Q3 2022 Babylon Holdings Ltd Earnings Call

November 10, 2022

[music].

Operator: Good morning and welcome to Babylon’s Third Quarter 2022 Earnings Conference Call and Webcast. All participants will be in listen-only mode.

All participants will be in a listen only mode.

Operator: If anyone should require operator assistance during the event, please press star zero from your telephone keypad. After today's presentation there'll be an opportunity to ask questions. Please note this event is being recorded. Leading the call today is Dr. Ali Parsa, Founder and Chief Executive Officer and David Humphreys, Chief Financial Officer.

After today's presentation there'll be an opportunity to ask questions. Please note this event is being recorded.

Please note this event is being recorded.

Operator: Leading the call today is Dr. Ali Parsa, Founder and Chief Executive Officer and David Humphreys, Chief Financial Officer.

Operator: Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and as further described at the end of the press release as posted on the company’s website. These forward-looking statements reflect Babylon’s current expectations based on the company’s beliefs, assumptions and information currently available to the company and are subject to various risks and uncertainties that could cause actual results to differ materially.

and as further described at the end of the press release, as posted on the Company's website.

Operator: These forward-looking statements reflect Babylon’s current expectations based on the company’s beliefs, assumptions and information currently available to the company and are subject to various risks and uncertainties that could cause actual results to differ materially.

Operator: Although Babylon believes these expectations are reasonable, the company undertakes no obligation to revise any statements to reflect changes that occur after this call. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements can be found in the Risk Factors section on the company’s annual report on Form 20-F filed on March 30, 2022 and as other filings with the Securities and Exchange Commission.

no obligation to revise any statements to reflect changes that occur after this call.

Descriptions of some of the factors that could cause actual results to differ materially from these forward looking statements can be found in the risk factor section on the Company's annual report on form 20-F filed on March 30th, 2022, and its other filings with the Securities and Exchange Commission.

Operator: In addition, please note that the company will be discussing certain non-IFRS financial measures that they believe are important in evaluating performance. Details on the relationship between these non-IFRS measures to the most comparable IFRS measures and reconciliation of historical non-IFRS financial measures can be found at the end of the press release that is posted on the company’s website. The presentation slides for today’s call are also available on the company’s website.

Details on the relationship between these non-IFRS measures to the most comparable IFRS measures and reconciliation of historical non-IFRS financial measures can be found at the end of the press release that is posted on the Company's website.

Presentation slides for today's call are also available on the Company's website.

Operator: With that, I'd like to turn the call over to Babylon's CEO, Dr. Ali Parsa. Please go ahead.

Please go ahead.

Ali Parsa: I would like to welcome everyone to Babylon's 3rd quarter earnings call. Thank you for your time and interest in Babylon. I'm joined today by David Humphreys, our Chief Financial Officer. I will share an update on our progress in the most recent quarter before passing the call to David to provide more details on our financial results and then we will open the call for questions.

details on our financial results and then we will open the call for questions.

Ali Parsa: I would like to focus on three key themes: firstly, an update on our expected capital needs to profitability as well as our capital structure. Secondly, our progress on delivering our core mission, and thirdly, our continued delivery this quarter across key financials and operational metrics, including discussing some of the key clinical and technology initiatives, which are helping us to deliver margin improvements.

Financial and operational metrics, including discussing some of the key clinical and technology initiatives, which are helping us to deliver margin improvement.

Ali Parsa: As most of you are aware, funding of future business to the point of profitability has been an area of interest for everyone. In October, we announced our intention to sell our California IPA business in early 2023. And on November 3, we completed an $80 million capital fundraise for the company.

For the company.

Ali Parsa: We believe the Meritage sale will provide sufficient capital for Babylon’s funding requirements through profitability and that the recent capital raise provides us with flexibility around the timing to complete the sale of the IPA. There is no change to our previous guidance on Babylon’s projected time to profitability.

There is no change to our previous guidance on Babylon projected time to profitability.

Ali Parsa: They have also undertaken some important initiatives beyond the capital raise that I want to highlight. We eliminated our public and private warrants that were the result of our SPAC transaction to simplify our overall capitalist structure. Additionally, or Class B shares will convert to Class A shares so that the Class A shares are now the only class of shares outstanding.

To highlight we eliminated all public and private warrants that were the result of a spike transaction to simplify our overall capital structure. Additionally, our class B shares were converted to class a shares so that the class a shares are now the only class of shares outstanding we have also.

Ali Parsa: They have also received shareholder and board approval to implement a reverse share split at a 25:1 ratio. This was done for two reasons: to address the minimum share price requirements of the NYSE and to make our shares more attractive to institutional investors, as many are not allowed to hold shares that trade below the specified minimum price points.

Loud to hold shares that trade below the specified minimum price points.

Ali Parsa: Our focus is to ensure that Babylon emerges strongly out of the current market downturn. We believe the significant increase we are all witnessing in the cost of capital will inevitably result in the unfortunate weakening or disappearance of some of the innovative solutions needed to tackle the current challenges facing the healthcare sector.

The current challenges facing the healthcare sector.

Ali Parsa: We are already observing this through the closure or acquisition of some of the newer providers or innovative projects or divisions within the incumbents. In what the macroeconomic challenges across the developed economies will only amplify the structural challenges of accessibility and affordability of the current models of the healthcare delivery, we recently concluded a comprehensive survey of 5,000 American customers of healthcare covering our two key focal points: accessibility and affordability. With inflation remaining persistently high, most other survey stated they are struggling with healthcare costs, including healthcare maintenance, emergency needs, and private health insurance costs. Nearly half of all those surveyed have been put in debt from the healthcare bills that required out of pocket costs.

The current models up the health care delivery. We recently concluded a comprehensive survey of 5000 American customers with health care covering our two key focal points accessibility and affordability with inflation remaining persistently high most of the adults so they.

They said they are struggling with health care costs, including health care maintenance emergency needs private health insurance costs nearly half of all those surveyed have been put in debt from the health care Bill that's required the out of pocket costs why.

Ali Parsa: While our survey showed the affordability of healthcare is of increasing concern among the population, other recent surveys published by AAMC, MedSpace and Definitive Healthcare demonstrated the accelerating challenges of accessibility. They revealed that approximately 117,000 physicians left the workplace in Q4 2021. Meanwhile, 45% of the remaining physicians are older than 55 and some specialties in the U.S are reporting burnout rates of up to 60%. As Albert Einstein observed almost a century ago, we cannot solve our problems with the same thinking we used when we created them.

Accelerating challenges well fact sensibility they revealed that approximately 117000 physicians left the work place in Q4, 2021 mean bought 45% well still remaining physicians are older than 55 and from the spin.

<unk> in the U S Army porting burnouts rates of up to 60%.

And how about the Einstein observed almost essentially ago, we cannot solve all problems with the same thinking to be used when we created.

Ali Parsa: In Babylon, we remain convinced that the existing and a scalable clinic hospital-centric reactive model of sector will not be able to provide a credible long-term solution to the current challenges. We therefore remain focused on building a data-centric, predictive, proactive and integrated digital-first primary care platform that can manage population health at scale. This means we will continue to narrow our focus on building and delivering the technology and services that are core to our differentiated offering. We plan to invest the funding to be provided by our IPA sale and already provided by our capital raise to further build out our digital-first product and to demonstrate our ability to scale the service to manage population health for our clients. In 2023, you will see us extend our digital-first offering further across our Medicare and commercial customer contracts. In time, we believe this will provide a more cost efficient solution that can bring down the individual costs dramatically improve access to healthcare.

Dave and integrated digital first primary care platform that can manage population health I escaped. This means we will continue to narrow our focus on building and delivering the technology and services that all who toward differentiated offering we believe we plan to do.

That's the funding to be provided by our I T E C.

Already provided by our capital raise to further build out our digital product and to demonstrate our ability to scale. These families to manage population health for our clients. In 2023, you will see us extend our digital first offerings further across all Medicare and commercial customer.

In time, we believe this will provide a more cost efficient solution that can bring down the individual costs dramatically improve access to healthcare.

Magically improve access to health care.

Ali Parsa: And lastly turning to discuss our financial results, for the quarter, we are pleased to announce that we have once again delivered on our guidance and beating consensus expectations across key metrics, including both revenue and adjusted EBITDA. Our revenue for the quarter came in at $289 million, which was driven primarily by growth in our value-based care, VBC contracts. This represents almost 4x revenue growth since Q3 2021 and is a beat on consensus estimates.

$10 million, which was driven primarily by growth in our value based care V. B C contracts. This represents almost four times revenue growth since Q3, 2021 and he's a beat on consensus estimates.

Ali Parsa: As a result of our continued strong revenue growth, we are increasing our revenue guidance for the full year of 2022 from over $1 billion to $1.05 billion to $1.1 billion. While our focus is increasingly on driving improved margins in our populations, we remain convinced that our continued record of extraordinary growth is a testament to the scalability of our platform, which will ultimately allow us to deliver savings and improve member’s health at scale.

Vince that all continued their code of extraordinary growth is a testament to the scalability of our platform, which will ultimately allow us to deliver savings and improvement helped escape.

Ali Parsa: Additionally, this quarter we added 10,000 VBC members through the launch of a new Medicare contract in New Mexico. This is part of our continued goal to diversify our revenue by moving away from primarily a Medicaid membership to increase our commercial and Medicare members, which bring in more revenue per member and have higher potential to improve margins. Already, this quarter 44% of our VBC revenue came from commercial and Medicare population and we plan to increase this further in 2023. We are also excited to share that last week, our partner Ambetter announced open enrollment and expansion of its virtual first commercial exchange product, Ambetter Health Virtual Access powered by Babylon in 5 U.S states. This will enable Babylon to be primary care gatekeeper, providing value-based care service to a commercial population of members through a digital-first product that we launched in January 2023.

It's part of our continued goal to diversify our revenue by moving away from primarily a Medicaid membership to Greece, or commercial or Medicare members, which bring in more revenue per member and have higher potential to improve margins already this quarter, 44%.

V. B C revenue came from commercial and Medicare population and we plan to increase this further in 'twenty 'twenty. Three we are also excited to share that last week, our partner announced opening Goldman and expansion of its virtual first commercial exchange product.

And better health virtual axis powered by Babylon in five U S. States. This will enable babylon to be a primary care gatekeeper, providing value based care service to a commercial population of members to a digital first product that will.

Launched in January 'twenty 'twenty three.

Ali Parsa: In addition, we've continued to expand key partnerships across the UK, Rwanda and APAC. In the UK, we extended our partnership with Bupa in September for an additional 3 years to deliver digital health services to $2.3 million Bupa UK health insurance customers.

Ali Parsa: In Rwanda, we launched an AI Triage Symptom Checker pilot in 5 public health centers, with over 26,000 successful digital first checking. Finally, in partnership with the Population Services International, we announced a digital health service in Vietnam to help low income communities make informed decisions about their health and efficiently navigate to the healthcare system.

He is making decisions.

Decisions about their health and efficiently navigate to the health care system.

Ali Parsa: Turning to look at our medical margins, we are also pleased to report a medical margin across all our calls this quarter of 1.3%, which is an improvement from our results in the first half of the year of 0.9%.

Ali Parsa: This should be seen in the context that the majority of our revenue is still less than 1 year old and much of the intervention that we plan with our population is not reflected in our numbers yet. I’d like to give you some more information about the programs and the initiatives that we have implemented or are in the process of implementing to drive medical margin improvements.

The main thing to drive medical margin improvement.

Ali Parsa: Firstly, we have continued to see progress this quarter in our operational metrics, indicating future margin improvements. We continue to sign up patients more quickly than ever before, in our newest deals with sign up rates, which are 3x to 4x higher than our patients sign-up rate at the same stage of our older peers.

Continue to sign up patients more quickly than ever before in our newest deals with sign up rates, which are three to four times higher than our patients signed up right.

Famous stage of our older fleet.

Ali Parsa: Secondly, across our deals, we are targeting specific areas of high claims expenses. One way we do this is through HealthIQ, our emerging advanced risk prediction and insights platform, which leverages AI to evaluate the medical history and current conditions of every member to predict which ones are at risk for a specific condition and which ones will generate rising costs. It considers a number of factors, which are not included in the standard risk prediction models such as member’s knowledge, skills, and attitude towards their own health, which is a key predictor of health outcomes, over 25% of the members we deem high risks would not have been detected by typical risk prevention models. We then outreach to these members targeting in particular those who are expected to generate high costs, if not actively managed. For example, depression and anxiety are among the top spend drivers across all our costs.

One way we do this is true health I tell you all the emerging advanced risk prediction and insights platform, which leverages AI to evaluate the medical Heath.

Cutting conditions of every member to predict which ones are at risk for a specific condition and which ones will generate rising costs.

It couldn't see there's a number of factors, which are not included in the standard risk prediction models, such as members knowledge skills and attitude towards their own the house, which is a key predictor of health outcomes over 25% of the members that we didn't have.

The risks would not have been detected like typical risk prevention model. We then outreach to these members targeting in particular, those who are expected to generate high cost. It's not actively manage for example depression and anxiety are among the top it spend drivers across all of our call.

Ali Parsa: Therefore, we have integrated behavioral health services with physical healthcare across all our populations, providing easy to access mental health appointments within less than 5 days of outreach and have already seen more than 50% reduction in depression and anxiety burdens as measured by industry standard rating scales, which is a leading indicator for an overall reduction in claims spending across both medical and behavioral health costs.

Asia by industry standards.

On a scale, which is a leading indicator for an overall reduction in claims of spending across both medical and behavioral health costs.

Ali Parsa: We also ensure that our service is highly accessible to members throughout the healthcare continuum. For example, through partnerships with these community-based health workers, which launched this quarter in Georgia, Iowa and California, we help navigate patients to service provided by local community-based organizations, meet patients in the hospitals for a smoother transition back home and bring technology into the home to encourage the patient to engage with our comprehensive digital self service.

For example through partnerships with these community based health workers, which launched this quarter in Georgia, Iowa, and California, you help navigate patients to services provided by local community based organizations meet patients into hospitals to smooth the transition back home and <unk>.

<unk> technology into the home to encourage the patient to engage we talk comprehensive digital starter Sir.

Ali Parsa: We are already seeing a strong engagement with this program and are expanding to further cohorts adding states in Q4 before expanding to cover all our U.S members in 2023.

In Q4 before expanding to cover all our U S members in 'twenty 'twenty three.

Ali Parsa: Throughout all of our services, we retain our focus on digital-first care. We are constantly developing our technology platform to ensure we are engaging members in the most accessible ways. For example, this quarter launched a web version of our solution in the U.S. allowing members to schedule virtual primary or specialty care visits from any web enabled device and we also launched the ability for our members to asynchronously message with our care teams at any time as fast, convenient and lower cost alternative to receive basic care. This quarter, the vast majority of our specialist referrals were handled through our e-consult platform rather than needing to refer members to a brick-and-mortar specialist. Turning now to consider our adjusted EBITDA results, we delivered an adjusted EBITDA loss for the quarter of $54 million, which is once again a strong beat of consensus expectations. It also represents solid year-on-year improvement from an adjusted EBITDA margin of negative 64% in Q3 last year to a margin of negative 19% this year.

Primary order speciality care visits from any web enabled device and we also launched the ability for members to a synchronized way.

That's a two week our care teams at any time.

Convenience and lower cost alternative.

To receive basically.

This quarter, the vast majority of our especially refer.

Or has the R E consult platform rather than needing to refer members to a brick and mortar suspicions turning now to consider our adjusted EBITDA results. We delivered an adjusted EBITDA loss for the quarter were $54 million, which is once again a strong beat.

Of consensus expectations.

This also represents solid year on year improvement from an adjusted EBITDA margin of negative 64% in Q3 last year to a margin of negative 9% this year.

Ali Parsa: These improvements are partly due to these programs and initiatives we have implemented to drive medical margin improvement, the efficiencies which come with our scalable model as well as due to the successful implementation of our previously announced cost-cutting initiatives, which we expected to deliver savings of up to $100 million a year. Based on these results, we continue to be confident that we will deliver on our 2022 adjusted EBITDA loss guidance of $270 million or less.

Which we expect it to deliver.

Savings of up to 100 million dollar yeah.

Based on these results we continue to be confident that we will deliver on our 2022 adjusted EBITDA loss guidance of $217 million or less.

Ali Parsa: Before handing the call over to David, I would like to thank the entire Babylon team for their hard work and the relentless commitment they have shown once again this quarter, they have continued to deliver every day to drive us forward on our world changing mission to provide high quality, accessible and affordable healthcare to everybody on earth. And I am truly fortunate to work with such a wonderful group. I would also like to thank all our investors for their continued support. I am confident that with our recapitalize balance sheet, simplified equity structure and with our increased focus on our core digital first primary care business model, we now have everything we need in place to deliver our mission to build a digital first primary care service that can be scaled to cover everyone.

War changing mission to provide high quality accessible and affordable health care to everybody on there and I am truly fortunate to work with such a wonderful group I would also like to thank all our investors for their continued support I am confident that with our recent Kathleen.

Capitalized balance sheet simplify the equity structure and with our increased focus on our core digital first primary care business model. We now have everything we need in place to deliver our mission to build a digital first primary care service that can be scaled to cover everywhere we can.

Ali Parsa: With that, I pass the call to over to David to provide more detail about our financial results. David?

Is it.

David Humphreys: Thank you, Ali. And thank you to everyone for joining the call. Today, I would like to share further comments on the trends we’ve seen across our third quarter financial results and update you on our funding.

I would like to share further comments on the trends, we're seeing across our third quarter financial results.

Great you on a funding.

David Humphreys: I will discuss our financial performance, focusing particularly on our path to profitability as a result of our continued focus on revenue mix, driving improvements in Medical Margin, and execution of our previously announced cost reduction actions. I’ll also provide an update on our financial guidance for full year 2022.

Lliving improvements in medical margin and execution of our previously announced cost reduction actions.

I'll also provide an update on our financial guidance for full year 2022.

David Humphreys: As Ali mentioned we’ve had another strong quarter of financial performance. We reported revenue of $289 million, which represents almost 4x year-on-year revenue growth and exceed consensus estimates. As a result, we’re raising our revenue guidance for FY ‘22 from over $1 billion to range of $1.05 billion to $1.1 billion.

Exceeds consensus estimates.

David Humphreys: As a result, we’re raising our revenue guidance for FY ‘22 from over $1 billion to range of $1.05 billion to $1.1 billion.

David Humphreys: From a profitability standpoint, we also delivered an adjusted EBITDA loss of $54 million for the third quarter, which equates to an adjusted EBITDA margin of negative 18.8% beating consensus estimates by over $10 million. This is equivalent to $18 million adjusted EBITDA loss per month during the quarter, positioning us well to execute on our previously announced forecasted December 2022 adjusted EBITDA loss of $18 million or less and to meet our guidance through the year of $270 million or less.

This is equivalent to $18 million adjusted EBITDA loss per month during the quarter.

Turning us well to execute on our previously announced forecast in December 2022 adjusted EBIT.

Loss of $18 million or less and to meet our guidance for the year is $270 million or less.

David Humphreys: This result is a reflection of our continued focus on revenue mix, medical margin initiatives, operational leverage benefits as we scale our business, and the discipline with which we’ve executed our previously announced cost reduction actions. From our funding standpoint, in early November we completed our $18 million private placement, and we continue to move forwards with our proposed sale of the IPA business.

Operational leverage benefits as we scale our business.

And the discipline with which we've executed our previously announced cost reduction actions.

David Humphreys: From our funding standpoint, in early November we completed our $18 million private placement, and we continue to move forwards with our proposed sale of the IPA business.

November we completed a $18 million private placement and we continue to move forward with our proposed sale of the IPA business.

David Humphreys: I’d also like to briefly comment on the current macroeconomic situation. We continue to monitor the impact of factors such as inflation, and foreign exchange conditions on our business. We expect the impact inflation to be largely mitigated by the digital first nature of business model, and the pricing structure our value-based care arrangements.

We continue to March the impact of factors, such as inflation and foreign exchange conditions on our business.

David Humphreys: We expect the impact inflation to be largely mitigated by the digital first nature of business model, and the pricing structure our value-based care arrangements.

David Humphreys: Furthermore, our cash flow has benefited from the impacts of a strong U.S. dollar. Given our recent private placement was in U.S. dollars, and a significant amount of our headcount and other expenditures are in GDP. Turning to look at our financial results in more detail.

Turning to look at our financial results in more detail.

David Humphreys: As mentioned earlier, our revenue this quarter was $289 million, which is a 4x increase on the revenue we generated in the third quarter of 2021. Top line revenue growth was again driven by our value-based care segment, which is almost 5x the VBC revenue we generated in the third quarter of 2021. VBC and related revenue increased by $212 million, quarter-over-quarter, for total $268 million for the third quarter, and accounts for 93% of Q3 revenue.

Top line revenue growth was again driven by our value based care segment, which is almost five times. The V. B C revenue, we generated in the third quarter 2021.

VBC and related revenue increased by $212 million, quarter-over-quarter, for total $268 million for the third quarter, and accounts for 93% of Q3 revenue.

Total of $268 million for the third quarter.

And accounts for 93% of Q3 revenue.

David Humphreys: This has been driven by significant increases in our VBC membership base from 100,000 in Q3 2021 to 271,000 U.S. VBC members this quarter. We continue to focus on diversifying our VBC member mix by increasing our proportion of higher PMPM and easier to engage digital first Medicare and Commercial populations. These two populations grew from 27,000 members in Q3 2021, to 60,000 members in Q3 2022 and made up 44% of our VBC revenue in Q3 2022, which was an increase in 40% in Q2.

We continue to focus on diversifying our V. P. C member mix by increasing our proportion of higher P. M. P M and easier to engage digital first Medicare and commercial populations.

David Humphreys: These two populations grew from 27,000 members in Q3 2021, to 60,000 members in Q3 2022 and made up 44% of our VBC revenue in Q3 2022, which was an increase in 40% in Q2.

David Humphreys: Just this quarter, we launched a new contract in New Mexico to cover 10,000 Medicare advantage members. We expect this focus on digital first Medicare and Commercial populations to continue to be reflected in our revenue pipeline for FY ‘23 and beyond.

David Humphreys: Licensing revenue this quarter was $7 million, a decrease of 10% from $8 million in Q3 2021. This reduction was largely driven by FX headwinds in our licensing contracts, which are denominated in pound sterling, and would have been roughly flat on a constant currency basis.

This reduction was.

Largely driven by FX headwinds and our licensing contracts, which are denominated in pound sterling and would've been roughly flat on a constant currency basis.

David Humphreys: Clinical Services revenue, which includes our clinical services delivered in the UK and Rwanda, as well as our U.S. fee service business was $14 million during the third quarter of 2022, which is an increase of 30% from $11 million in the third quarter of 2021, driven by increased virtual consultation volumes in both the U.S. and the UK.

Our U S service business was $14 million during the third quarter of 2022 which.

There's an increase of 30% from 11 million in the third quarter 2021 driven by increased virtual consultation volumes in both the U S and the U K.

David Humphreys: Now to the cost of care delivery, we break this down into two components: claims expense and clinical care delivery expense, which differentiates between our members’ medical expenses and the costs incurred by Babylon in delivering our service offering.

We break this down into two components, our claims expense and clinical care delivery expense, which differentiates between our members' medical expenses and the costs incurred about Babylon and delivering our service offering.

David Humphreys: This quarter, our claims expense was $264 million, which was an increase from $51 million in Q3 2021, due to the addition of 171,000 new VBC members in the last year.

David Humphreys: Our medical margin, which we define as one minus claims expenses as a percentage of our VBC revenue was 1.3% this quarter. This is an improvement from medical margin across the first half of 2022 of 0.9% driven primarily by performance of our FY ‘21 digital first cohort contracts, and it’s taken within the context that the majority of our VBC contracts have an average tenure of less than 1-year.

This is an improvement from medical margin across the first half of 2022 with no 0.9% driven.

Driven primarily by the performance of our FY 'twenty, one digital first cohort contracts.

He's taken within the context that the majority of our V. B C contracts have an average tenure of less than one year.

David Humphreys: We expect our medical margins continue to improve based on the clinical and technology initiatives that are driving margin improvements as Ali described earlier.

Yeah.

David Humphreys: Clinical Care Delivery expenses for the quarter, was $19 million, which increased slightly from $17 million in Q3 2021. As the business scales, we are able to deliver care much more efficiently. And our clinical care delivery expense as a percentage of revenue this quarter continued to drop from 23% in the third quarter of 2021 to 6% this quarter, due to the utilization of operating leverages across our network that comes with scale, and continuing to implement initiatives to increase efficiency across our clinical organization. For example, we progress well with implementing the multi-state licensing program for our clinicians that we outlined on previous earnings calls.

Business scales, we're able to deliver can much more efficiently.

Nickel care delivery expense as a percentage of revenue this quarter continue to drop from 23%.

In the third quarter, 2021% to 6% this quarter due to the utilization of operating Leverages across our network that comes with scale and can change we're implementing initiatives to increase efficiency across our clinical organization.

For example, we progressed well with implementing the multi state licensing program for our clinicians that we outlined on previous earnings calls.

David Humphreys: The percentage of our clinicians who are licensed across multiple-states has grown from 13% since last year to 50% at the end of Q3, and continues to grow every week. This has allowed us to increase our utilization and reduce staffing while simultaneously increasing employment volumes.

This allowed us to increase our utilization and reduced staffing while simultaneously increasing appointment volumes.

David Humphreys: Combining both claims expense and clinical care delivery expense, our cost of care delivery expenses this quarter was $283 million, which is an increase from $68 million in Q3 2021, due to the increases in our value-based care membership. Quarter-over-quarter, cost of care delivery expense increased slightly by $22 million from $260 million, but on a percentage total revenue basis decreased from 98.1% to 97.9%.

Quarter over quarter cost of care delivery expense increased slightly by $22 million from $260 million, but on a percentage of total revenue basis decreased from 98, 1% to 97, 9%.

David Humphreys: Turning to look at our operational costs, we’re pleased to see both technology and SG&A expenses falling as a percentage of revenue this quarter, reflecting our digital scalability, and operational leverage.

David Humphreys: Our technology expenses, which are comprised of platform and application expenses and research and development expenses, were $25 million in third quarter of 2022, an increase of $2 million from Q3 2021. While our total technology expenses were greater as a result of increased R&D expense due to operational leverage of our technology, technology costs decreased significantly as a percentage of revenue from 36% in the third quarter of 2021 to just 8% this quarter.

David Humphreys: While our total technology expenses were greater as a result of increased R&D expense due to operational leverage of our technology, technology costs decreased significantly as a percentage of revenue from 36% in the third quarter of 2021 to just 8% this quarter.

David Humphreys: Similarly, our SG&A expenses which increased to $57 million this quarter versus $42 million in Q3 2021 have also decreased as a percentage of revenue. SG&A expenses reduced to 20% of revenue this quarter compared to 57% in the third quarter of 2021.

Also decreased as a percentage of revenue SG&A expenses reduced to 20% of revenue this quarter compared to 57%.

Third quarter 2021.

David Humphreys: Moving on to discuss adjusted EBITDA. For the third quarter 2022, our adjusted EBITDA loss was $54 million, an increase of $7 million from adjusted EBITDA loss of $47 million in Q3, 2021.

David Humphreys: We continue to see a trend of strong improvement this quarter when adjusted EBITDA loss margin at 19% in Q3 2022 compared to 64% in Q3 2021, presents a 45% point improvement year-on-year.

Since a 45% point improvement year on year.

David Humphreys: The significant profitability improvements reflect the operation leverages we’ve generated with scale and a successful execution of cost cutting initiatives which have begun to produce savings this quarter, which we expect to deliver future savings from Q4 this year and into 2023.

Successful execution.

Cost cutting initiatives, which have begun to produce savings this quarter, which they expect to deliver future savings from Q4, this year and into 'twenty two 'twenty three.

David Humphreys: Moving to the balance sheet, cash and cash equivalents as of September 30, 2022 was $110 million, compared to $37 million as of September 30, 2021. Additionally, we received $18 million in proceeds from a private placement, which were added to our balance sheet on November 3. When added to our cash balance on September 30, this provides aggregate cash availability of $190 million.

Additionally, we received $18 million in proceeds from our private placement, which route it to our balance sheet on November 3rd.

When added to our cash balance as of September 30th this provides aggregate cash availability of $119 million.

David Humphreys: Looking forward to our future capital needs, we expect the proceeds from our planned sale of the IPA business in California to provide sufficient capital for funding requirements to reach profitability. And at this stage, there is no change to our previous guidance on our expected time to profitability and our adjusted EBITDA basis.

At this stage, there's no change to our previous guidance on our expected time to profitability on an adjusted EBITDA basis.

David Humphreys: From a capital structure standpoint, following the completion of the private placement transaction on November 3rd and the conversion of all outstanding Class B shares to Class A shares, we had just under $620 million Class A shares outstanding.

David Humphreys: I’d like to briefly address our transition from reporting as a foreign private issuer to reporting as a U.S. domestic issuer. This means our Q4 and full year 2022 as well as our results for future periods will be reported under U.S. GAAP.

Means our Q4 and full year 2022 as long as our results for future periods will be reported under U S. GAAP.

David Humphreys: This transition will mean realized [indiscernible] and amortized less of our platform and application expenses, and that we’ll need to reassess whether any premium deficiency reserves need to be recognized, as well as other adjustments for one off transaction. These changes will have no impact on cash flow, or cash requirements. I'd like to end by giving an update on our guidance for 2022.

These changes will have no impact on cash flow or cash requirement.

I'd like to end by giving an update on our guidance for 2022.

David Humphreys: As I mentioned earlier, we’re updating our revenue guidance for the full year 2022 from over $1 billion to $1.05 billion to $1.1 billion. We’re reiterating our adjusted EBITDA guidance for the year of a loss of $270 million or less.

We're reiterating our adjusted EBITDA guidance for the year.

Loss of $270 million or less.

David Humphreys: Looking forward to 2023 we have a robust revenue pipeline and are focused on continuing to diversify our commercial Medicare Advantage portfolio. And as Ali mentioned, we’re incredibly excited about the launch of our Ambetter partnership on January 1, 2023.

Ali mentioned, we're incredibly excited about the launch of our own better partnership on January the first 2023.

David Humphreys: For an adjusted EBITDA standpoint, we expect to exit December 2022 with a monthly adjusted EBITDA loss of less than $18 million and continue to focus on our key drivers towards positive adjusted EBITDA and reducing 2023 monthly adjusted EBITDA loss, specifically, our revenue margin mix, execution of our clinical and technology initiatives that driving claims margin improvements, and a continued focus on driving operational leverage, including execution of current and future cost savings actions.

Execution of our clinical and technology initiatives that driving claims margin improvements and our continued focus on driving operational leverage including execution of current and future cost savings actions.

David Humphreys: To conclude, I’m incredibly proud of the strong financial results we delivered this quarter. I’d like to thank our whole team and Babylonians for their hard work and their continued commitment to deliver the best possible care for our members. I’m proud to continue to work alongside them every day to drive forwards on our mission to make high quality healthcare, accessible and affordable for everyone on earth.

I'd like to thank our whole team at Babylonians their hard work and continued commitment to deliver the best possible care for our members are perhaps can change to work alongside them every day to drive forward on our mission to make high quality health care accessible and affordable for everyone on AR.

David Humphreys: Operator. We’re now ready to open the call to questions.

We're now ready Triton Nicole to questions.

Operator: Thank you. At this time, we'll be conducting the question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

At this time, we'll be conducting the question and answer session.

If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

So participants who are using speaker equipment may be necessary to pick up your handset before pressing the star keys one.

One moment, please we poll for questions.

Operator: Thank you. Our first question is from the line of David Larsen with BTIG. Please proceed with your questions.

Our first question is from the line of David Larsen with BTG. Please proceed with your questions.

David Larsen: Hi, congratulations on the very good quarter. Can you talk a little bit about the Ambetter contract? It looks to me like that may have been a commercial contract, you highlighted a digital first solution. Are you -- are your planned customers seeking to develop digital first platforms that they are going to market with? And are you maybe being included in RFPs with your planned clients to actually be the digital first solution for plans? Thanks very much.

Can you talk a little bit about you know the and better contract. It looks to me like that may have been a commercial contract you highlighted a digital first solution.

Are you or your plan customers seeking to develop digital first platforms that they're going to market with and are you.

Maybe being included in Rfps with your plan clients to actually be the digital first solution for plans. Thanks.

Thanks very much.

Ali Parsa: David, thank you for the questions. This is Ali. The answer to all of those is yes. We believe that the -- as I described David, that the current model that relies on all these brick-and-mortar solutions that are unscalable and trying to get people to go to them in order to manage their health over a long period of time, is not very effective. So we’ve been working with our customers trying to persuade them that digital first distributed always on doctor, nurses primary care in your pocket is a better way to go to market. We’re delighted that Ambetter has already launched that product. And they are now signing members into it. We think that this will be a very good way to go to market. So, we are being included both in RFPs and in new launches with various partners, whereby the go-to-market for those partners with their members, or a virtual first entry into the healthcare solution. And we think we feel very positive about that.

We believe that the as I described David that the kind of model that relies on the all the brick and mortar solutions that are scalable and trying to get people to go through them in order to manage down our house over a long period of time is not very effective so we've been working with our customers trying to pick.

Sweden that a.

A digital first distributed all of these a doctor nurses primary care in your pocket is a better way to go to market.

Liked it the Baton beta has already launched that product and they are now.

Timing members into it we think that this will be a very good way to go to market. So we are being included both in Rfps.

New launches with various partners whereby the go to market for those partners with their members or their chose first entry into the health care solution and we think we feel very positive about <unk> about that.

David Larsen: Can you talk a little bit about how you're approaching pricing and the gross margin profile of these contracts? I can see the mix of membership has improved. You've got a greater Medicare and commercial mix. Are you able to with your increased scale, perhaps I guess negotiate for a -- we'll call it a higher quality mix of lives for new contracts. Just any thoughts on how you think about gross margin as you enter into these deals in year one, year two, year three, post signing?

Has improved you've got a greater Medicare and commercial mix are you able to with your increased scale.

Perhaps I guess negotiate for.

Well call it a higher quality mix of lives for new contracts.

Any thoughts on you know how you think about gross margin as you enter into these deals year, one year two year three.

Post signing.

Ali Parsa: David, would you like to take that or --?

David would you like to take that.

David Humphreys: Yes. David, so from our perspective, you're exactly right. We look ahead to our revenue mix. We're very much focused on increasing the contribution coming through from Medicare and commercial contracts where we're seeing higher PMPM and greater profitability opportunities going forward. It doesn’t mean that we won’t continue to explore Medicaid, we certainly see a strong pipeline there. But for those deals, we are really going to be focused on the ones where, with our leverage, with our learning today, we can strike the right balance between the revenue contribution that they will bring, and the contribution they will make to us hitting our profitability targets.

From our perspective, you're exactly right. We look ahead to a revenue mix, we're very much focused on increasing the contribution coming through.

Medicare and commercial contracts, where we're seeing higher yen and greater profitability opportunities going forward. It doesn't mean that we won't continue to explore Medicaid.

We see a strong pipeline there.

Those deals were really going to be focused on the ones, where with all the rage with all mining today, we can strike the right balance between the revenue contribution they will bring.

And the contribution they make to us hitting our profitability targets.

Okay.

David Larsen: Okay. And then just related to that, I think the PMPM rate increased to like $329, which compares to around $300 bucks in Q2. I think the PMPM rate was like, up around 100 and maybe 50% year-over-year. Is that accurate? Does it sound reasonable and what drove that increase?

I think the P. M. P. M rate was up around 100, and maybe 50% year over year is that accurate because it sound reasonable and what drove that increase.

David Humphreys: Yes, David. So, the key driver of that increase in Q3 was the fact that we've added around 10,000 Medicare live in New Mexico, and an arrangement that went live July 1.

The key driver of that increase in Q3 was the fact that we allocate.

Added around 10000.

Can live in new Mexico, and an arrangement the Wednesday July one.

David Larsen: Okay. That’s very helpful. And then just quickly, any updates on the sale of the IPA business? How much cash would you expect to collect from that? Any source there will be great. Thank you.

Any thoughts there would be great. Thank you.

David Humphreys: Yes. So, look, everything is on track and going to plan relating to the IPA sale. We are working very closely with a top tier investment bank, on that transaction and we've been really encouraged by the level of interest that’s come in. Frankly, it’s exceeded our internal expectations at this stage. So, from our perspective, given the valuation ranges we have seen from multiple sources, we are confident moving forward here and looking forward to executing a transaction early 2023. It gives us the funding that we need to get through to profitability.

We are working very closely with our top tier investment bank on that transaction and you know we've been really encouraged by the level of injury.

That's come in frankly, it's exceeded our internal expectations at this stage so.

From our perspective, you know given the valuation ranges we've seen from multiple sources.

When it comes to meeting or whatever I'm looking forward to executing a transaction 90 23. It gives us the funding that we need to get through to profitability.

David Larsen: Okay. I'll hop back in the queue. Congrats on a good quarter.

David Humphreys: Great. Thanks, David.

Operator: Our next question is from the line of Dev Weerasuriya with Berenberg Capital. Please proceed with your question.

Dev Weerasuriya: Hey, good morning. Thanks for taking my questions and congrats on a solid quarter. I just want to dig in first here around the medical margins, which obviously are critical. I'm trying to get an understanding of the line of sight you have there in terms of claim expenses, if any, and to how you expect the medical margin, the cadence of that to change for a particular cohort, let’s say, to the first six months to a year, year two, year three -- just any internal expectations that you have around that will be helpful. Thanks.

I just wanted to dig in a first year around the medical margins, which obviously are critical. And I'm trying to get an understanding of our you know the line of sight you have there in terms of claim expenses. If any and to you know how you expect the medical margin the cadence of that to change for a particular cohort, let's say to the first six months to a year two year three. Any internal expectations that you have around that that'd be helpful. Thanks.

And I'm trying to get an understanding of our you know the line of sight you have there in terms of claim expenses.

If any and to you know how you expect the medical margin the cadence of that to change for a particular cohort, let's say to the first six months to a year two year three.

Any internal expectations that you have around that that'd be helpful. Thanks.

David Humphreys: Yes. Sure. So, we've seen good movement in our Q3 claims margin, increasing ahead of what we recorded in the six months to-date. But we always caution a little bit about those near-term analysis quarter-on-quarter claims margin, given the average tenure of VBC contracts is running at less than 12 months.

We've seen good movement in our Q3 claims margin increasing ahead of what we reported in the six months to date.

We always caution a little bit about those niche.

Quarter on quarter from Clayton's margin given the average tenure.

ABC contract says is running at less than 12 months.

David Humphreys: Having said that, what we have seen in Q3 is really good momentum in our 2021 digital first cohort contract. So, we included a graph actually, and Page 7, our presentation materials that talk to the evolution of the margin that we've seen in those contracts over the last 12 months. So, I would certainly refer you to that. And you will see we're up to about 7.6% of contribution from that cohort to our Q3 numbers.

First of all the contracts. So we included a graph on page.

Page seven of our presentation material, but for the evolution of the margin that we've seen in those contracts over the last 12 months. So I refer you to that and you'll see you know roughly about seven 6% of contribution from that cohort to our Q3 numbers.

Dev Weerasuriya: Okay. Great. And then I guess is there may be a difference in that margin cadence across the Medicare, commercial and Medicaid populations? And then I have one follow-up. Thanks.

That that margin cadence across in Medicare.

Commercial and Medicaid populations, and then I have one follow up thanks.

David Humphreys: Yes. So, we see the margin evolution opportunity being stronger in the commercial and Medicare populations. In addition, where we are seeing the most beneficial claims margin improvements is with those populations, where our data strategy is the most effective in identifying the high risk members. And we are engaging successfully those high risk members with both our clinical and technology initiatives and we see that coming through in some of our operational metric data. For example, where we are seeing great improvements in inpatient and emergency services levels, which are great indicators for us in terms of what will come through into court and the financial margin evolution.

Commercial and Medicare populations.

In addition, where we are seeing the most beneficial claims margin improvements is with those populations, where our data strategy.

The most effective in identifying the high risk members.

We're engaging successfully those high risk men members with both clinical and technology initiatives in and we see that coming through in some of our operational metric data for example, where we're seeing great improvement in inpatient and emergency services levels, which are great indicators for Austin.

In terms of what will come through in due course in the financial margin evolution.

Dev Weerasuriya: Okay. Great. And then, I know Ambetter has about 2 million members, just curious within the six states that you guys are launching on, if there is, what percentage of that members are operating in those six states? And then just lastly, you guys have about $190 million in cash, about $90 million in operating and investing cash out for this quarter. I know you are expecting about $80 million adjusted EBITDA loss run rate at the end of this year. But how are you thinking about kind of the cash you have on hand and membership growth? Are you guys thinking about maybe limiting some of that membership growth until that IPA sale is confirmed? Or are you guys comfortable with bringing on new contracts early next year? That’s it for me. Thanks.

If if there is you know what percentage of that members are operating in six states.

And then just lastly, you know you guys have about 190 million in cash about you know.

90 million and operating and investing cash outflow. This quarter I know you you're expecting about $18 million adjusted EBITDA.

Loss run rate at the end of this year, but how are you thinking about kind of the you know the cash you have on hand and membership growth. You know are you guys thinking about maybe limiting some of that membership growth until that I P. S. Atlas confirmed or are you guys comfortable with bringing on new contracts early next year.

That's it for me thanks.

Yes.

Ali Parsa: So, you are absolutely right, that the number of Ambetter members that we are taking a business stage is a tiny fraction of the entirety of the Ambetter members. We are delighted we take that contract. As we know this is our first Ambetter contract in primary care. There was that relationship with what was with another supplier, we managed to now become a partner with Ambetter. And we hope that as these contract start performing well and demonstrate the value of a distributed, scalable, digital first solution, we can do more of those. On our cash situation David, would you like to take that?

Yeah.

That relationship with what was with another supplier, we manage to now become a partner, which I'm better and we hope that these contracts to start performing well and demonstrate the value of a distributor to the scalable digital SaaS solution, we can do more of a dose.

On our cash situation, David would you like to take that.

David Humphreys: Yes. Sure. So, from a cash situation, as you mentioned, when our pipe process, it takes us to the equivalent of $190 million bucks since September. I think the key thing to point out here is the success we have had in our cost reduction program. So, as we see for Q3, we are already at a $54 million adjusted EBITDA loss, which equates to an $18 million monthly run rate. And that’s without getting the full benefit of our cost savings program coming through. So, as we look ahead to Q4, we clearly feel that we are in a good place to exit December with an adjusted EBITDA loss run rate that is lower than the $80 million that we previously communicated as a target.

Situations you mentioned you know what we are all quite price. It it takes us to you know.

The equivalent of 190 million boxes, we exited September .

I think the key thing point out here is the success we've had in a cost reduction program.

So as we see for Q3, we're already at a $54 million adjusted EBITDA loss, which equates to an $18 million monthly run rate.

And that's without getting the full benefit of all cost savings, probably Brian coming through so as we look ahead to Q4.

Clearly we're in a good place to exit December with an adjusted EBITDA loss run rate.

That is lower than the 18 million that you previously communicated target.

David Humphreys: I think there was a part two there just also around a question on the revenue growth. So, from our perspective, we're still focused on significant revenue growth, right. We see really good operational leverage coming through and our digital first model is extremely scalable. However, when I think about the revenue growth, you're right in terms of us making sure it’s the right revenue growth. We talked about continuing that push on Medicare commercial mix that is important. And making sure we are striking the right balance on new Medicaid deals.

Around a question on the on the revenue side.

With respect to why we're so focused on significant revenue growth right. We see really good operational leverage coming through in our digital first model is extremely scalable.

However, when I think about the revenue growth you're right in terms of making sure. The right revenue growth, we've talked about continuing that push on Medicare Marshall makes that is important making sure we're striking the right balance on your Medicaid.

Dev Weerasuriya: Great. Thank you. I'll hop back in queue.

Operator: Thank you. To ask a question, you may press star one.

Operator: The next question is from the line of Daniel Grosslight with Citi. Please proceed with your questions.

Ali Parsa: Hey Daniel.

Yeah.

Operator: Hi Mr. Grosslight, your line is open for questions.

Daniel Grosslight: Sorry, I was muted. Thanks for taking the question. You know, getting your California IPA, I'm curious to get an update on how you're thinking about the commercial market in 2023, once those assets are divested. Can you provide any color on right now, what percent of your commercial membership is in the California IPA? Is that going to be able – are you going to be able to offset that with the Ambetter launch next year? And then just given commercial MLRs are much better than overall MLRs, do you anticipate you will see an increase in MLRs once those IPA assets are divested?

Given you're selling your California, IPA I'm curious to get an update on how you're thinking about the commercial market in 2023 once those assets are divested.

You provide any color on it right now what percent of your commercial membership is in the California Ipas is that gonna be able are you going to be able to offset that with the and better lunch next year and then just given commercial MLR is are much better than overall MLR or do you anticipate youll see a increase in MLR is once those IP.

Assets are divested.

Ali Parsa: Danielle, I think that two things happened here. One is that you're absolutely right. The Ambetter deal more than compensates for what we will be losing on the commercial in California commercial deal. But the second or more important in that Daniel, is that with the model that we now have with Ambetter, members will be allocated and will agree to go through Babylon's system in most cases, in order to access healthcare as a whole, so that we can navigate and we can help them to get to the right results.

Deal more than compensates for a while we will be losing on the commercial Ah in California commercial deal.

But just taking the more important thing that Daniel is that weeks.

The model that we now have we done better.

Members will be allocated to them will agree to go to Babylon a system.

In most cases in order to access healthcare as a whole so that we can navigate and we can consider something we can help them to get to the right results.

Ali Parsa: So, we will significantly increase accessibility and availability of care for those members. What we have seen in our contracts in UK is when that happens, the cost savings are significantly more than when members just directly go and access healthcare themselves. I mean our own contracts, where we see that those cohorts of members who we activate who access healthcare to us versus those who don’t, we see the margin improvement is much better. Therefore, we are very hopeful that the Ambetter contract not only will compensate for what we will lose in the commercial, but they will be a qualitatively better cohorts for us.

On contracts when we see that those cohorts of members well deactivate two axis healthcare to Ah versus those who don't you see the margin improvement is much better and therefore, we are very hopeful that you haven't been to contract not only will compensate for what people lose in the commercial but.

B, a qualitatively better cohorts for us.

Daniel Grosslight: Got it. Okay. So, is it safe to say that even with the divestiture of the IPA in 2023, you're going to see growth in commercial membership in 2023?

Ali Parsa: Absolutely, and the contract that we just announced is not the only contract, obviously, we will have to add the 2023. We will be looking at building on this.

Daniel Grosslight: Okay. And I am just curious to hear your thoughts on the ACO REACH program, some of your peers have retrenched from the program. Any thoughts on how you're going to attack that market in 2023?

Ali Parsa: Yes, Daniel. From our perspective, the contracts we currently have with that program is actually part of our IPA business. So, although we will continue to keep our eyes open for opportunities in that space, that, we view as being incremental to our path to profitability. My expectation at this stage is our near-term focus on our final is on opportunities outside of that program.

From our perspective, the contracts we currently have with that program is actually part of our IPA business. So, although we will continue to keep our eyes open for opportunities in that space, that, we view as being incremental to our path to profitability. My expectation at this stage is our near-term focus on our final is on opportunities outside of that program.

That program is that she part of our IPA business. So, although we'll continue to keep our eyes open. Charities in that space that we view as being incremental to our path to profitability. Yeah. My expectation at this stage is our omni channel focus on off on always on opportunities outside of that program.

Charities in that space that we view as being incremental to our path to profitability. Yeah. My expectation at this stage is our omni channel focus on off on always on opportunities outside of that program.

Daniel Grosslight: Okay. So, we should expect Medicare PMPMs to drop a little bit after the divestiture of the IPAs and as you kind of focus on Medicare advantage over ACO REACH?

ACO reach.

Ali Parsa: That’s right. Obviously, we'll get the full benefit in FY ‘23 with the new Medicare transaction that went live on July 1 as well.

Daniel Grosslight: Gotcha. Okay. Thank you.

Operator: Thank you. At this time, I will turn the floor back to Dr. Parsa, for closing remarks.

Ali Parsa: Just to thank everybody for your time today and attending our session, which I am very grateful to everyone for doing so. I think what we described in here is that we have been listening to the market carefully. We can see what the conditions in the capital markets have fundamentally changed. We are readjusting our business in order to focus on that. We know that where we are strong, and that is in the provision of a digital first primary care solution that can manage population health at scale. We are going to double down on that

Adjusting our business in order to focus on that we know that what where we are a strong and that is in the prohibition of digital first primary care solutions that can manage population health at scale, they're going to double down on that.

Ali Parsa: We see that maybe one consequence of the current capital markets and cost of capital. And we are already seeing that is going to be that many will exit the market either through M&A activities, or by just shutting down the renovation or the digital departments. We saw that movie again – before around 2001 period. The consequence of that would be that why the demand that those services were serving is not growing anywhere. And as you show in some of the statistics, I shared the number of primary care physicians are significantly falling across the country, the demand is increasing. And that’s why we are seeing that in the traditional primary care acquisitions that are happening right now. You see the valuations that are being achieved. We think that as we go ahead and build a very substantial scalable primary care network across United States, and the technologies necessary to make that primary care net for highly effective and more scalable than already exist. We will get the fruits of that back in time in our valuation, but also in our appeal to our clients. That’s going to be our focus going forward.

2001 period, the consequence of that would be done why is the demand that those services were serving is not going anywhere and as you saw in some of the statistics I shared the number of primary care physicians are significantly falling across the country. The demand is increasing and that's why we're seeing that in the traditional primary care.

Patients that are happening right now and you'll see the valuations that are being achieved we think that as we go ahead and build a very substantial scalable primary care network across United States and the technologies necessary to make that probably many cabinets were highly effective more scalable doesn't already exist.

We will get the fruits of that back in time.

And valuation, but also in our appeal to our clients that's going to be our focus going forward.

Ali Parsa: It will take us time, but I think that as long as we continue to make progress quarter-after-quarter, we want – we are pretty confident that we will eventually get there. Thank you so much for your time and we look forward to following up with you in due course.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.

Q3 2022 Babylon Holdings Ltd Earnings Call

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