extensive physical rebranding across our footprint to enhance our one carrier Max value preposition ahead of the annual enrollment period.
These efforts are already paying dividends with 92% of our patients already seen as of September and our overall stars rating tracking well above four stars.
Earlier this year, we began opening centers outside of the core Florida market by expanding our presence to Memphis, and New York City.
We now have four centers in New York and are seeing encouraging results.
We've already surpassed our membership goals and now have over 600 patients. Thanks to strong organic sales from our team and hiring of PCP with deep roots in their community.
We also recently launched our clinic dental offering providing much needed access to dental care services for Medicare advantage Enrollees in New York City.
We believe that the addition of this offering will be highly attractive to seniors and will serve as a key point of differentiation from others in the market.
Lastly, as a reminder, we recently opened our east Flatbush location in collaboration with <unk> Health and we are working together to grow membership.
We look forward to building on this strategy as we expand to additional communities across the country.
I'd like to provide more details on the pending Stuart closing in a moment, but first let me provide an update on our pilot in the space coast of Florida.
Recall, our space growth strategy was established to demonstrate the transition of stored value based care physicians to <unk> platform.
We've begun rolling out some key initiatives in the pilot, including conducting clinical training sessions for our PCP and care teams deploying additional coding and quality resources, providing prioritized list of risk stratified patients and distributed weekly updates to market leadership.
As a result of these initiatives, we have already seen over 75% of members.
Have identified opportunities to close gaps in care and site corresponding reduction in emergency visits and hospital admissions base.
Based on the encouraging results we've seen to date, we plan to expand our de novo in the space coast market to complement and enhance the services already provided to the Stewart network.
Similarly, our recent opening in Houston also supports our future de Novo growth plans in connection with Stuart.
Finally, I am excited to announce that our stockholders overwhelmingly approved the issuance of stock in connection with our pending acquisition of stored value based care at our recent annual meeting.
Transaction is expected to close properly.
We believe this transaction will be transformative to healthcare delivery, providing us with a scale to deliver value based care throughout the country.
Upon closing the transaction our network will expand to approximately 2000 providers and 200000 senior value based care patients in 10 states across 30 markets.
Moving on to our integration plans.
Hosted numerous town halls with steward physicians.
Providing education and resources designed to ensure they are successful in deploying a value based care.
We have plans to begin collaborating with Stewart physicians to develop sales strategies for the ongoing AEP.
Assisting them in scheduling annual wellness checks for their patients and working with them to close gaps in care through the remainder of the year.
Through our engagement with these providers, we've also begun identifying which provider groups makes sense to move into the hybrid models. As a reminder, hybrid locations will vary depending on the physician practice, but will resemble our care Max Center model. We believe these centers will require much lower capital intensity.
Then a de novo location, as we anticipate being able to retrofit existing space.
We believe hybrids will be able to generate mature contribution margins in excess of 15% and we already have a pipeline of these potential opportunities. We've also accelerated our hiring efforts, bringing on an additional 70 individuals.
<unk> positions, such as quality coordinators care managers and provider relations managers among others.
Further we have staffed every new market with leadership and recently hired a new Chief Digital officer.
With these additions we are confident we have the right talent in place to execute on our integration and growth plans.
On the payer side, we are already making good progress in preparing to transition a portion of the steward Medicare advantage fee for service lives and new Medicare value based care arrangements. These are on track to be effective at the beginning of 2023.
We are encouraged that our payer partners have been highly receptive to aligning with us on our strategy as they look to shift more of their business into value based care arrangements.
Recall that following the closing of the Stewart transaction, we will have access to an additional 380000 MA fee for service beneficiaries and we believe that we will eventually be able to transition a portion of those patients into risk based arrangements.
Since we founded <unk> and establish our whole person health model, we have taken an innovative approach to building our proprietary system, which blends targeted technology and comprehensive high touch care and in turn drive our strong results.
We remained very deliberate about our growth plans and believe that our hybrid delivery model of a capital light NSO combined with our high performing centers differentiates us from others in the healthcare industry are national MSL expansion plans are designed to provide economies of scale.
To allow our business to grow in a capital efficient manner.
Once we've identified markets with significant opportunity for success, we plan to strategically deploy de novo's and areas in which we already have MSR membership density and strategic relationships.
We believe this strategy will reduce the initial cash burn we would otherwise have entering new markets without established patients and will accelerate the timeline to profitability.
Our core business continues to deliver robust results is a testament to our best in class model and the value we provide to our patients.
We believe our acquisition of stored value based care will be a transformative milestone for us.
Firmly establishing our industry leadership and creating a pathway for care Max to further integrate value based care into the healthcare delivery system.
With our presence in multiple markets across the country, we will be able to bring critically needed healthcare to seniors, providing better outcomes reduce cost and improve quality of life.
We look forward to realizing the benefits of the Stewart acquisition and leveraging our experience in managing at risk populations to drive sustainable growth and enhanced value for our stakeholders.
Before I hand, the call over I'd like to take a moment to recognize our team in responding to hurricane Ian.
Through their efforts, we were able to ensure the safety and security of our team members and patients.
While we only operate a few centers in the impacted areas, we were able to remain operational during that time.
Further our team went above and beyond to support our colleagues who were personally impacted by the storm. There are constant hard work and dedication enables us to deliver on our mission of providing health care with Hearts.
Two seniors with that I will turn it over to Kevin to provide greater detail on our third quarter financials.
Thanks, Carlos and good morning.
We delivered another strong quarter again, beating internal targets on membership revenue and adjusted EBITDA.
As a reminder, you can find a reconciliation of our GAAP to non-GAAP metrics like adjusted EBITDA in our press release and earnings presentation.
Total revenue for the third quarter was $158 million up 51% compared to the third quarter of 2021, including 60% growth in Medicare risk revenues.
Saw healthy member growth quarter on quarter across each of our Medicare Medicaid and commercial lines of business.
Since becoming a public company last year.
We have nearly doubled our Medicare members to 39500 as of September already surpassing our initial full year guidance and on track to exceed 40000 by year end.
Due to this continued growth we are increasing our full year revenue guidance.
$80 to 600 million to $600 million to $620 million.
Between our core organic sales de novo expansion and NSO growth, we remain confident and sustained momentum across our multi pronged growth strategy heading into 2023.
Other revenue was $16 million.
More than double from Q3 last year.
As a reminder, among other things other revenue includes capitation and surplus sharing from patients we don't take full risk on.
In Q3, we recognize retrospective revenues related to strong performance under certain partial risk contracts.
Absent other true ups for modeling purposes, we would expect this to normalize to roughly $10 million in the fourth quarter.
Medical expense ratio was 75, 2%, reflecting continued mix shift towards <unk> patients.
As we've noted on prior calls we believe our platform is uniquely equipped to achieve attractive medical margins across the spectrum of value based care from patients seen at our clinics to those seen by providers and our MSL network.
And this all patients typically come with higher MBR little incremental opex, making them not just a capital efficient way for us to grow but also in established pipeline to absorb exceptional providers into our clinic model.
And these are consolidated MBR, we are pleased that our year to date MBR at our centers remains below 70%.
As of quarter end, our platform contribution margin reached its highest level this year.
Even with the additional cost incurred from the three centers opened in the quarter.
Other expenses, including cost of care sales and marketing and G&A were approximately stable from the second quarter as we continue to find cost efficiencies to help fund our investments.
In the fourth quarter, we have opened three more de novo's, bringing our total center count to 54 and are well on our way to ending the year with 60.
As Carlos noted we are already starting to see the fruits of our strategy in New York, where we believe our collaborations with <unk> and the related companies give us a differentiated advantage, we look forward to creating further value from these key relationships in our new store markets.
Adjusted EBITDA for the third quarter was $9 2 million.
Bringing year to date, adjusted EBITDA to $24 5 million and keeping us on track for our guidance of $30 million to $40 million for the full year 2022.
Our base case is to lend approximately around the midpoint of the range.
<unk> factors that leave room for both upside and downside.
Seasonally in Q4, we tend to see more patients hit stop loss deductible levels and the Medicare part D limits.
Members May also hold off on certain electric procedures around the holidays.
These factors would have a favorable impact to MBR compared to prior quarters.
As an offset we expect to continue to grow our MSL base with near term dilutive impact on margin.
The additional marketing spend to capture membership during AEP and continue to invest in corporate overhead to support our growing platform.
At the end of the third quarter, we had $53 million of cash $184 million of debt net of unamortized discount and $110 million of undrawn delayed draw term loans with.
We subsequently drew down $45 million from our delayed draw term loans to fund the Stewart acquisition and expect to take on incremental debt to finance towards 2022, Medicare shared savings receivable in connection with the closing of the transaction.
Further details on any financing entered into in connection with the closing of the Stewart transaction will be shared upon closing.
While we plan to provide more formal 2023 guidance on our fourth quarter call I do want to Orient our audience Directionally on the moving pieces in our business.
First we expect our core <unk> business to continue to grow in membership revenue and adjusted EBITDA.
Remember this represents the 45 centers, we began the year with which excludes losses from de Novo's open this year and beyond.
We believe there remains ample growth opportunity and even our most mature markets.
Our core centers still have capacity to grow membership by more than 50% and overall Medicare advantage penetration in central Florida is still below 60% compared to over 70% in South Florida.
Second we plan to continue executing on our de Novo growth strategy next year.
Stewart acquisition allows us to be even more selective when determining which sites to open.
We have a pipeline of approximately 10 de novo's and 2023 that we believe can leverage our complementary relationships across either Stewart elements related or a combination.
The upcoming space comes to Novo's and hybrid opportunities Carlos alluded to are a great example of this.
Our highly strategic approach towards de Novo's as the foundation for growing our business in a disciplined capital efficient and sustainable way.
Third as our party statement indicated we believe Stuart has the potential to be meaningfully accretive to adjusted EBITDA.
This not only adds further cushion to support our financial leverage but also allows us to make the necessary near term investments to transition Stuart Medicare lives to value based care.
By empowering Stuart's 1800 MSL providers.
Take risks on patients and aligning their economic incentives with ours, we think PM TM margin on Stuart's BBC beneficiaries can ultimately look a lot like <unk> today.
With this transaction, we believe we have the right team and the expertise to positively impact the wellbeing of hundreds of thousands of seniors and potentially bring a $100 million plus EBITDA opportunity to fruition along the way.
Operator, we will now open it up for questions.
Thank you.
As a reminder, if you would like to ask a question. Please press Star then one on your telephone keypad.
Our first question is from Andrew Mok with UBS. Your line is open.
Hi, Good morning, Alright, perfect external MLR was up about 160 basis points sequentially. I think previously you said that MLR is expected to improve due to a patient's hitting their deductibles on stock loss and prescription drugs. So what were the developments in the quarter that for.
The expected improvement in MLR.
Hey, Andrew it's Kevin.
Yes, so there's a couple of factors one if I take you back to where we target MLR, specifically for our clinics, which isn't that sub 70% range.
That's that's the important component for the clinics.
And our MSL business, our targeted <unk> that we're achieving is that 85%. So as we grow our MSL business at a faster clip faster than we had anticipated.
We could expect to see some of that deviation on the MBR nothing within our clinics.
We've said on the call and as we've seen in the data our 2022 year to date MBR within our clinics are still at that sub 70.
So this really pertains to the influx of new patients that were getting them on the MSR side.
Got it are you able to share that MSR membership with us seems like that's an important driver to understand the changing shifts in the P&L.
Yeah.
Yes, I think thats something that we could sure sure.
Okay great.
And then year to date you.
<unk> about $5 million of Capex for nine clinics opened so far and 15 targeted this year first is that Capex outlay, the right way to think about the capex requirement. So additional clinic openings and to the extent that some of those opening costs are financed by strategic partners, where exactly is that being charged.
That gets you on the P&L.
Great question.
Yes, so from a from a capex standpoint, I think early on when we look at that as Novo strategy, we were targeting a $2 million to $3 million range per clinic, Florida, Capex, while we've been able to do is find tenant financing landlord type financing for those build outs.
And so what you'll see is a lot of that is going to be within our rent expense going forward. Once those clinics are opened.
So.
It's on a clinic by clinic basis, as we look at where we're opening but we're always going to be strategic and attempt to open. These clinics in the most capital efficient manner.
Yes, I'll just add to that we do expect to see a significant reduction in that capital outlay, both on the Opex.
And Capex.
Specifically due to the Stewart transaction as we start opening up centers in collaboration and open up either either tuck in receipt of de Novo is that already have membership and some of them are already retrofitted and very large locations as we discussed at the beginning of the call.
Got it that's helpful and then Kevin towards the end of the prepared remarks, you made a comment that patients may hold off on procedures around the holidays, which could help Q4 MLR I think most people running afcs are expecting an acceleration in procedure growth into Q4. This year. So just curious was that were there any hard data points.
Or anecdotes that you're hearing about whats driving that comment or is that just something.
It's more speculative that could happen around the holidays. Thanks.
Yeah. Thanks, Andrew Yeah, that's based on historical data that we've seen.
For the last 10 years and running the clinics on here in South, Florida, we have seen that most folks just don't like to do procedures during the holidays and so they will.
Those types of procedures tend to slow down in Q4.
Got it a procedure as procedure growth up sequentially as were in Q4.
I'm sorry, what was the question again.
Total procedure growth up throughout the whole quarter.
<unk> holiday than non holidays is that usually up sequentially in Q4.
No it's not none of the data that we're seeing.
Okay. That's helpful. Thank you.
Yes.
The next question is from Brian <unk> with Jefferies. Your line is open.
Hi, good morning, and thanks for taking my question the deposit on for Brian .
So my first question just has to do is related to your guidance.
For EBITDA.
Trying to understand the seasonality of the business and.
In directional.
Insights you can share on your EBITDA given that I'm.
Tracking.
The range between $15 million and 5 million so any.
And thank you for sure for modeling purposes.
Sure. Yes. So we are targeting are our base case since the target the midpoint.
That range seasonality does play a factor in Q4.
For the factors that we mentioned, which are the stop loss of about <unk> pay.
Patients typically not wanting to have those elective procedures during the holidays and then also the part D limits as folks begin to hit the donut hole.
That cost tends to shift around.
Less cost that flow through to the risk bearing providers. So those are all the favorable impacts that we would expect to see from a Q4 standpoint.
The other items are the other offsets that we would expect this year just as we continue to grow this base of our Msos side those patients tend to come in with pretty high.
Initially and so as that becomes a larger.
Percentage of our business, our overall book of business it could deteriorate, the MLR or at least bring them back into something that could be more realistic with Q2 or Q3.
And then in addition that we do have some marketing spend that we're going to do for AAP.
And we do need to invest in the organization ahead of the Stewart acquisition.
Great. Thanks for that information and then just going back to your comments around your hybrid model versus the de Novo clinics, but can you just discuss what informs the decision to transition to more of a hybrid model that youre discussing versus a traditional de novo and also.
If possible quantify how youre expecting this to.
Shift or accelerate your pathway to positive free cash flow.
Yes, so the decision to go into a hybrid model is.
Specific to the practices that we're working with when we think about a hybrid model, where usually targeting larger group.
Groups or provider groups that have a greater competencies right. It's not your typical one or two physician group. These are groups that have physician specialist in many cases, even have lab.
Diagnostics to what we generally do with these providers and what we are doing.
We're building out within their facility.
Effectively a senior center and branding that Carmax.
And operating very much like what a de novo or.
<unk> Medical center it looks like so that's very much dependent on <unk>.
Practices that we identify and then on the other practices right. We if we have an area that has significant density with smaller providers, that's where we would elect to build a de novo and then fill those in with what we call Aqua hires in those specific positions that have grown significant panels and then the ones that don't.
Don't shift over to a de novo those will remain.
As a productive NSO or IPA and our group model and the idea. There is this is a capital efficient way to grow our business in that and specifically in the hybrid model.
It's less capital intensive from a capex perspective, opex, because you're retrofitting space and we're able to get to those kind of unit economics without having all of that capital outflow initially.
Great. Thank you.
The next question is from Joshua Raskin with Nephron Research your line is open.
Hey, Thanks. Good morning, I was wondering if you could talk a little about the outlook your view of Medicare advantage market growth specifically in the areas, where you've got your centers and maybe conversations with payer partners understanding that it's early but just benefit changes.
Other things that could inform sir.
Core organic growth for next year.
Yes, we're very bullish on Medicare advantage growth.
You know you know by 2026, we expect Medicare advantage to be well over 50, 50% of all Medicare recipients we've talked.
Significantly about cms's commitment to Medicare and value based care and their expectation that all seniors will be in a value based care program by by 2030. So we're very bullish on that and more specifically even in the areas that we're in we see tremendous white space. The conversations we've already had with the <unk>.
Beyers as we think about the Stewart integration.
Almost all of those contracts have been completed and we've seen just tremendous positive receptivity from the.
From the payers and wanting to.
Have a value based care partner value based care relationships and a lot of these areas that we're going into in Texas, Massachusetts.
And then some of these areas where steward has a significant presence. So we're actually very very excited about all of the progress that we've made with all of these payer partners in securing all of these contracts.
Prior to even finalizing the deal.
Gotcha, and then could you just provide more color I heard sort of 10 de novo is in the pipeline.
What are the you know.
Our headwinds or challenges are sort of the deciding factors on whether those get built and if you could just give us a sense of.
Are those in existing markets that you have in whereas the demand that youre seeing that.
Yes, those are in existing markets and we're moving forward with those those medical facilities with respect to guidance and how we're thinking about de novo's.
In the future years, it's really going to be dependent on those specific areas, where we continue to gain that density and then take advantage of being able to build out new medical centers in a capital efficient way by bringing in as I mentioned in the earlier question those physician groups.
We can pull together to open up de Novo so that's going to frame a lot of our decision, making we're going to be opportunistic in the way that we think about that and when we were.
At the beginning of next year, when we give guidance on stored and in the next year, we're going to talk in detail.
About what about what that looks like.
Okay perfect. Thanks.
The next question is from Jessica concern with Piper Sandler Your line is open.
Hi, Thanks for taking my question.
Can you just clarify if the affiliate growth strategy something that you guys are pursuing in conjunction with the Stewart transaction.
Or are you even accelerating outside of the Stewart transaction.
Yeah.
Yes, we are accelerating outside of the storage. So obviously, we've just ingested.
A lot of membership in the Stewart transaction, we discussed here. It's 100000 MSP members 50000, Medicare advantage value based care and an opportunity to convert a lot of that 380000 Medicare advantage fee for service, but we have a significant base.
Business development team, that's built out working with strategic partners and Payors.
Your work in communities that have a need for a tech enabled M. S. So a company like ours to come in and professionally manage these and that's just going to further our opportunities to continue to build density in these markets our specialty networks.
Further drive both our NSO and seeded de Novo strategy.
Got it so I guess just my question is like.
Given all of these things start up.
Given that.
On the number.
A number of new initiatives, how are you prioritizing in terms of time and also.
Dollar investment.
What's your priority for the Stewart integration in the first six months 12 months and.
How are you thinking about that relative to investing in India.
Thanks.
The advantage of the MSR strategy, it's a capital light strategy, we've already built the platform.
To support that and it's once you build the platform you've got the technology, you've got the people the process the leadership team.
Very it's very easy to scale that and to build the infrastructure in those specific markets that we continue to enter so we're not concerned about the ability to continue to adjust significantly more membership than even what we have in the store transaction and then as we consider the de Novo transaction in complement to these strategies.
Were you know it was mentioned it Josh that's where we're going to be opportunistic and we can accelerate and pause there.
We consider kind of capital needs and growth.
From that perspective.
Got it and my last one.
Can you break out the mix of your manage and a lot better in Florida and other states.
Thanks.
Yes, Jessica the bulk of our of our membership today is obviously in Florida.
From a outside of Florida standpoint.
From a risk bearing contracts if you recall a lot of our strategy is when we enter into these markets, we're not going to take risk day one.
We needed to professionalize the organization, we need to bring patients and have them buy into the medical management.
And so we don't typically take risk on those contracts day, one so if you're specifically looking for risk type of.
Membership.
It's a little to none outside of Florida, nearly all of our risk patients are in Florida today.
Those contracts do have the ability to flip the risks we've negotiated those contracts. So that at an 18 to 24 month period. There is a pathway to risk because ultimately we know that that unlocks the most value for our organization.
And once we close the transaction in the next couple of days here it will be able to give detailed information as to where all of the Medicare advantage members are theres, a significant amount of membership and in Texas. There is a significant amount of membership and.
And in the Massachusetts area. So we will be able to break it down by market. Additionally, as we mentioned on the call.
New York continues to exceed expectations, we're growing.
Faster, creating deep grass roots.
Presence within that community.
And we're excited about the results that we're gonna drive so we'll be able to break that down by market.
Again that is star one to ask a question. The next question is from Julian dressing with true Securities. Your line is open.
Thank you and thanks for taking my questions. Good morning, everyone. My first question is around Medicare advantage star ratings, which have been under focus when the industry expecting a decline I was wondering if you could share your views and exposure there how are they thinking about the impact of decline in MA plans are talking about the 'twenty 'twenty four.
Pharma plus towards foundation on oncology and thinking about the potential offset drivers deal.
Hey, John It's Kevin Yeah as.
As you mentioned the recently released star ratings really don't impact us until the 2020 for premiums are all obviously the health plans are going to go through their bid process.
We've reviewed our contracts specifically with the help with the health plans that we have today in detail don't believe there is a material impact on what we're seeing and we've had conversations with the health plans and it's been encouraging conversations thus far.
What we can say is historically when health plans to have star ratings fluctuations there tend to be adjustments that happened on the enhanced benefit side.
Again, we think it's really important for us to stay payer agnostic, which really protects our patients for many unfavorable shifts in those benefits. It also gives them the opportunity to maintain the relationship with the PCP.
And potentially switch to health plans that have better better quality ratings.
Okay. That's helpful. And then my next question around the MSP Stuart the adding a significant amount of MSP lives something we have to $200 or something.
And the mix of those as we've seen from some public peers on the MSP side can you speak to how youre thinking about the 2022 results in MSP and I'm not sure that you can speak to the 2021 performance.
As a steward, but any pause any color that would be helpful.
Although we're excited about the MSP, we think it's a great program and we think it's a stepping stone into true value based care as we implement all of our processes.
To manage value based care, we're going to implement the similar processes for all of that MSP membership in terms of how we create.
Preferred network, how we capture acuity, how we train those physicians using our care Max University. So.
So we think that the impact will be able to make on those MSP results is going to be significant Stuart has done it.
A good job of managing that membership to date, but we think we can really professionalize that.
And have a much much greater impact I know in this past year.
I think from a savings perspective.
<unk> performed Stewart performed well there were some benchmarking.
I think nuances that affected some some larger providers this past year and I think impacted some of those underserved communities. We don't expect that to be a significant issue in the following year in our discussions with government and some of the actuaries.
Okay and then my final question.
The new rule and hire of a chief digital officer for the company.
Just want some time in terms of the near term as well as longer term investment opportunities you see.
And I would likely to focus on and more digital investments now versus what you had done in the past.
Yes look with respect to technology were always enhancing and perfecting our technology, we think that our strategy of our proprietary technology model combined with our with kind of a high touch care is the future of health care and how you kind of enter that with Val.
<unk> based care. So we're always going to continue to make those significant investments in the technology side and we wanted to make sure that we had.
Leader in the company that reflected those same sentiment so we hired.
Incredible Chief Digital officer that we're really excited about and we believe that that really takes us into kind of the next.
Stage of value based care. So we will continue to evaluate that.
Continuously and continue to make improvements in how we deploy our technology both on the affiliate side and on the de Novo side.
Great. Thanks, a lot.
Thank you.
We have no further questions at this time I will turn it over to Carlos to solo for any closing remarks.
Okay.
Thank you.
I would like to thank everyone for joining our call today and for supporting the company. We're very excited about our momentum in the imminent closing of the store transaction, we look forward to continuing to execute on our strategy and realizing the significant benefits of the Stewart transaction as we drive sustainable growth and enhance value for our stakeholders. We will keep you updated on all.
Our progress thank you and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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