Q4 2023 agilon health Inc Earnings Call

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Operator: I would like to welcome you all to the Agilon Health fourth quarter 2020, and many more, and I will. President.

I would like to welcome you Okay. The accident health first quarter 2020 Spring earnings Conference call.

My name is brita and I'll be your moderator for today.

All lines Amit for the presentation portion of the Coupe.

Operator: Thank you for the opportunity for questions and answers at the end. He would like to ask a question. Target on the phone. Press the star followed by 1 on your touch screen.

What are the opportunity for questions at the end.

If he would like to ask a question and you have dialed in on the fine Steve.

Press Star followed by Gwen when you touch thank you Pat.

Matthew Gillmor: I would now like to pass the conference over to your host, Matt Gillmor, Vice President of Investor Relations, to begin. So Max, please go ahead.

I would now like to pass the conference over to Iced, Matt Gilmore.

Vice President of Investor Relations to begin say, Matt. Please go ahead.

Matthew Gillmor: Thank you, Operator. Good afternoon, and welcome to the call. With me is our CEO, Steve Sell, and our CFO, Tim Bensley. Following our prepared remarks, we will conduct a Q&A session. Before we begin, I'd like to remind you that our remarks and responses to questions may include forward-looking statements. However, actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filings. Please note that we assume no obligation to update any forward-looking statements.

Thank you operator, good afternoon, and welcome to the call with me is our CEO, Steve <unk> and our CFO, Tim Bensley. Following our prepared remarks, we will conduct a Q&A session before we begin I would like to remind you that our remarks and responses to questions may include forward looking statements actual results may differ materially.

From those stated or implied by forward looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filings. Please note that we assume no obligation to update any forward looking statements. Additionally, certain financial measures. We will discuss in this call are non-GAAP financial measures, we believe that.

Stephen C. Baxter: Additionally, certain financial measures we will discuss in this call are non-GAAP financial measures. We believe that providing these measures helps investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is available in the earnings press release and Form 8K filed with the SEC. Please note that Steve and Tim will be referencing a slide deck posted to our investor relations website during their prepared remarks. With that, I will turn things over to Steve. Thanks, Matt.

Biding. These measures helps investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is available in the earnings press release and form 8-K filed with the SEC. Please note that Steve and Tim will be referencing.

The slide deck posted to our Investor relations website during their prepared remarks, and with that let me turn things over to Steve.

Thanks, Matt Good afternoon, and thank you for joining us.

Stephen C. Baxter: Good afternoon, and thank you for joining us. On today's call, I would like to walk you through the following elements. Our final results for Q4 2023, our updated guidance for 2024, an update on our member and market unit economics, a progress update on our 2024 performance action plan, and finally, our growth outlook for the class of 2025. Before I get into the quarter, let me provide some context. Agilon and the Medicare Advantage industry are navigating through a complex transition period, and we are taking significant steps to help mitigate the impact of this evolving environment on our business, including strengthening our reserves, as well as focusing on the targeted actions we outlined in early January. However, while the near-term dynamics are negatively affecting our financial results, demand for our platform has never been stronger, as we continue to deliver significant value to patients, payers, and our PCP The underlying fundamentals of our business model remain intact, reflected in member economics, member growth, quality outcomes, and physician MPS scores, and we are well positioned to accelerate performance over the medium and long term.

Today's call I would like to walk you through the following elements. Our final results for Q4 2023, our updated guidance for 2020 for an update on our member and market unit economics.

<unk> update on our 2024 performance action plan and finally, our growth outlook for the class of 2025.

Before I get into the quarter, let me provide some context.

Agile on in the Medicare advantage industry are navigating through a complex transition period, and we are taking significant steps to help mitigate the impact of this evolving environment on our business, including strengthening our reserves as well as focusing on the targeted actions we outlined in early January.

While the near term dynamics are negatively affecting our financial results demand for our platform has never been stronger as we continue to deliver significant value to patients payers and our PCB partners.

Underlying fundamentals of our business model remain intact reflected in member economics member growth quality outcomes and physician NPS scores and we are well positioned to accelerate performance over the medium and long term.

Let's now turn to the quarter.

Stephen C. Baxter: Our medical margins for the fourth quarter of 2023 were $51 million below the midpoint of the guidance range we provided in early January. This was driven by $38 million from costs and revenue attributable to the fourth quarter and $13 million of development attributable to previous periods. Relative to our guidance from January, the higher costs in our final 23 results were driven by two factors. First, as we completed our financial closing process in February, we received updated data, including relatively complete claims data from our largest payers, as well as additional information such as seasonality factors and census data. We completed our analysis of this data in mid-February, which indicated that medical costs for our members were higher than our previous estimate for 2023. Second,

Our medical margins for the fourth quarter, and 2023 were $51 million below the midpoint of the guidance range. We provided in early January.

This was driven by $38 million from cost and revenue attributable to the fourth quarter and $13 million of development attributable to previous periods.

Relative to our guidance from January the higher costs in our final 23 results were driven by two factors first as we completed our financial closing process. In February we received updated data, including relatively complete claims data from our largest payers as well as additional information.

Asian, such as seasonality factors and census data.

Completed our analysis of this data in mid February which indicated that medical costs for our members were higher than our previous estimate for 2023.

Second.

Stephen C. Baxter: In light of this new information and the dynamic utilization environment, we have strengthened our reserves as we close 2023. Our team developed a range of reserve scenarios, and we reserved at the high end of our estimates. The completion factor assumptions used in our 2023 close are significantly lower compared to the actual completion factors from 2022.

In light of this new information and the dynamic utilization environment, we have strengthened our reserves as we closed 2023.

Our team developed a range of reserves scenarios and we reserved at the high end of our estimates.

<unk> factor assumptions used in our 2023 close are significantly lower compared to the actual completion factors from 2022.

Stephen C. Baxter: We believe this is a prudent approach, given the environment, and expect to carry this forward. Turning to the 24 guide, we have also lowered our 2024 medical margin guidance by $155 million to $425 million at the midpoint, and lowered our 24 adjusted EBITDA guidance by $87 million to negative $38 million at the midpoint. Our updated guidance assumes the $38 million medical margin shortfall attributed to the fourth quarter 23 is not seasonal and will persist into 2024. It should be noted that our revised guidance assumes a gross cost trend of 7.9%, less the impact of our strategic action items, and a net cost trend of approximately 6.6% in 2024. This is 250 basis points above our prior 24 expectations and on top of the 7% medical cost trend we observed in 2023.

We believe this is a prudent approach given the environment and expect to carry this forward.

Turning to the 24 guide we have also lowered our 2020 for medical margin guidance by $155 million to $425 million at the midpoint.

And lowered our 24, adjusted EBITA guidance by $87 million to negative $38 million at the midpoint.

Our updated guidance assumes a $38 million medical margin shortfall attributed to the fourth quarter 'twenty three is not seasonal and will persist into 2024.

It should be noted that our revised guidance assumes a gross cost trend of seven 9% less the impact of our strategic action items at a net cost trend of approximately six 6% in 2024.

This is 250 basis points above our prior 24 expectation and on top of the 7% medical cost trend we observed in 2023.

Stephen C. Baxter: Despite our higher utilization assumption, we expect to grow our medical margin by 40% in 2024 and drive meaningful gains in adjusted EBITDA. As I noted before, Agilon and the Medicare Advantage industry are navigating a challenging transition period between 2023 and 2024. Healthcare costs among the senior population are rising faster than contemplated in CMS benchmarks and plan bids, which may be driven by post-COVID pent-up demand. We do think it's important to recognize a few things.

Despite our higher utilization assumption, we expect to grow our medical margin by 40% in 2024 and drive meaningful gains in adjusted EBITDA.

As I noted before <unk> and the Medicare advantage industry are navigating a challenging transition period during 2023 and 2024.

Healthcare costs among the senior population are rising faster than contemplated in CMS benchmarks and planned bids which may be driven by post COVID-19 pent up demand.

We do think it's important to recognize a few things.

Stephen C. Baxter: First, Medicare Advantage has a relatively short repricing cycle, and the program is designed to adjust to changes in utilization. Over the next 12 to 24 months, we expect CMS benchmarks to reset to reflect the rise in utilization, and many of our health plan partners will adjust bids and benefits to recapture margin. We expect this repricing cycle will benefit our financial performance in future periods. Second, we have a strong balance sheet with approximately $500 million in cash and short-term investments.

First Medicare advantage has a relatively short repricing cycle.

And the program is designed to adjust to changes in utilization.

Over the next 12 to 24 months, we expect CMS benchmarks will reset to reflect the rising utilization and many of our health plan partners will adjust bids and benefits to recapture margins. We expect this repricing cycle will benefit our financial performance and future periods.

Second we have a strong balance sheet with approximately $500 million in cash and short term investments.

Stephen C. Baxter: Even with the further moderation in our 2023 performance and 2024 outlook, we have significant resources to support our growth and ongoing actions to drive performance. Now, to a refreshed view on the unit economics of our business as outlined in the slide presentation on our investor relations website. For this commentary, I'll be referencing slides 9 through 13 of the deck.

Even with the further moderation in our 2023 performance in 2024 outlook, we have significant resources to support our growth and ongoing actions to drive performance.

Now to a refreshed view on the unit economics of our business as outlined in the slide presentation on our Investor Relations website.

To this commentary I'll be referencing slides nine through 13 of the deck as we have consistently shared our business model is driven by member growth and the ongoing maturation of member and market cohorts.

Stephen C. Baxter: As we have consistently shared, our business model is driven by member growth and the ongoing maturation of member and market cohorts. While the macro environment has clearly impacted our overall unit economics for 2023, there are some very important takeaways from the data. First, as we show you on page 10, despite the negative 2023 utilization environment, our members that came on the platform from 2018 to 2020 are sustaining medical margin performance at attractive levels of roughly $150 per member per month. By comparison, our 2023 member cohort, representing approximately one-third of our membership, shows the impact of higher utilization and starts off at $25 per member per month. Second, as we show you on page 11, we have repeatedly talked about our member and PCP growth and its impact on margin progression. Now, we are separating out the impact of compounded mid to upper team same store growth on the performance of our market cohort.

While the macro environment has clearly impacted our overall unit economics in 2023, there are some very important takeaways from the data.

First as we show you on page 10, despite the negative 2023 utilization environment. Our members that came on the platform from 2018 to 2020, our sustained medical margin performance at attractive levels of roughly $150 per member per month.

In our 2021 and 2022 member cohorts are showing positive margin progression.

By comparison, our 2023 member cohort representing approximately one third of our membership shows the impact of higher utilization and starts off at $25 per member per month.

As we show you on page 11, where we have repeatedly talked about our member and PCP growth and its impact on margin progression we.

We are separating out the impact of compounded mid to upper teens same store growth on the performance of our market cohorts with.

Stephen C. Baxter: What the data shows is that our three earliest market classes, with annual growth rates of 12 to 24 percent, have seen between a $36 to $86 per member per month reduction in medical margin due to new member dilution. This is not dissimilar from the impact that new markets have on the platform, as they also take time to mature as risk adjustment and our medical cost management levers improve. Set differently, our strong same-store growth has created an embedded opportunity in our earliest markets to focus on new doctors and their senior patients to drive performance in those markets; this data aligns well with our 24 performance action plan as it is fully within our control. Finally, our growth algorithm of growing markets, growing members, and growing medical margins remains intact, albeit with a more measured and narrowed focus given the macro environment and its impact on our results, pivoting to We continue to make progress against our plan, which will position us to accelerate our path to profitability and cash flow generation. As a reminder, our plan includes the following four elements.

What the data shows is that our three earliest market classes with annual growth rates of 12% to 24% have seen between a 36 to $86 per member per month reduction in medical margin due to new member dilution.

This is not dissimilar from the impact that new markets have on the platform as they also take time to mature as risk adjustment and our medical cost management levers improve.

Said differently, our strong same store growth has created an embedded opportunity in our earliest markets to focus on new doctors and their senior patients to drive performance of those markets.

This data aligns well with our 24 performance action plan as it is fully within our control.

Finally, our growth algorithm of growing markets growing members and growing medical margins remains intact.

With a more measured and narrowed focus given the macro environment and its impact on our results.

Pivoting to our performance action plan that we discussed with you in early January.

We continue to make progress against our plan, which will position us to accelerate our path to profitability and cash flow generation.

As a reminder, our plan includes the following four elements.

Stephen C. Baxter: One, expanding support for primary care doctors joining the platform in mature markets. Two, leveraging our strong payer relationships. And three, addressing our data visibility gaps.

One expanding support for primary care doctors joined the platform in mature markets to leveraging our strong payer relationships.

<unk> addressing our data visibility gaps and four boosting our operating efficiency today I wanted to provide you a brief update on our progress.

Stephen C. Baxter: And four, boosting our operating efficiency. Today I wanted to provide you a brief update on our progress. Let's start with PCP onboarding and education. As a reminder, we provide structured training to primary care doctors during our implementation process with new groups, but we historically have not provided this same training to new physicians joining veteran practices.

Let's start with PCP Onboarding and education as a reminder, we provide structured training to primary care doctors during our implementation process with new groups, but we historically have not provided the same training to new physicians joining veteran practices.

Stephen C. Baxter: As outlined in our newly released cohort data, the strong SaneStore growth with doctors joining the platform in our earliest markets has created variation in these new physicians' understanding and performance in our partnership. We are on track to deploy this training to 90% of the doctors in our targeted mature markets during the first half of 2024. We expect these efforts will improve our BOI performance and clinical program enrollment in the back half of the year, supporting our financial performance in 2025 and beyond. Next, payer strategy.

As outlined in our newly released cohort data the strong same store growth with doctors joined the platform in our earliest markets has created variation in these new physicians understanding and performance in our partnerships.

We are on track to deploy this training to 90% of the doctors in our targeted mature markets. During the first half of 2024. We expect these efforts will improve our performance and clinical program enrolment in the back half of the year supporting our financial performance in 2025 and beyond.

Next payer strategy, we have been encouraged with the dialogue and level of engagement with our payer partners in recent weeks as many of you know we partner with leading physician groups that typically represent 20% to 30% of the independent primary care capacity within each local community.

Stephen C. Baxter: We have been encouraged by the dialogue and level of engagement with our payer partners in recent weeks. As many of you know, we partner with leading physician groups that typically represent 20 to 30 percent of the independent primary care capacity within each local community. Payers rely on our partners to offer a comprehensive network and benefits and our consistent track record of quality and cost performance. From a visibility standpoint, we are now receiving detailed data for supplemental benefits from most of our large national and regional payers.

Payors rely on our partners to offer a comprehensive network and benefit in.

And our consistent track record of quality and cost performance.

From a visibility standpoint, we are now receiving detailed data for supplemental benefits for most of our large national and regional payers. We believe this will enable <unk> to understand and better forecast these costs, which was a source of volatility in 2023.

Stephen C. Baxter: We believe this will enable Agilon to understand and better forecast these costs, which was a source of volatility in 2023. Additionally, we have been able to negotiate targeted changes in our percentage of premium rates in key markets. This reflects that payers want to partner effectively with Agilon and our groups over the long term. We expect to make continued progress, deepening our engagement with payers during 2024 and beyond. For data visibility, this month, we began onboarding data from our largest payer into our new financial data pipeline, and we will begin ingesting data from other large payers over the next several months. We expect to onboard data for over 55% of our membership during the first quarter and 75% of our membership during the second quarter.

Additionally, we have been able to negotiate targeted changes in our percentage of premium rates in key markets.

This reflects that payers want to partner effectively with agile on and our groups over the long term, we expect to make continued progress deepening our engagement with payers during 'twenty four and for 2025.

For data visibility. This month, we began onboarding data from our largest payer into our new financial data pipeline and we will begin ingesting data from other large payers over the next several months.

We expect to onboard data for over 55% of our membership during the first quarter and 75% of our membership during the second quarter.

Stephen C. Baxter: This data pipeline will enable our internal teams to process and analyze payer data faster and with much more detail, which will improve our forecasting and operations. We are also expanding the use of the Minerva platform we acquired in 2023 to support clinical program enrollment, and we will better leverage HIE and ADT data to impact transitions of care. The final area of focus is operating efficiency.

This data pipeline will enable our internal teams to processed and analyzed payer data faster and with much more detail, which will improve our forecasting and operations. We are also expanding the use of the <unk> platform.

We acquired in 2023 to support clinical program enrollment and we will better leverage HIV and ADT data impact transitions of care.

Final area of focus is operating efficiency, we have taken targeted actions to reduce our platform support to 3% of revenue in 2024. Additionally, we have reduced our geographic entry costs by $10 million and our updated 2024 guidance to reflect a measured approach to our growth.

Stephen C. Baxter: We have taken targeted actions to reduce our platform support to 3% of revenue in 2024. Additionally, we have reduced our geographic entry costs by $10 million in our updated 2024 guidance to reflect a measured approach to our growth. Now let's turn to growth with the class of 2025. Given the current environment, we are taking a measured approach to our growth. This is reflected in the quality of groups we are bringing on the platform and the longer implementation cycle we have been able to achieve in recent years. I'm pleased to share that the class of 2025 new partners will include at least five groups with more than 60,000 new MA members. This will expand our network to include 36 physician groups and 3,000 primary care doctors. And, as I mentioned, we have lowered our geographic entry cost to a range of $55 to $65 million, which is down from our prior 24 estimate of approximately $70 million.

Now, let's turn to growth with the class of 2025.

Given the current environment, we are taking a measured approach to our growth.

This is reflected in the quality of groups, we are bringing on the platform and the longer implementation cycle, we have been able to achieve in recent years.

I am pleased to share that the class of 2025, New partners. We will include it will include at least five groups with more than 60000, new members. This will expand our network to include 36 physician groups and 3000 primary care doctors.

And as I mentioned, we have lowered our geographic entry costs to a range of $55 million to $65 million, which is down from our prior 2004 estimate of approximately $70 million. It's important to note that this lower range still contemplates the potential for additional senior patients in the class.

Stephen C. Baxter: It's important to note that this lower range still contemplates the potential for additional senior patients in the class of 25 to come on the platform or for incremental onboarding costs associated with the class of 26. In closing, I want to offer three important takeaways. First, Agilon is navigating through a transition period for our company and the Medicare Advantage industry. Medical costs are temporarily outpacing revenue benchmarks in 2023 and 2024. Agilon and the industry, including CMS and our health plan partners, will adjust to this new environment, supporting our ability to return to a more normalized margin trajectory over time. Second, we are taking significant actions to improve our performance in this dynamic environment. From a forecasting perspective, this is reflected in the significant strengthening of our reserves exiting 2023 and our reset guidance for 2024 that assumes recent utilization remains elevated. From an operating perspective, we are executing against the action plan we have outlined with a focus on best-in-class execution on factors we can directly control.

It's a 25 to come on the platform or for incremental onboarding costs associated with the class of 2006.

In closing I want to offer three important takeaways first agile on is navigating through a transition period for our company and the Medicare advantage industry.

Medical costs are temporarily outpacing revenue benchmarks during 2023 and 2024.

<unk> and the industry, including CMS and our health plan partners will adjust to this new environment supporting our ability to return to a more normalized margin trajectory over time.

Second we are taking significant actions to improve our performance against this dynamic environment from a forecasting perspective. This is reflected in the significant strengthening of our reserves exiting 2023, and a reset guidance for 'twenty for that assumes recent utilization remains elevated from an.

Operating perspective, we are executing against the action plan, we have outlined with a focus on best in class execution on factors, we can directly control.

Tim Bensley: Third, and finally, our business model is working. Demand for our platform has never been stronger, and we are delivering significant value to patients, payers, and our PCP partners, even in a difficult environment. This is reflected in the updated member cohort information we have shared, which is translating into significant economics for our PCP partners, reinvestment into local primary care, and our ability to derive consistent improvement in quality measures across our network. We remain confident in the strength of our platform and physician network, as well as the long-term opportunity for Agilon. With that, let me turn the call over to Tim for his comment. Thanks, Steve, and good afternoon.

Third and finally, our business model is working and demand for our platform has never been stronger and we are delivering significant value to patients payers and our PCB partners even in a difficult environment. This is reflected in the updated member cohort information, we've shared which is translating into.

Two significant economics to our PCB partners reinvestment into local primary care and our ability to drive consistent improvement in quality measures across our network. We remain confident in the strength of our platform and physician network as well as the long term opportunity for Agila with that.

Let me turn the call over to Tim for his comments. Thanks.

Thanks, Steve and good afternoon, I'll cover two items before we go into Q&A first additional details on our 2024 guidance second balance sheet and cash flow expectations I will reference several of the slides during my comments.

Tim Bensley: I'll cover two items before we go into Q&A. First, additional details on our 2024 guidance. Second, balance sheet and cash flow expectations. I'll reference several of the slides during my comments, starting with guidance details.

Starting with guidance details you can see our updated projections for 2020 for medical margin on slide five of the presentation. We now expect our medical margins to be in the range of $400 million to $450 million in 2024, which compares to our prior guidance midpoint of $580 million.

Tim Bensley: You can see our updated projections for 2024 medical margin on slide five of the presentation. We now expect our medical margins to be in the range of $400 to $450 million in 2024, which compares to our prior guidance midpoint of $580 million. The primary drivers of the change include, first, the lower starting point for 2023 medical margins, which Steve addressed. Second, our assumption that higher costs from 2023 will carry forward into 2024, including a reduced outlook for the class of 2024. Third, a partial offset from higher revenue associated with stronger performance in our burden of illness documentation efforts as we close 2023. We are now assuming a cost trend of 6.6% for 2024, which is 250 basis points over our previous 4.1% assumption.

The primary drivers of the change includes first the lower starting point in 2023 medical margins, which Steve addressed.

Our assumption that higher cost from 2023 will carry forward into 2024, including a reduced outlook for the class of 2024.

Third a partial offset from higher revenue associated with stronger performance in our burden of illness documentation efforts as we close 2023.

We are now assuming a cost trend of six 6% for 2024, which is 250 basis points over our previous four 1% assumption.

Tim Bensley: I wanted to note that these are net all-in trends after the impact of our clinical programs. Our gross trend assumption for 2024 excluding these programs is now 7.9% compared to 5.3% previously, and it's in line with the trend we observed in the fourth quarter of 2023. On slide six, I wanted to call out some of the adjusted EBITDA dynamics that impacted our 2023 results and how those dynamics will work in 2024. During 2023, the relatively modest growth we generated in medical margins of $8 million created negative leverage on our consolidated adjusted EBITDA. This was due to prior year development being re-recorded in 2023, which lowered our medical margin. Additionally, we had a handful of markets in an EBITDA loss position, including several markets from the class of 2023.

I wanted to note that these are net all in trends after the impact from our clinical programs. Our gross trend assumption for 2024. Excluding these programs is now seven 9% compared to five 3% previously and is in line with the trend we observed in the fourth quarter of 2023.

On slide six I wanted to call out some of the adjusted EBITDA dynamics that impacted our 2023 results and how those dynamics work in 2024.

During 2023, the relatively modest growth, we generated a medical margins of $8 million created.

Created negative leverage to our consolidated adjusted EBITDA.

This was due to the prior year development, we recorded in 2023, which lowered our medical margin. Additionally.

Additionally, we had a handful of markets and an EBITDA loss position, including several markets from the class of 2023.

Cause of this we had higher operating expense growth relative to medical margin growth for.

For 2024, we expect this dynamic will reverse with medical margin growth driving more flow through to adjusted EBITDA.

Tim Bensley: Because of this, we had higher operating expense growth relative to medical margin growth. For 2024, we expect this dynamic will reverse, with medical margin growth driving more flow through to adjusted EBITDA. One key dynamic is that we expect the class of 2024 to be profitable from a market EBITDA perspective, and we don't expect prior year development to recur. From a balance sheet perspective, as Steve mentioned, we have approximately $500 million of cash in investments and minimal debt. Our available cash and investments include $495 million that is consolidated on our balance sheet and another $21 million of off-balance sheet cash associated with our ACO REACH entities.

One key dynamic is that we expect the class of 2024 will be profitable from a market EBITDA perspective, and we don't expect prior year development to recur.

From a balance sheet perspective, as Steve mentioned, we have approximately $500 million of cash and investments and minimal debt are.

Our available cash and investments include $495 million that is consolidated on our balance sheet and another $21 million of off balance sheet cash associated with our ACO reach entities.

Based on our updated guidance, we expect to use $125 million to $150 million of cash during 2024.

For reference our cash flow realization is offset from our medical margin and adjusted EBITDA performance by about 12 months because of the timing of our settlements with payers based on this our 2024 guidance would result in 2025 use of cash of about $25 million with an expectation of positive cash flow.

Operator: Based on our updated guidance, we expect to use $125 to $150 million of cash during 2024. For reference, our cash flow realization is offset from our medical margin and adjusted EBITDA performance by about 12 months because of the timing of our settlements with payers. Based on this, our 2024 guidance would result in a 2025 use of cash of about $25 million with an expectation of positive cash flow in 2026 and beyond. With that, Operator, we are ready to take questions. He would like to say a few words, and if you are in the Q&A session, please press star followed by one on your.

So in 2026 and beyond.

With that operator, we are ready to take questions.

Thank you.

If you would like to ask a question during the Q&A session. Please press star followed by one on your telephone keypad.

If you change your mind anytime Keith Cresta Okay.

We will pause for a minute.

We have questions from the phone lines.

Lee Thank you JP.

J P. Morgan your line is open nishu.

Yes.

Okay.

Overall.

Lisa Christine Gill: If you change your mind at any time, please press stop and... We will pull it from it, and I'm going to wrap this up, on the phone line, team. Your overall views on, you know, when we think about utilization trends, it seems that, in some of your comments, maybe you think some of this is pent-up demand, or is this the new normal? And do you feel that, ultimately, CMS and the health plans will adjust to this new normal when we think about bids? So that would be my first question.

When we think about utilization trends.

Some of your comments that maybe you think some of that pent up demand or is this the new normal.

Do you feel that ultimately CMS.

The health plans will adjust to this new normal when we think about.

So that would be my first is I just want to understand how you're looking at the current environment as to whether you think this is the new normal or you think there is some level of pent up demand.

Stephen C. Baxter: I just want to understand how you're looking at the current environment as to whether you think this is the new normal, or you think there's some level of pent-up demand. Lisa, thanks for the question. I guess I'd start by saying I think we're operating in a very dynamic utilization environment, and what we've communicated today sort of tries to demonstrate respect for that environment. We obviously have seen an acceleration in trend in Q4, stepping up to a Q4 trend level of 7.7%. Our assumption into the fourth quarter is that utilization continues at that level. And so we see it persisting.

Lisa Thanks for the question I guess I'd start by saying I think we're operating in a very dynamic utilization environment and what we've communicated today. So we've tried to demonstrate the respect for that environment.

We obviously have seen an acceleration in trend in Q4 stepping up to a Q4.

Trend level of seven 7% our assumption into 'twenty four is that utilization continues at that level and so we see it persisting in.

Stephen C. Baxter: In looking at the data that Tim talked about, we didn't see a tremendous amount of seasonality within that, but we concluded that this will persist, and that's been reflected in our guidance for 2024. We do expect, as we said, that benchmarks will catch up with this. We'll see what the final notice looks like when we get that later in Q2. And we have been encouraged, as we've talked with some of our plan partners about their plans for 2025 in terms of their bids, and specifically that they will be focused on bidding for margin. And that's obviously material as it flows through to us.

And looking at the data that Tim talked about.

We didn't see a tremendous set of seasonality within that but concluded that this will persist and that's been reflected with anr.

Within our guidance for 2024.

We do expect as we said that benchmarks will catch up with this we will see what the final notice looks like when we get that.

Later in Q2.

And we have been encouraged as we've talked with some of our planned partners about their plans for 2025 in terms of their bids and specifically that they will be focused on bidding for margin and thats, obviously material as it flows through to us. So our belief is that it is ongoing and it's going to be at this elevated level at least through <unk>.

Stephen C. Baxter: So our belief is that this is ongoing, and it's going to be at this elevated level at least through 2024. And then, if I just think of some of the elements in the 24 guidance, I just want to better understand, you know, the impact of B28, the two midnight rule, and then the comments that you made around supplemental benefits. So is the comment about supplemental benefits that you have less risk around some of the supplemental benefits based on negotiations with Medicare? If you can just help me understand those three, that'd be great.

24.

And then if I just think of some of the elements in the 'twenty four guidance.

Just wanted to better understand the impact of the 2008, two midnight rule and then the comments that you made around supplemental benefits.

Is the comment around supplemental method that you have less risk around some of the supplemental benefits based on negotiations with managed care and if you can just help me to understand those three that'd be great. Thanks.

Stephen C. Baxter: Sure, our revenue guidance for the year includes the impact of V-28, which has that rough 2% impact we've talked about, offset by our actions and the other elements in REPS. The two midnight rule is factored into our inpatient assumption in 24 and is part of that trend that Tim and I laid out for you in 2024. And then supplemental benefits. As we look at the relative change from 23 to 24 across the mix of our payers, we do not see nearly as great an escalation as we saw 23 over 22, and our payer conversations right now are focused on our ability to mitigate those things we can't control, like supplemental benefits, whether that's through a carve-out, whether that's through a corridor, or capping that. So it's a combination of those things, Lisa.

Sure our revenue guidance for the year includes the impact of the 28, which has that rub, 2% impact we've talked about offset by by our actions and the other elements in revenue. The two midnight rule is factored into.

Our inpatient assumption in 2004 and as part of that trend.

Tim and I laid out for you in 2024.

And then supplemental benefits as we look at the relative change from 'twenty three to 'twenty four across the mix of our payers, we do not see nearly as great an escalation as we saw 23 over 22.

And our payer conversations right now are focused on our ability to mitigate those things we can't control like supplemental benefits, whether thats through a carve out whether that's through a corridor of capping that so it's a combination of those things Lisa Tim anything you'd add to that I think thats right right on.

Tim Bensley: Tim, anything you'd add to that? I think that's right on, and by the way, so great we are, yeah, yep, go ahead. No, no, no, you go ahead. I actually know that that's great. Go ahead, go ahead.

By the way so great we are yes.

Yes go ahead.

No you go ahead.

Great great.

Stephen C. Baxter: No, I was just going to say, just to tag on, just to quantify the supplemental benefit issue, we do expect to be a slight headwind in 2024 with 20 basis points or so, but, you know, that's coming off a very big headwind that we had in 2023. OK, appreciate it, and from Justin Lake of Walthamstow. Thanks. I wanted to first kind of go over what you laid out for us today versus January 5th, specifically on the medical cost side. So you have 250 million a year of medical costs versus $141 million. So you had $38 million of incremental new costs in the fourth quarter. That's the way to think about it. Would you just multiply that by another three quarters to annualize? kind of drive that delta, is that what I'm looking at here?

Thank you.

Hey, Glenn.

Can you quantify the supplemental benefits, we do expect to be like a slight headwind in 2024% 20 basis points or so, but that's coming off a very big headwind that we had in 2023 so.

Okay.

Okay I appreciate the comments.

Thank you.

We now have the next question from Justin Lake of Wolfe Research.

Thank you for your question.

Thanks.

Wanted to first kind of.

Through this bridge that you laid out for us today.

Today versus the January.

<unk>.

The medical cost side, so you're at $250 million a year.

Medical costs.

Kind of a headwind versus a $141 million before.

So you had $38 million of incremental new costs in the fourth quarter is the way to think about it.

And did you just multiply that by another three quarters to annualize it.

Tim Bensley: Yeah, that's a great question. And I think the change of 38 million is total medical margin. We had a little bit of incremental revenue, but I think the full change. So the way we look at it is we essentially went into the fourth quarter, looking at all the things that Steve just went through and how we essentially have been refining our process and making sure that we get to a number that we feel we're going to be adequately reserved for the end of the year. We actually added $68 million of medical expense to our final close versus what we were guiding to in early January. Of that $68 million, about 13 So we've added about $55 million of actual cost to our reserves. To get to your point, I think you were pretty close to the number.

To kind of drive that.

I'm looking at here.

Yes, that's a great question and I think the change of $38 million as total medical margin, we had a little bit of incremental revenue I think the full change. So the way we look at it is we essentially went into the fourth quarter looking at all the things that Steve just went through and how we essentially have been refining our process and making sure that we get to a number that we feel.

We're going to be adequate reserve for the end of the year, we actually added $68 million of medical expense.

Our final close versus what we're guiding to in early January of that $68 million about $13 million of it is actually for some incremental membership that we that we realized so we've added about $55 million of actual cost to our reserves.

To get to your point I think you were pretty close to the number in.

Tim Bensley: In the fourth quarter, we added about 40 million of that 55 million, and with the other 15 million in the previous quarters, that 40 million incremental, that total incremental with the 40 million going into the fourth quarter leaves us with a trend on base medical expense that is accelerating. And Steve talked about some of these numbers; our full-year base medical trend, without supplemental benefits, is 7% now for 2023 for the full year; the fourth quarter accelerated to about 7.7% for the full year. We've taken that 7.7%-based medical expense and essentially assumed slightly higher than that for our full year, for our full year 2024. So essentially, yes, we've taken that fourth-quarter step up and flowed that through into the 2024 guide. Okay, and then just a couple things on trend.

In the fourth quarter, we added about $40 million of that $55 million with the other $50 million in the previous quarters that $40 million incremental that total incremental with a $40 million into the fourth quarter leaves us with a trend on base medical expense that is accelerating in the fourth quarter and Steve talked about some of these numbers are full year base medical trends or without.

Without supplemental benefits at 7% now for 2023 for the full year, the fourth quarter accelerated to about seven 7% for the full year, we've taken that seven 7% based medical expense and essentially assume that slightly higher than that for a full year.

For our full year 2024, so essentially yes, we've taken that fourth quarter step.

Step up and flow through into 2024 guide.

Okay, and then just a couple of things on trend one can you tell us.

Some of the breakdown here of what Youre seeing specifically one of the companies that are out there talking about inpatient then.

Seeing some pickup in short stays even before the two midnight rule. What are you assuming for that I don't know if you gave an answer to that question Lisa asked on the two midnight rule specifically.

Stephen C. Baxter: One, you know, can you tell us some of the breakdown here of what you're seeing specifically? One of the companies is out there talking about inpatient and, you know, seeing some pickup in short stays even before the two midnight rule. What are you assuming about that? I don't know if you gave an answer to that question that Lisa asked about the two midnight rule specifically, what do you know, what is the impact that you're assuming there, you know, maybe you could tell us to pick up on short stays versus total admissions? Like, how much pressure does that put on total admissions? And then lastly, on ACO REACH, you know, there's been some discussion that CMS is seeing a trend higher in the fourth quarter, and they've kind of talked to the ACO REACH plans about that. Give us some numbers there in terms of how much of a trend CMS is reporting in the fee-for-service program in the fourth quarter versus, you know, what they've seen year-to-date to kind of maybe measure Thanks. I'll take the first one, and you can take the AC.

What is the impact that you are assuming there maybe you could tell us the pickup in short stays versus total addition, Blake how much pressure does that put on total emissions and then lastly on ACO reach.

Theres been some discussion that CMS is seeing trend higher in the fourth quarter and kind of talk to the ACO reach plans about that can.

Can you give us some numbers there in terms of how much trend CMS.

He is reporting in the fee for service program.

In the fourth quarter versus what <unk> seen year to date to kind of maybe measure that pick up versus that Matt. Thanks, guys.

Sure So I'll take the first one.

So Justin in terms of trend.

We are seeing some step up in terms of inpatient medical it is in line with what we considered within that that overall trend.

And the two day rule is definitely contributing to that but it is still in line with what we've laid out for Q1 and within the within the full year. The other categories that we are seeing.

Stepping up is the ones that we've talked about before which is the surgeries principally in the outpatient side, but also seeing some inpatient surgery.

Tim Bensley: So, Justin, in terms of trend, we are seeing some steps up in terms of inpatient medical. It is in line with what we considered within that overall trend, and the two-day rule is definitely contributing to that, but it's still in line with what we've laid out for Q1 and within the full year. The other categories that we are seeing, you know, stepping up are the ones that we've talked about before, which are surgeries, principally on the outpatient side, but also seeing some inpatient surgery. A lot of that was in Q4. Some may have been driven by exhausting maximum out of pocket and some just sort of induced utilization around that, but also specialty costs in part. Yeah, Justin, on the ACO reach side, we are also seeing in our ACO reach numbers an acceleration in claims expense in the fourth quarter, similar to what we're seeing on the MA side. So that's certainly coming through our numbers. The one thing that I think, and part of your question is, that's a little bit different in ACO reaches, as those claims increase, that will actually go into the final calculation for the retro trend adjustment.

A lot of that was in Q4, some may have been driven by exhausting maximum out of pocket and some some just sort of induced utilization around that.

But also specialty costs and part B drug.

Yes, just on the ACO REIT side, we are also seeing in.

In our ACO reach numbers and acceleration in claims expense in the fourth quarter similar to what we're seeing on the MA side. So that's certainly coming through our numbers. The one thing that I think part of your question is it's a little bit different than ACO reaches as those claims increase that will actually go into the final calculation for the retro trend is.

Adjustments so.

Overall Medicare fee for service claims are going up our costs are going up the revenue will adjust up as well and thats allowed us from our perspective to pretty much hold and we booked our final ACO reach close pretty much in line with where we had guided the full year national ACO reach Justin is at $6.

8% and our performance came in at two 7%. So we beat that national benchmark by 410 basis at six 8% on the National trend is pretty similar to what we're seeing for the full year on the MA side. So it is what I was referring to.

Tim Bensley: So as overall Medicare fee-for-service claims are going up or costs are going up, the revenue will adjust up as well. And that's allowed us, from our perspective, to pretty much hold, and we've booked our final ACO reach close, pretty much in line with where we had guided. The full-year national ACO reach, Justin, is at 6.8%, and our performance came in at 2.7%. So we beat that national benchmark by 410 bases. That 6.8% on the national trend is pretty similar to what we're seeing for the full-year on the MA side, so that's what I was referring to. And was there a pickup there in the fourth quarter?

And was there a pickup there in the fourth quarter CMS to come to you and say, we're revising that number up.

CMS doesn't come to us and say that they won't give us the claims data and you give us the Medicare fee for service reference population data on a monthly basis.

Okay I'll follow up offline thanks, guys.

Thanks Jessica.

Thank you.

Have a question from Ryan Daniels with William Blair.

Hey, guys. Thanks for taking the questions. Let me start with a big picture one just on your relationship with your managed care Payors given some of the headwinds Youre seeing I know you've talked about getting better data feeds and maybe restructuring some of the contracts one of your peers today.

Tim Bensley: Did CMS come to you and say, you know, we're revising that number up? CMS doesn't come to us and say that; they just give us the claims data and give us the Medicare Fever Service reference population data on a monthly basis. Okay, I'll follow up with one.

Actually moved down the risk adjustment or risk scale, I should say to do some partial risk and move away from full capitation I'm curious if you've debated internally. If that's a strategy you would consider pursuing or if youre, just going to kind of stick with it through the storm here given the trends you see longer term in the business and the cohorts.

Ryan Daniels: Thanks. We now have a question from Ryan Daniels with William... Hey guys, thanks for taking the questions. Let me start with a big idea and some of the headwinds we talked about, you know, getting better data, and many of your peers today. Authorized by the U.S. Department of Health and Human Services, USAID, Microsoft Office Word Document MSWordDoc Word. Document.8, down the risk adjustment. Scale, I should say, away from focus.

Yes, Ryan now listen I really appreciate the question and we obviously are in a volatile environment as we've talked about I think we believe the future is value based care and in full risk value based care I think building a differentiated model and it made significant investments at the market in the platform.

To make that a reality and I think we've got lots of data points like the one I just shared on ACO reach or locally with our payers that we can outperform that fee for service environment, but specifically to your question.

Stephen C. Baxter: Yeah, Ryan, no, listen, I really appreciate the question. And we obviously are in the volatile environments we've talked about. I think we believe the future is value-based care and full risk value-based care. I think we are building a differentiated model, and it has made significant investments in the market and the platform to make that a reality. And I think we've got lots of data points, like the one I just shared on ACO reach or locally with our payers, that we can outperform that fee-for-service environment. But specifically to your question, I think we're in this transition period in terms of MA funding and plan bids. And we're doing it against the backdrop of an elevated utilization environment. And so what we're doing is actively tuning our payer economics and our risk sharing so that we do that two ways. One is in terms of an increased percentage of the premium for capitated business that we've got, and we've been able to have some success around that. We've got more conversations actively going on. And the second is reducing our exposure to elements that are really out of our control.

I think we are in this transition period in terms of MA funding and planned bids and we're doing it against the backdrop of an elevated utilization environment.

So what we're doing is we're actively tuning our payer economics in a risk sharing.

That we're doing that two ways. One is in terms of and an increased percentage of premium for capitation business that we've got and we've been able to have some success around that we've got more conversations actually going and the second is reducing our exposure for elements that are really out of our control. So.

Supplemental benefits star scores outside of the ones that we control around that or just aggressive bid that lead to far higher utilization assumptions then were laid out from an actuarial perspective, and so that tuning Ryan gets reflected in a variety of ways, but I think.

Stephen C. Baxter: So supplemental benefits. I think that's the way we're looking at it. I think our payers are looking for us to do more. We're just looking for an economic and a risk-sharing arrangement that sort of balances the environment.

That's the way we're looking at it.

Our payors are looking for us to do more we're just looking for an economic and a risk sharing arrangement that sort of balances the environment.

Okay.

Stephen C. Baxter: And I'm curious, based on that commentary, especially about your exposure to things that are outside of your control, were the, how receptive are they today to other value adds so that they're willing to negotiate, helping with the So, to date, we're relatively early in that. We have had some success across some very key markets, across a couple of payers. We've got it going with many payers right now, Ryan.

It makes sense and Super helpful color, and then I'm curious based on that commentary, especially about.

Reducing your exposure to things that are outside of your control, which I think is noteworthy how receptive are the payers to this today kind of appreciate that you shouldnt be penalized for.

These things that you can't control and we are looking for you for other value add so that they are willing to negotiate.

How big of a piece of your book of that MA business has gone through that level of negotiation.

So to date, we're relatively early in that we have had some success across some very key markets across a couple of payers. We've got it going with with many payers right now Ryan I would say the value that we provide is very evident to these payer.

Stephen C. Baxter: I would say the value that we provide is very evident to these payers, particularly in this utilization environment. And they want to have a strong primary care supply chain. And our groups represent the largest and sort of most prestigious groups within their communities, and so it's very important.

Particularly in this utilization environment and they want to have a strong primary care supply chain and our groups represent the largest and sort of most procedures groups within their communities and so it is very important so that is factored into our discussion and we'll give you an update on the <unk>.

Eduardo: So that is factored into our discussion. And we'll give you an update on the next call in terms of how that's progressing, but I think we're pretty optimistic. The line is, Hey guys, how are you doing? This is Eduardo on behalf of Jailendra.

<unk> call in terms of how that's progressing but I think we're pretty optimistic.

Okay. Thank you for the comments.

Thank you.

Hi.

Shannon dressing with Shire Securities. Your line is now.

Yeah.

Hey, guys. How are you doing this is eduardo on for Joe <unk>.

Stephen C. Baxter: Thanks for the question. Hey Eduardo, Just on the bridge, it looks like the class of 2024 medical has declined more than the total medical margin relative to your January. Is there anything that you're seeing which makes, I guess, you more cautious? So the class of 24 assumption reflects the full step up in the utilization trend that we talked about across the entire book. I think it drops from $76 PMPM to $52 PMPM is the math on that change. So that is what's driving the change that you see. And then just on the, I guess, the gross medical cost trend, impact being 7.9% versus the net being 6.6%. You know, that rough math points to the clinical programs, roughly $50 million impact on your year two plus lives in 24. I guess first, does that sound right?

Thanks for the question Eduardo.

On the bridge it looks like the class of 2020 for medical margin declined more than the total medical margin relative to your January expectations is there anything that youre seeing which makes.

I guess, you're more cautious on the class of 2024 versus the rest of the book.

So the class of 24 assumption reflects the full step up in the utilization trend that we talked about across the entire book I think it drops from $76 <unk> to $52 <unk> as is the math on that that change.

That that that is what's driving the change that you see there.

Sure.

And then just on the I guess, the gross medical cost trend.

Impact being seven 9% versus the net being six six that rough math points to the clinical programs having a.

Roughly $50 million impact on your year, two plus lives in 'twenty four I guess first does that sound right and can you discuss I guess whats the program do you see being the largest contributors to this trend benefit.

Stephen C. Baxter: And can you discuss, I guess, which programs you see being to the Trend Benefit? Yeah, the math is right on. We think that, you know, there's a little bit of supplemental benefit headwind in those numbers as well. But the overall value of those clinical programs for us should be about 140 basis points in 2024. And Eduardo, what I would say is all of our clinical programs, palliative, renal, and high-risk management, are focused on reducing unnecessary ER and inpatient visits.

Yes, the math is right on we think that.

There's a little bit of supplemental benefit headwind in those numbers as well, but the overall value of those clinical programs for us should be about 140 basis points in 2024 in it are Eduardo what I would say is all of our clinical programs palliative renal high risk management are focused on reducing unnecessary.

Sorry, EUR and in patient visits.

Stephen C. Baxter: We had really good success in 23 with those, with inpatient medical down 2%, which is far better than sort of what we're seeing nationally. And I think we're expanding those to more markets and enrolling more patients in those programs based on a more accurate assessment. So those are the things that are giving us the confidence around the numbers you just laid out for New Brunswick, New York. Hey, just one clarification, a lot of numbers: what was the actual cost trend for the full year in 2023? I heard 7.7 for the fourth quarter, but how does it compare?

Had really good success in 2003 with those with inpatient medical down, 2%, which is far better than.

Sort of what we've seen nationally.

I think we're expanding those to more markets and enrolling more patients in those programs based on a more accurate assessment. So those are the things that are giving us.

The confidence around the numbers you just laid out.

Thanks.

Thank you.

Uh huh.

Mcmahon of Leerink.

Hey, Thanks, just one clarification lot of numbers what was the actual cost trend for the full year in 2023 seven.

<unk> 77 for the fourth quarter and close to 80 for the gross during this year, but how does that compare to the full year.

Tim Bensley: For 2023 with. Yeah, yeah, yeah, absolutely. So our base claims trend, so this is without supplemental benefits all in for the full year, we're now with the incremental reserves that we booked will be 7%. So our 2023 full year trend was 7%, and then the fourth quarter accelerated to 7.7%.

For 2023.

Yes, yes, yes.

Yes, absolutely. So are based claims trend. So this is without supplemental benefits all in for the full year. We're now with the incremental reserves that we book will be 7% of our 2023 full year trend was 7% and then the fourth quarter accelerated to seven 7%.

Tim Bensley: If you include the supplemental benefit effect, the non-medical 7.0 that Tim talked about goes up to 8.2%. Please remind me of the percent of your claim. Yeah, so right now, it's a great question because one of the things that we did when we went in and went through all this process to make sure that we're adequately reserved for the full year is we compared what our assumption is right now for the full-year completion rate to what it would have been for the same group of markets, so year 2 plus markets back, knowing now what we know for our full final cost in 2022 and what it should have been Where at this point, our completion rate with December paid, then final full year incurred, what the real costs were, would have been about 76.5%.

And if you include the supplemental benefit effect, the nonmedical that 7.0 that Tim talked about with goes up to eight 2% for <unk>.

2000, okay.

And just remind me the percentage of your claims that you've completely settled at this point for 2003.

Yes, so right now, but it's a great question because one of the things that we did when we went in and went through all of those process to make sure of that radically reserved for the full year as we compared what our assumption is right now for full year completion rate to what it would have been for the same group of market so year to plus markets.

Back knowing that what we know for our full final costs in 2022, what it should have been in 2022 last year at this point our completion rate with December paid then final full year incurred what the real costs work would have been a completion rate of about 76, 5%. We're assuming a completion rate right now on an apples to apples basis of about.

Tim Bensley: We're assuming a completion rate right now on an apples-to-apples basis of about 75%, so we would have assumed that we were about 150 basis points more conservative. But in the meantime, now, between then and now actually closing, we've been able to see our January page as well, so a whole other month of data, which is actually two more months of data than we had when we got it in early January, and we're just up over 80% completion. In whit in a festive way.

75%, So we would have assumed.

That were about 150 basis points more conservative but in the meantime, now between then and now actually closing we've been able to see our January pages as well to a whole another month of data, which is actually two more months of data than we had when we guided in in early January and were just up over 80% complete.

Okay.

Tim Bensley: Sorry. No, go ahead. I just wanted to give the context of, in the assessment we talked about receiving in February, doing the analysis from some of our largest national payers that was more complete than the composite that Tim talked about. But also in that were updated seasonality factors and census data, because the world is moving for everyone, and so that was all incorporated into the scenarios that we talked about and ultimately where we landed on that most conservative. One last quick one, just the change in geographical entry costs this year. I thought that was largely a set rate.

Yes.

Sorry go ahead.

No go ahead Steve.

I just was going to give the context of in the assessment, we talked about receiving in February and doing the analysis from some of our largest national payers that are more complete than the composite that Tim talked about but also in that were updated seasonality factors and census data because the world is moving for everyone in.

That was all incorporated into the scenarios that we talked about and ultimately where we landed on that that most conservative scenario.

And sorry, one last quick one just the change in the geographical entry costs. This year I thought that was largely a set rate for physician compensation ahead of the future.

Tim Bensley: Yeah, so one of the largest parts of our geographic entry costs are the incentives that we pay to physicians in year zero to complete their annual wellness visits. And the higher the completion rate, obviously, the better that is for us because it allows us to have a positive impact on next year's revenue, as well as do a better job of getting our members enrolled in all of these clinical programs we're talking about. We actually finished the year at a much stronger rate than we had been projecting, particularly in a couple of large markets, and that drove our 2023 number up. Of course, in 2024, that number will be lower because of the size of the class of 2025 compared to 2024, from Elizabeth Anderson, the Liverpool ISD. Hi guys.

The change there.

So it's really one of the largest parts of our geographic entry costs are the incentives that we paid to physicians in years Euro to complete their annual wellness visits and the higher completion rates, we get obviously the better that is for us because it allows us to have a positive impact on next year's revenue as well as do a better job of getting our <unk>.

<unk> enrolled in all of these clinical programs, we're talking about we actually finished the year at a much stronger rate than we had been projecting on particularly in a couple of large markets that drove our 2023 number up of course in 2024 that number will be lower.

Because the class of 2025 because of the class the size of the class of 2025 compared to 2024.

Okay. Thanks.

Yeah.

Thank you.

Our next question comes from Elizabeth Anderson.

<unk> ISI.

Hi, guys. Thanks, so much further question I appreciate all the additional color on what Youre seeing in the data visibility.

A couple of weeks ago, you were talking about 7%.

Elizabeth Anderson: Thanks so much for the question. I appreciate all the additional color on, and the data visibility. I remember a couple of weeks ago, you were talking about some of your sort of percent completion rates, and from the Irish FDA in New York. Okay, fantastic. Thank you, Dr. Anderson. So, thank you, Brian. Yeah, thank you so much for thatnej where you'll be staying at the end, for the state.

Percent completion.

Yes.

<unk> for <unk> for <unk> in terms of data visibility can you give us an update on sort of I don't know whether its 10 since the beginning of January in terms of that sort of where your expectations of where you'll be say at the end of 'twenty before thanks.

Youre talking about the financial data pipeline.

Stephen C. Baxter: So the financial data pipeline, Elizabeth, that I talked about in my remarks that we're standing up this year, we are already receiving claims from our largest payer, and we'll have many more of our largest payers. We talked about in Q1, that'll be north of 50% of our members will be covered within that, and by Q2, we'll have 75% of those based on our seven largest national payers. What that does for us is it gives us the ability to really have a very consistent data set across three quarters of our members. It allows us to be faster with it and to be far more detailed at the cost of care category level than we have been able to historically because you're kind of wrestling with very different data sets, and so it effectively becomes our data set that as soon as it's updated, we have that ability to just move with it that much more rapidly Got it. That's super helpful.

The financial data data pipeline Elizabeth that I talked about in my remarks that we're standing up this year. We are receiving claims already from our largest payer and we will have many more of our largest payers talked about in Q1 that will be north of 50% of our members will be.

Covered within that and by Q2, we will have 75% of those based on our seven largest national Payors what that does for US is it gives us the ability to really have a very consistent data set across three quarters of our members. It allows us to be faster with it.

And to be far more detailed at the cost of care category level than we have been able to historically because you are kind of wrestling very different datasets and so it effectively becomes our data set that as soon as its updated we have that ability to just move with it that much more rapidly and so I.

I think that's what you're referencing is where we're at on that progression and we're on track and encouraged by that and that will be a component as we come back and start talking to you in future calls on the.

The assessments.

Got it that's super helpful. Thank you.

Thank you.

Stephen C. Baxter: Yeah, thanks. For the class of 2025, if we look at the composition of that, can you kind of help us compare and contrast that to the 2024 class? You know, should we think about this being a group? that also launches with relatively strong year one medical margins, or will these, you know, again, given the composition, should we think about this being more like the 23 class? So we, thanks, Sean, for the question. We have a really strong class of 25, very excited to be implementing them right now. As I said, it's at least five groups and 60,000 senior patients, and it will be at least one new state for us. You know, if you think about it in sort of comparison to the class of 23 and 24, you're going to see a greater concentration of these new groups in existing states and markets than we've seen. We think that's really prudent. You're able to leverage existing contracts, clinical programs, and infrastructure around that, so that helps a lot. It is also, in contrast to, say, the class of 23 and 24, less diverse.

Sean George RBC capital market your line.

Yes. Thanks.

So the classic one to 25, but if we look at the composition of banking kind of help us compare and contrast that to the 24 class should we think about this being a group.

And that also launches with a relatively strong year, one medical margins. It will be again, given the composition should we think about it being more like 23 clients.

So we thanks, Sean for the question, we have a really strong class of 25 very excited too.

Implementing them right now as I said, it's at least five groups and 60000 senior patients and it will be at least one new state for us.

If you think about it in.

Sort of comparison to the class of 23% and 24 youre going to see a greater concentration of these new groups in existing states and markets than what we've seen we think that's really prudent you are able to leverage existing contracts clinical programs infrastructure around that so.

That helps a lot.

It is also in contrast, like past 'twenty three 'twenty four it is less diverse you have got more sort of multi specialty groups and primary care and not as many different types of groups within those and then as we just talked about kind of the GL entry costs really.

Stephen C. Baxter: You've got more sort of multi-specialty groups and primary care, and not as many different types of groups within those. And then, as we just talked about, kind of the geo-entry costs really account for the potential for more membership than that 60,000 I talked about in the class of 25, or in longer implementation cycles for the class of 26, so some early onboarding costs for that. So that's sort of the complexion of that group, and we'll be sharing details on each one of these groups here in the coming period. Okay, and maybe just quickly on that last point, should we think about this being kind of what the class of 25 ends up looking like? Is it prudent, given the kind of backdrop, to pause here or just be a lot more selective in who you're including?

Account for the potential for more membership than that 60000, I talked about in the class of 25 or in longer implementation cycles for the class of 2006. So some early onboarding costs for that so that's sort of the complexion of that group and we'll be sharing details on each one of these grew.

<unk> here in the coming period.

Okay, and maybe just quickly on that last point should we think about this being kind of what the classic twenty-five ends up looking like as a prudent given kind of the backdrop to pause here or just be a lot more selective in who you are including.

Stephen C. Baxter: Or do you think 25 could continue to grow? Well, I think so to 25 is that we said at least right, so five groups and 60,000. So there is the potential for that to grow. But I do think we're very prudent in terms of, in particular, our payer contract. Now, this class is in the footprint that we sit in today, so you're able to leverage a lot of existing infrastructure, so there's probably not as much of a dynamic in that. But a big part of this is sort of the pull-through on these groups, but that's sort of where we're at right now. At least five groups, at least 65. Okay, great, and many more. For more information, visit www.fema.gov. Luther of Wales' father on the L.A. Yeah, hey, thanks.

Or do you think 25 could continue to grow.

Well I think suit to 25 is that we said at least right. So five groups and 60000. So there is the potential for that to grow.

Do think we're very prudent in terms of in particularly our payer contracts now. This class is in the footprint that we sit in today, so youre able to leverage a lot of existing footprint. So there's probably not as much of a dynamic on that but a big part of this is sort of the pull through on these group.

But that that's sort of where we're at right now at least five groups at least at least 60000.

Okay, great. Thanks again.

We now have Stephen Baxter with Wells Fargo on the line.

Yes, hey, thanks, So I just wanted to ask.

Stephen C. Baxter: So I just wanted to ask, you know, at this point, as you look back at sort of the cohort progressions, especially the older cohort, has there been anything structurally to get back to these economics over time? I mean, one thing.

At this point as you look back at sort of the cohort progression, especially the older cohorts.

There been anything that structurally changes your view of the company's ability to get back to these economics over time I mean, one thing that we've been thinking about is that on the health plan side. They have two levers to really deal with this first they have kind of the repricing, but then they're also seemingly cutting a lot of corporate overhead so they might not even be necessarily getting back.

Stephen C. Baxter: We've been thinking about is that, you know, on the health plan side, they have two levers to really deal with this. First, they have kind of the repricing, but then they're also... cutting a lot of corporate overhead, so they might not necessarily get back to the same medical margins that they would have had on a pre-COVID basis. So as we sort of think about it, just wondering if you could provide some thoughts around the potential achievability of those economics and, I guess, what the environment looks like going forward. Thanks.

Back to the same medical margins that they would have had on a pre COVID-19 basis. So as we sort of think about it just wondering if you could provide some thoughts around the potential achievability of those economics, and I guess, what it looks like it'll be a pretty different environment going forward. Thanks.

Stephen C. Baxter: Yeah, Stephen, I mean, it definitely is a dynamic environment, and you've got elevated utilization. I appreciate your asking about the cohort data. I mean, I think clearly elevated costs impacted the member cohorts and the market cohorts that are in the deck that's on the investor website. But I think we're encouraged when you look at the member cohort data, which is basically members that came on at 18, kind of how they're performing across time, 19, same thing. If you look at the classes of 18, 19, and 20, they are progressing or sustaining near 150 bucks PMPM. That's on the low side, but we've talked about that 150 to 200 is sort of where we're shooting for, and obviously, we've got some that are north of us.

Yes, Stephen I mean, it definitely is a dynamic environment and you've got the elevated utilization I appreciate you're asking about the cohort data.

I think <unk>.

Clearly elevated costs impacted the member cohorts and the market cohorts that are in the.

The deck that's on the Investor website I think we're encouraged when you look at the member cohort data, which is basically members that came on in 2018 kind of how they are performing across time 19 same thing. If you look at the classes of 18, 19, and 20, they are progressing or sustaining.

150 Bucks <unk>, that's on the low side, but we've talked about that 150 to 200 is sort of where.

We're shooting for and obviously, we've got some that are north above that.

Stephen C. Baxter: The market class data, what we've shown you for the first time within that, is the impact of dilution from mid-teens, same-star growth, year in, year out. And so, it's very important in terms of what you're able to drive across those markets. And our action plans are focused on, you know, we've added 400 providers and 100,000 MA members since the initial year one; those are dragging those markets. So you see a $36 PM PM impact in the market class of 18, an $86 PM PM impact in the class of 19, and a $44 PM PM impact in the class of 20. These are dragging those market numbers that you see on the next page.

The market class data, what we've shown here for the first time within that is the impact of dilution from mid teens same store growth year end year out and so it's very impactful in terms of what you are able to drive across.

Those markets.

And our action plans are focused on.

Added 400 providers and 100000 MA members since the initial year one.

Those are drag in those markets. So you see at $36 <unk> impact in the market class of 18 and $86 <unk> impact in the class of <unk> 19, and a $44 <unk> impact and the class of 'twenty those are draw.

<unk> those market <unk>.

Number is that you see.

On the next page and so our opportunity is in that action plan I talked about around addressing PCP variability how do we focus on those new doctors, how do we focus on those new patients how do we get them more educated in understanding sort of the elements of the value based.

Stephen C. Baxter: And so our opportunity is in that action plan I talked about around addressing PCP variability. How do we focus on those new doctors? How do we focus on those new patients? How do we get them more educated and understanding sort of the elements of the value-based care model and really what's available to them within the care team to drive that improvement?

Care model and really what's available to them within the care team to drive that improvement, we see that as a major opportunity for us to to drive those up and so I think we believe based on 18 19, and 20, you Couldnt get members to that level and with markets, we've got to be able.

Stephen C. Baxter: We see that as a major opportunity for us to drive those up. And so I think we believe based on 18, 19, and 20, you can get members to that level. And with markets, we've got to be able to accelerate and drive that cohort maturation for those newer members and newer PCPs at the same level. So that's kind of how we're thinking about it. That's a lever we can control.

To accelerate and drive that cohort maturation for those newer members and newer pcp's same level. So that's kind of how we're thinking about it that's a lever we can control you've talked about levers outside of our control like how plans file their bids and there.

George Hill: You've talked about levers outside of our control, like how plans file their bids and their benefits. We are encouraged, based on what we're hearing around that and how they're thinking about 25, that would obviously flow through dollar for dollar to us. That's part of the payer economics and risk sharing discussion that I talked about. And then there's obviously what will happen from a benchmark perspective and how much of this accelerated utilization will be captured within that. But we think we're in this two-year cycle. We think those elements should improve the spread 25, 26, 27. But we're really focused on what we can control, and we see this variability with newer doctors and with newer members as a great opportunity. Now, we have George Hill of Deutsche Bank on the line.

Benefits, we are encouraged based on what we're hearing around that and how theyre thinking about 25 that would obviously flow through dollar for dollar to us that's part of that payer economics and risk sharing discussion that I talked about and then Theres, obviously, what will happen from a benchmark perspective and how much of this.

<unk> accelerated utilization will be captured within that but we think we are in this two year cycle. We think those elements should improve the spread 'twenty five 'twenty six 'twenty seven, but we're really focused on what we can control and we see this variability with newer doctors and with newer members as.

<unk> is a great opportunity for us.

Okay. Thank you for the color.

Sure.

George Hill with Deutsche Bank Your line.

Okay.

Stephen C. Baxter: Yeah, thanks for taking the question, guys. And, and Steve, this is kind of like a big picture question for you, as you talked about some of your health plan partners bidding for margin. But there's kind of guardrails around what they can do, right, based upon what the final rate notice looks like, the TBC, how close they want to bid to the benchmark and impact the rebate levels and things like that. So I'm wondering, kind of from where you sit, what do you think about the margin expansion? in 2025. And kind of like, like, I'm going to kind of use that as a proxy.

Yes, thanks for taking the question guys and Steve. This is kind of like a big picture question for you, which you talked about some of your health plan partners bidding for margin.

But theres kind of guardrails around what they can do right based upon what the final rate.

The TBC how close they won the bid to the benchmark and impact of the rebate levels and things like that so I'm wondering kind of from where you sit what do you think about the margin expansion potential.

In 2025 and kind of like.

I'm going to kind of use that as a proxy.

Stephen C. Baxter: What can that look like for you guys? Because some of your health plan partners have talked about needing to increase margin, you know, low double-digit dollars per member per month as you look out to 2025. I'd be interested to hear how you think about those moving forward. I think the math is if you do a $10 PM-PM adjustment in terms of a bid across a half a million seniors in MA, I think it's an annual number of $60 million, right? So that, if you talk about low double digits, that gives you, you know, the ability to sort of dimension what that could look like. And that's one element of this, George.

What can that look like for you guys because some of your health plan partners.

<unk> talked about.

With needing to increase margin.

Low double digit dollars per member per month digital accounts.

25.

I'd be interested to hear how you think about this as maybe a big picture level.

I think the math is if you do a $10 <unk> pm.

Adjustments in terms of a bid across a half a million seniors in MAA I think thats, an annual number of $60 million right. So that if you talk about low double digits that gives you the ability to sort of dimension what that could look like and that's one element of this George.

Stephen C. Baxter: And so I think we've had conversations with people. Some people are thinking more than that. Some people, you know, I think are still trying to figure that out.

And so I think.

We've had conversations with people some people are thinking more than that some people I think are still trying to figure that out but.

Stephen C. Baxter: But I think that that's one piece of it. But I will come back to, you know, what I was just talking to Stephen about. The thing we can control is really around this variability in the new doctors and the new patients. We think that can be very material in terms of the improvement that we can see from that perspective as well. And then there's just this natural maturation in the cohorts, right?

I think that that's one piece of it but I will come back to what I was just talking to Steve about the.

We can control is really around this variability and the new docs and the new patients. We think that can be very material in terms of the improvement that we can see from that perspective as well and then there's just this natural maturation in the cohorts right in a very difficult year.

Stephen C. Baxter: In a very difficult year, you're seeing us projecting a 40% step up in medical margin from 23 to 24. A big part of that is the class of 24 that comes with great experience and longer implementation. But I think if you think about our business, as members mature across time, you should see this natural evolution, and this spread should correct from where it sits today. Thanks, George, now, and Ron of Bangor.

You're seeing us projecting a 40% step up in medical margin from 23 to 24.

A big part of that is this class of 24 that comes on great experienced longer implementation, but I think if you think about our business as members mature across time, you should see this natural evolution and this spread should correct for.

Where it sits today.

Okay.

Okay.

Thanks George.

Yes.

We now have.

I didn't run of bank of America.

Adam: Hey, thanks for the question. I'm going to ask something very similar to what's been asked already, but maybe from a different angle. So the payers are also talking about 2025, cutting rebates, and they've given a number, something like $40 at the max, for some ways of looking at it. On a percentage basis, if they're talking about 100 basis points of margin, would that be higher for you just because if that does come in the form of rebates, it's a higher percentage of the... Uncapitated Benchmark, and separately, is there a way that they do cut benefits and somehow it doesn't flow to you because you're talking about, you know, Carving Out Risk on Supplemental Benefits, and Just trying to understand how much visibility you have into that, how much capacity payers have to cut benefits and not slow it down. So, um, I mean...

You May proceed with your question.

Hey, Thanks for the question I'm going to ask something very similar to what's been asked already but maybe from a different angle.

The payers are also talking about 2025 in terms of actual margin improvement. So like Humana think something like 100 150 basis points of margin most of that comes from.

Cutting rebase and they've given a number or something like $40 at the Max.

Looking at some ways of looking at it.

On a percentage basis, if theyre talking about 100 basis points of margin would that be higher for you just because if that does come in the form of rebates, it's a higher percentage of the.

Appetite benchmark.

<unk>.

Just separately is there a way that they do cut benefits and somehow it doesn't flow to you because you are talking about.

No.

Carving out risk on supplemental benefits and its supplemental thing.

They're getting cut in your carved them out as it somehow end up impacting your Cana I'll just trying to understand like.

Stephen C. Baxter: I'll just back up, Adam, to what I said, which is that we are really trying to tune our payer economic and risk-sharing arrangements in this environment. Utilization is up, and we're managing that. We should probably be receiving a larger percentage of the premium. That's part of the dialogue that we have with them, given the consistency of performance from a quality perspective that we're delivering for them and for their patients. So that's kind of a big part. The things outside of our control, how do we look at that?

How much visibility you have into that.

How much capacity payers have to cut benefits and not slow it into agile.

Yes so.

I mean I'll.

I will just backup Adam to what I said, which is we're really trying to tune our payer economic and risk sharing arrangements.

In this environment.

Utilization is up and we're managing that.

You should probably be receiving a larger percentage of premium that that's part of the dialogue that we have with them given the consistency of performance from a quality perspective.

We're delivering for them and for their patients. So that that's kind of a big part that things outside of our control how do we look at that two week corridor and the Capex do we carve it.

Stephen C. Baxter: Do we corridor it? Do we cap it? Do we carve it?

I mean.

Stephen C. Baxter: I'm getting into sort of future scenarios about what gets changed and how that flows through. I don't have a perfect crystal ball on that, but I do think this idea is that we are delivering an incredibly valuable service for them, and we are trying to look at a sustainable model for them and for us that works around that. So that's sort of a general answer to your question, but we have a lot of dialogue with them as they think about their 25 bids, as they think about 25 markets, and how our partnerships fit within them. Yeah, I appreciate that. And then just two really quick follow-ups. So GNA, I think, platform support costs are based on the current guidance of like 3% of revenue, based on last year's performance. I think they're growing in like the mid-teens.

Getting into sort of future scenarios about what gets changed and how that flows through I don't have a perfect crystal ball on that but I do think this idea is we are delivering an incredibly valuable service for them and we are trying to look at a sustainable model for them and for us that it works around that.

So that's sort of a general answer to your question, but a lot of dialogue with them as they think about their their 25 bids as they think about 25 markets.

And how are our partnerships fit within that.

Yes, I appreciate that and then just two really quick follow ups. So G&A I think like platform support costs are based on the current guidance was like 3% of revenue in last year's performance I think they are growing in like the mid teens is that a reasonable way to think about 25 as well just on a dollar basis for platform support cost and then.

Adam: Is that a reasonable way to think about 25 as well, just on a dollar basis? platform support costs. And then finally, I think, you know, the adjusted EBITDA on 23 was around, you know, negative 90 million. That's how we should think of operating cash flow losses in 24 as well since we're talking about a one-year lag. Yeah, I think on the first one, you know, a little early for us to be guiding to platform support costs for 2025, but we would expect that we're going to definitely continue to get leverage out of our platform support costs and continue to drive, obviously, platform support cost growth will be obviously well below what our revenue cost growth is.

Finally, I think adjusted EBITDA in 'twenty period was around negative $90 million is that how we should think of.

Operating cash flow losses in 'twenty, four as well since we're talking about a one year lag.

Yes, I think on the first one.

A little early for us to be guiding to platforms for growth for 2025, but we would expect that we're going to definitely continue to get leverage out of our platform support costs.

We continue to drive platforms for cross growth will be obviously, well below what our revenue cost growth or what our revenue growth is so.

Adam: So, you know, specifically a little early to say, but yeah, we'll continue to get leverage for sure on the cash flow numbers. What we talked about for 2024 is that our expectation is that we'll burn somewhere between 135 and 100 and 125 and 150 million dollars of cash in 2024. If we hit our guidance for 2024 that we put out there, the way our cash flow works is there's kind of a delayed impact of the medical margin and EBITDA that we're generating in 2023 has a big impact on our 2024 cash flow. And our 2024 performance will have a big impact on 2025. If we can deliver our 2024 guidance, which we expect to, our 2025 use of cash would go down to about $25 or $30 million, and then that would put us on a good trajectory to have positive cash flow in 2026 and beyond.

Specifically, a little early to say, but yeah, we will continue to get leverage for sure.

The.

Cash flow numbers, what we talked about for 2024 is that our expectation is that will burn somewhere between 135% to 100 $125 $150 million of cash use in 2024.

If we hit our guidance for 2024 that we put out there.

The way our cash flow works is there is kind of a delayed impact of the medical margin and EBITDA that we're generating in 2023 has a big impact on our 2024 cash flow 2020 fours guided performance have a big impact on 2025, if we can deliver our 2024 guidance, which of course, we expect to our <unk>.

25 use of cash would go from down to about a 25% or $30 million.

And then that would put us on a good trajectory to be positive cash flow in 2026 and beyond.

And Adam.

I would say is just.

Stephen C. Baxter: And Adam, what I would say is that we're seeing tremendous leverage on the efficiency side from the investments we're making in technology and the centralization and standardization of activities that we're doing, like chart reviews that previously got done within local markets. And so I think just the scale that we've got, there's a tremendous opportunity, not just in things like discussions with payers, but also from an efficiency perspective, for us to drive that further. So I think as we continue to grow, there's going to be far greater leverage. And we get very good leverage against our operating costs in our existing markets. I mean, most of the incremental costs we add year over year to our platform's forecast is because we're adding markets. As our existing market base becomes a bigger and bigger part of our overall membership, we just get really good leverage out of costs in those markets. It's another benefit of growing in your existing footprint.

Seeing tremendous leverage on the efficiency side from the investments, we're making in technology and the centralized centralization standardization of activities that we're doing like chart reviews that previously got done within within local markets.

So I think just the scale that we've got there is a tremendous opportunity not just in things like discussions with payers, but also from an efficiency perspective for us to drive further further around that so I think as we as we continue to grow there's going to be far greater leverage from that perspective.

And we get very good leverage against our operating costs in our existing markets. I mean, most of the incremental costs, we add year over year to a platform for cost is because we're adding markets.

Yes.

Our existing market base becomes a bigger and bigger part of our overall membership we just get really good leverage out of costs in those markets.

It's another benefit of growing in your existing footprint.

Okay, great. Thanks, so much.

Operator: Thanks so much. Thank you. I would like to hand it back to the Agilion management team for any final comments. Well, thank you. Obviously, we're living in a very dynamic environment. I think our 23 results and 24 guide we've shared with you are clearly impacted by those, but we feel like our targeted action plan is on track and our business model is working. And I think when you look at our cohort data, even in a difficult environment, it shows the value we're providing to physicians and sort of what the long-term opportunity is within the business. So we look forward to talking with you all soon. Thanks for joining us on this new page. Corte, 2023 Earnings Conference Call. You may now disconnect your lines and please enjoy the rest of the event. For more information, visit www. FEMA.gov or tune in.

Thank you.

Question is on the line.

T.

The <unk> management team for any final remarks.

Well. Thank you obviously, we're living in a very dynamic environment I think our 'twenty three results in 24 guide we've shared with you are clearly impacted by those but we feel like our targeted action plan is on track and in our business model is working and I think when <unk>.

You look at our cohort data even in a difficult environment. It shows the value, we're providing to physicians and sort of what the long term opportunity is within the business. So we look forward to talking with you all soon thanks for joining us.

Thank you all for joining the Chilean health fourth quarter 2023 earnings Conference call.

May now disconnect your lines and please enjoy the rest of your day.

Okay.

Thank you all for joining via Julien.