Q1 2024 Astrana Health Inc Earnings Call

Operator: Today's speakers will be Brandon Sim, President and Chief Executive Officer of Astrana Health, and Chandan Basho, Chief Operating and Financial Officer. The press release announcing Astrana Health, Inc.'s results for the first quarter ended March 31st, 2024 is available in the investor section of the company's website at www.astranahealth.com. The company will discuss certain non-GAAP measures during this call. Reconciliations to the most comparable GAP measure are included in the press release.

The speakers will be branding, some president and Chief Executive officer of US trying to help and Sean Basho, Chief operating and financial Officer.

Operator: The press release announcing a strong health Inc. 's results for the first quarter ended March 31st 2024 is available at the investors section of the company's website at Www Dot Astana health Dotcom the company will discuss certain non-GAAP measures during this call reconciliations.

Operator: For the most comparable GAAP measure are included in the press release to provide some additional background on its results. The company has made a supplemental back available on its website. A replay of this broadcast will also be made available at <unk> website. After the conclusion of this call.

Operator: To provide some additional background on its results, the company has made a supplemental deck available on its website. A replay of this broadcast will also be made available on Astrana Health's website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contain certain forward-looking statements within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.

Operator: Before we get started I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward looking statements within the meaning of the safe Harbor provision of the private Securities Litigation Reform Act of 1995.

Operator: These forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook, and will and include, among other things, statements regarding the company's guidance for the year ending December 31st, 2024, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans, and merger integration efforts. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause actual results to differ dramatically from those projected.

Operator: These forward looking statements can be identified by terms such as anticipate believe expect future plan outlook and will and include among other things statements regarding the company's guidance for the year ending December 31, 2020 for continued growth acquisition.

Operator: <unk> ability to deliver sustainable long term value ability to respond to the changing environment.

Operator: Regional focus strategic growth plan and merger integration efforts.

Operator: There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in Astrana Health is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions, or otherwise, except as required by law.

Operator: Although the company believes that the expectations reflected in its forward looking statements are reasonable as of today. Those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected there can be no assurance that those expectations will prove to be correct.

Operator: Information about the risks associated with investing in a strong health is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision.

Operator: The company does not assume any obligation to update any forward looking statements as a result of new information future events changes in market conditions or otherwise, except as required by law.

Operator: Regarding the disclaimer language, I would also like to refer you to slide two of the conference call presentation for further information. With that, I'll turn the call over to Astrana Health President and Chief Executive Officer, Brandon Sim. Please go ahead, Brandon. Thank you.

Operator: Regarding the disclaimer language I would also like to refer you to slide two of the conference call presentation for further information.

Brandon Sim: With that I'll turn the call over to Australia helped President and Chief Executive Officer, Brandon them. Please go ahead Brandon.

Brandon Sim: Thank you operator.

Brandon Sim: Good evening, and thank you all for joining us today. We began 2024 with a strong first quarter here at Astrana Health as we expanded our innovative care model and technology platform to empower entrepreneurial providers and improve health care in local communities throughout the country. We continue to deliver against our strategic roadmap and are proud to announce compelling financial, operational, and clinical results to start the year. I'll start by highlighting our financial performance for the first quarter of 2024.

Brandon Sim: Good evening and thank you all for joining us today.

Brandon Sim: We began 2024 with a strong first quarter here at Assurant health, because we expand our innovative care model and technology platform.

Brandon Sim: Our entrepreneurial providers and improve health care and local communities throughout the country.

Brandon Sim: We continue to deliver against our strategic roadmap and are proud to announce compelling financial operational and clinical results to start the year.

Brandon Sim: Total revenue at Astrana reached $404 million, a 20% increase compared to the prior year period, and adjusted EBITDA rose to $42.2 million, up 42% compared to the prior year period. This resulted in an adjusted EBITDA margin of 10.4%.

Brandon Sim: I'll start by highlighting our financial performance for the first quarter of 2024.

Brandon Sim: Total revenue that has drawn a reached 404 million% to 20% increase compared to the prior year period.

Brandon Sim: That EBITDA rose to $42 2 million up 42% compared to the prior year period.

Brandon Sim: This resulted in an adjusted EBITDA margin of 10, 4%.

Brandon Sim: Both growth and profitability metrics were driven by robust membership growth across all our lines of business, coupled with ongoing success in managing the total cost of care for these members in value-based risk-bearing arrangements. We also continued investing in our teams, our technology platform, and our new market entry operation. We believe these investments are critical to our ongoing commitment to building a sustainable business, even as we continue to expand rapidly.

Brandon Sim: Both growth and profitability metrics were driven by robust membership growth across all lines of business coupled.

Brandon Sim: Coupled with ongoing success in managing the total cost of care for these members and value based risk bearing arrangements.

Brandon Sim: We also continued investing in our team our technology platform and our new market entry operations.

Brandon Sim: We believe these investments are critical towards our ongoing commitment to building a sustainable business, even as we continue to expand rapidly.

Brandon Sim: As a reminder, we've consistently talked about the four pillars of our business, which we feel our platform is uniquely positioned to execute on. One, expanding our membership base across existing and new geographies, and increasing the level of accountability and risk we are responsible for in our value-based care contract.

Brandon Sim: As a reminder, we've consistently talked about the four pillars of our business, which we feel our platform is uniquely positioned to execute on.

Brandon Sim: One expanding our membership base across existing and new geographies.

Brandon Sim: Q, increasing the level of accountability and risks we are responsible for a value based care contracts.

Brandon Sim: Sorry, empowering our providers to achieve superior patient outcomes and four executing strategic acquisitions to further accelerate our growth trajectory.

Brandon Sim: Empowering our providers to achieve superior patient outcomes. And four, executing strategic acquisitions to further accelerate our growth trajectory. On the first pillar, we experienced robust growth and membership in both CORE and UV. We now manage approximately 1 million lives driven by robust organic growth and strategic acquisition. Our membership grew organically by around 10% year-to-date, a number that is net of Medicaid redetermination and does not include any strategic acquisition.

Brandon Sim: On the first pillar, we experienced robust growth in membership in both core and new regions.

Brandon Sim: We now manage approximately 1 million lives driven by robust organic growth and strategic acquisitions. Our membership grew organically by around 10% year to date number that is net of Medicaid Redetermination and does not include any strategic acquisitions.

Brandon Sim: On the second pillar, we continue to take on greater responsibility for the total cost of care for our members, as we promised we would do. As of April 1st, our full-risk business makes up approximately 60% of total capitation revenue, and we anticipate continuing to grow that percentage while consistently delivering high-quality care as the year progresses. In addition, we also began taking on full recreational delegation in the state of Nevada.

Brandon Sim: On the second pillar, we continue to take on greater responsibility for the total cost of care of our members as we promised we would do.

Brandon Sim: As of April 1st our full risk business makes up approximately 60% of total capitation revenue and we anticipate continuing to grow that percentage, while consistently delivering high quality care as the year progresses.

Brandon Sim: In addition, we also began taking on full risk delegation in the state of Nevada.

Brandon Sim: We believe that we are uniquely positioned to capture the embedded growth that this pillar represents because of the high level of visibility and consistency that our proprietary technology and clinical infrastructure affords us. I'd like to continue emphasizing a key aspect of our business that distinguishes Astrana Health from other providers and peers. We have always been committed to serving all segments of our communities in value-based care arrangements, covering all payer types from original Medicare, Medicare Advantage, managed Medicaid, and commercial.

Brandon Sim: We believe that we are uniquely positioned to capture the embedded growth that this pillar represents because of the high level of visibility and consistency in our proprietary technology and clinical infrastructure affords us.

Brandon Sim: I would like to continue emphasizing a key aspect of our business.

Brandon Sim: English is trying to help from other providers and peers.

Brandon Sim: We have always committed to serving all segments of our communities in value based care arrangements covering all payer types from original Medicare Medicare advantage managed Medicaid to commercial.

Brandon Sim: And we continue to forge ahead in our transition to risk and being truly accountable for our members' whole health across those diverse business segments, even as others have shied away. The infrastructure, technology, and team that we have built allows us to do this well, resulting in our ability to serve a wider patient population, make our providers' lives simpler and more efficient, diversify our business and better manage risk, and support our payer partners across their entire business.

Brandon Sim: And we continue to forge ahead in our transition to risk and being truly accountable for our members courthouse across those diverse business segments, even as others have shied away.

Brandon Sim: The infrastructure technology and team that we have built allows us to do this well.

Brandon Sim: Results in our ability to serve a wider patient population.

Brandon Sim: Providers lives simpler and more efficient diversify our business and better manage risk and support our payer partners across their entire business.

Brandon Sim: With regard to the third pillar of our business, Astrana is focused on providing high-quality care and access to all members. However, we've noticed continued underperformance compared to previous years in terms of HEDIS, HCC, and other quality-related outcomes. We also continue to focus on making sure members receive the right care in the right setting, leading to our continued strong performance on clinical utilization metrics. For example, were bed days per thousand and admits per thousand improved in the first quarter when compared to previous periods?

Brandon Sim: With regards to the third pillar of our business are strong.

Brandon Sim: It is focused on providing high quality care and access to all members.

Brandon Sim: We've noticed continued outperformance compared to historical years in terms of heaters, HCC and other quality related outcomes.

Brandon Sim: We also continue to focus on making sure members receive the right care in the right setting.

Brandon Sim: Turning to our continued strong performance on clinical utilization metrics.

Brandon Sim: Our bed days per thousand and admits per thousand improved in the first quarter when compared to previous periods.

Brandon Sim: This improvement is consistent across all business segments, with Medicare, Medicaid, and commercial authorizations for inpatient and outpatient services marrying this trend. Moving on to the fourth pillar of the business, strategic acquisition, we successfully closed the second and final part of our community family care acquisition this quarter, as we had previously guided.

Brandon Sim: This improvement is consistent across all business segments, with Medicare Medicaid and commercial authorizations for inpatient and outpatient services marrying this trend.

Brandon Sim: Moving onto the fourth pillar of the business strategic acquisitions, we successfully closed the second and final part of our community family care acquisition. This quarter as we had previously guided.

Brandon Sim: This acquisition marks the largest in Astrana's history and serves as a successful example of a care enablement client deepening its relationship with Astrana Health and moving into the care partner segment. The integration of CFC was seamless, as we were already powering the CFC business with our care enablement platform prior to the acquisition, showcasing the value and synergy of leveraging our care enablement, tech-enabled services business. The completion of this transaction allows us to take on greater responsibility for the outcomes of the patients we serve with CFC's full-risk Medicaid-restricted Noxkine License.

Brandon Sim: This acquisition marks the largest in <unk> history and serves as a successful example of a care enablement client deepening its relationship with Australia House and moving into the care partners segment.

Brandon Sim: Gration of CSC was seamless as we were already powering the CFC business with our care enablement platform prior to the acquisition.

Brandon Sim: Suitcase in the value and synergy of leveraging our care enablement Tech enabled services business.

Brandon Sim: The completion of this transaction allows us to take on greater responsibility for the outcomes of the patients we serve with Cft's low risk Medicaid restricted Knox Keene license.

Brandon Sim: It also further strengthens our commitment to managing medical costs and providing quality care in our community. Looking ahead, we expect to transition the majority of our Medicaid members to full risk arrangements in the next 6 to 12 months. This quarter, we also completed the acquisition of Prime Community Care of Central Valley, or PCCCB. A risk-bearing provider organization with over 150 primary care and multi-specialty care providers, which serve around 26,000 primarily Medicaid members in the Central Valley of California.

Brandon Sim: It also further strengthens our commitment to managing medical costs, and providing quality care in our communities.

Brandon Sim: Looking ahead, we expect to transition the majority of our Medicaid members to full risk arrangements in the next six to 12 months.

Brandon Sim: This quarter. We also completed the acquisition of crimes beauty care of Central Valley or P. C. C. C V.

Brandon Sim: Our risk bearing provider organization with over 150 primary care and multi specialty care providers, which serve around 26000, primarily Medicaid members in the Central Valley of California.

Brandon Sim: Prior to this, our organic growth and partnership efforts in the Central Valley have been robust, and PCCCV joining our Care Partners business will be a further accelerant for our efforts to deliver high-quality, high-value care to communities in the Central Valley and also represents our entry into San Joaquin County. Over the next 12 months, we anticipate continuing our strategy in the region with PCC-CV in the fold, taking greater accountability for total cost of care for these members and further integrating with our care enablement platform in order to advance patient outcomes and empower community providers in the region. And outside of California, we continue to see a rich pipeline of both organic and inorganic opportunities in both Texas, Nevada, and beyond.

Brandon Sim: Prior to this our organic growth and partnership efforts and the Central Valley had been robust and P. C. C. C V. Joining our care partners business will be a further accelerant for our efforts to deliver high quality high value care to communities in the Central Valley and also represents our entry into San Joaquin County.

Brandon Sim: Over the next 12 months, we anticipate continuing our strategy in the region with P. C. C. C V in the fold, taking greater accountability for total cost of care for these members and further integrating with our care enablement platform and order advanced patient outcomes and empower community providers in the region.

Brandon Sim: And outside of California, we continue to see a rich pipeline of both organic and inorganic opportunities in both Texas, Nevada and beyond.

Brandon Sim: We believe that the strong growth and consistent execution of our strategic roadmap demonstrate the uniqueness of our platform, repair model, and technology capabilities, our well-established value-based infrastructure, and long track record of managing total cost of care and patient outcomes in value-based arrangements across all payer types with confidence in the ongoing growth and profitability of our platform. To conclude my prepared remarks, I want to express my gratitude to our teammates, providers, and partners for their belief in our vision to transform healthcare in local communities nationwide. The rapid growth and positive outcomes of the business would not be possible without your passion, dedication, and support. With that, I'll hand it over to Chan to review our financial results.

Brandon Sim: We believe that the strong growth and consistent execution of our strategic roadmap demonstrate the uniqueness of our platform our care model and technology capabilities.

Brandon Sim: Our well established value based infrastructure and long track record of managing total cost of care and patient outcomes and value based arrangements across all payer types with confidence in the ongoing growth and profitability of our platform.

Chan: To conclude my prepared remarks, I want to express my gratitude to our teammates providers and partners for their belief in our vision to transform health care in local communities nationwide.

Chan: The rapid growth and positive outcomes of the business would not be possible without your passion dedication and support.

Chan: With that I'll hand, it over to John to review our financial results.

Chan: Thanks Brandon.

Chandan Basho: Moving into this quarter's performance, we began 2024 with total revenue of $404 million, a 20% increase from $337 million in the prior year quarter. This was primarily driven by increased capitation revenue resulting from organic membership growth in our core IPAs, as well as the addition of CFC IPA on January 31st, 2021. Care partners' revenue increased 26% to $397 million during the period.

Chan: Moving into this quarter's performance, we began 2024 with total revenue of $404 million.

Chandan Basho: 20% increase from $337 million in the prior year quarter.

Chandan Basho: This was primarily driven by increased competition revenue, resulting from organic membership growth in our core ipas.

Chandan Basho: As well as the addition of CFC Ipas on January 31 2024.

Chandan Basho: Sure partners revenue increased 26% to $397 million during the period.

Chandan Basho: Along with organic and strategic growth, partners' revenue increased due to the conversion and addition of full-risk membership. As of April 1st, 2024, we expect our full risk business to account for approximately 60% of capitated revenues relative to 49% as of January 1st, 2024. Adjusted EBITDA was $42.2 million, up 42% from 29.8 million in the prior year period. For the first quarter of 2024, Adjusted EBITDA excluded certain one-time items, including a $4.7 million expense related to a financial guarantee via a letter of credit that we provided two years ago in support of two independently operated local provider-led ACOs.

Chandan Basho: Along with the organic and strategic growth.

Chandan Basho: <unk> revenue increased due to the conversion in addition, our full risk membership.

Chandan Basho: As of April one 2024, we expect our full risk business to account for approximately 60% of catheter needed revenues relative to 49% as of January one 2024.

Chandan Basho: Adjusted EBITDA was $42 2 million.

Chandan Basho: 42% from $29 8 million in the prior year period.

Chandan Basho: In the first quarter of 2024, adjusted EBITDA, excluding certain onetime items, including a $4 7 billion dollar expense related to our financial guarantee.

Chandan Basho: The letter of credit that we provided two years ago in support of two independently operated local provider led acos.

Chandan Basho: Despite the removal of these ACOs from the CMS program, the shared losses for that year were recorded, and we're working with those two providers to recoup the funds that were spent. As I mentioned, this is not a recurring item, nor do we believe it reflects the operations of our ACO business.

Chandan Basho: Despite the removal of these acos from the CMS program the shared losses for that year were recorded and we're working with those two providers to recoup the funds that were spent.

Chandan Basho: As I mentioned.

Chandan Basho: This is not a recurring item nor do we believe it reflects the operations of our ACO business.

Chandan Basho: Net income attributable to Astrana Health was $14.8 million, an increase of 13% from $13.1 million in the prior year quarter. Earnings per share on a diluted basis were $0.31, up 11% from $0.28 in the prior year. Now turning to the balance sheet, our financial position remains well capitalized with $335 million in cash-in-cash equivalents and total debt of $393 million as of Q1 2024. This compares to $294 million in cash and cash equivalents and total debt of $282 million at the end of 2023.

Chandan Basho: Net income attributable to Australia health was $14 8 million and.

Chandan Basho: An increase of 13% from $13 1 billion in the prior year quarter.

Chandan Basho: Earnings per share on a diluted basis were <unk> 31 cents up 11% from 28 in the prior year.

Chandan Basho: Now turning to the balance sheet.

Chandan Basho: Our financial position remains well capitalized with $335 million in cash and cash equivalents and total debt of $393 million as of Q1 2024.

Chandan Basho: This compares to 294 million in cash and cash equivalents and total debt of 282 million at the end of 2023.

Chandan Basho: We are steadfast in our ability to execute our growth strategy by expanding our membership through both organic means and strategic acquisitions, as well as transitioning our contracts to full risk. Further, we remain confident that full-year projections align with expectations, given our diverse Paramics and ability to manage costs of care. As a result, we are reaffirming our full-year guidance for revenue, adjusted EBITDA, and earnings per share. Looking ahead to the coming quarters, the successful completion of the second part of the CFC acquisition is projected to contribute a single-digit uplift in Q2 revenue relative to Q1.

Chandan Basho: We are steadfast in our ability to execute our growth strategy by expanding our membership through both organic means and strategic acquisitions as well as transitioning our contracts to progress.

Chandan Basho: Further we remain confident that full year projections aligned with expectations, given our diverse tier mix and ability to manage cost of care.

Chandan Basho: As a result, we are reaffirming our full year guidance for revenue adjusted EBITDA and earnings per share.

Chandan Basho: Looking ahead to the coming quarters. The successful completion of the second part of the CFC acquisition is projected to contribute single digit uplift in Q2 revenue relative to Q1.

Chandan Basho: This will be reflected in the full quarter's impact of CFC on our financials. Historically, Q3 has been our strongest quarter in terms of profitability due to suites and ACO-related payments. Our sustained participation in the ACO program has enhanced our capabilities around real-time data gathering and forecasting. Due to the enhanced clarity, we are comfortable this year booking ACO earnings based on the quarter of their contribution. As a result, Q3 will be slightly lower in terms of EBITDA contribution percentage versus the historical year.

Chandan Basho: This will be reflected in the full quarter's impact of CFC on our financials.

Chandan Basho: Historically Q3 has been our strongest quarter in terms of profitability due to suites and ECR related payments are.

Chandan Basho: Sustained participation in the ACO program has enhanced our capabilities around real time data gathering and forecasting.

Chandan Basho: Due to the enhanced clarity we're comfortable this year booking ACO earnings based on the quarter of their contribution.

Chandan Basho: As a result, Q3 will be slightly lower in terms of EBITDA contribution percentage versus historical years.

Chandan Basho: In closing, we're extremely pleased with our performance in the first quarter, which has set a positive tone for the remainder of the year. Our strong organic membership growth, strategic acquisitions of CFC and PCCCB, ongoing transition to full risk arrangements, and the stability and improvements of our utilization metrics represent strong momentum for our business. We have confidence in our ability to continue our long-trek record of successful execution. We will continue in our commitment to deliver the utmost quality of care, focus on industry-leading patient outcomes, and serve more communities across the country. Thank you for your time today. With that, operator, we'll turn to questions.

Chandan Basho: In closing, we're extremely pleased with our performance in the first quarter.

Chandan Basho: Which has set a positive tone for the remainder of the year.

Chandan Basho: Our strong organic membership growth strategic acquisitions of CFC, and PTC TV ongoing transition to full risk arrangements and the stability and improvement so far utilization metrics represent strong momentum for our business.

Chandan Basho: We have confidence in our ability to continue our long track record of successful execution.

Chandan Basho: We will continue and our commitment to deliver the utmost quality of care to focus on industry, leading patient outcomes and to serve more communities across the country.

Chandan Basho: Thank you for your time today with that operator, we'll turn to questions.

Speaker Change: Thank you ladies and gentlemen, the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time and we will take one question and one follow up per analyst once again Thats Star. One if you do have a question or comment.

Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time, and we'll take one question and one follow-up per analyst. Once again, that's star 1 if you have a question or comment. And we'll take our first question from Ryan Daniels from William Blair. Please go ahead.

Operator: And we will take our first question from Ryan Daniels from William Blair. Please go ahead.

Ryan Scott Daniels: Hey guys, thanks for taking the questions. I'm curious if you could speak a little bit more about your pipeline, either for new partnerships or M&A, especially as we contrast your strong performance versus what some other peers are seeing in the market. Meaning, is that opening up some opportunities? Is there pressure on provider groups to get new partnerships, etc.?

Ryan Scott Daniels: Hey, guys. Thanks for taking the questions I'm curious if you could speak a little bit more to your pipeline.

Ryan Scott Daniels: Either for new partnerships or M&A, especially as we contrast, your strong performance versus what some other peers are seeing in the market, meaning is that opening up some opportunities is there pressure with provider groups to get new partnerships et cetera, just any color there would be great.

Brandon Sim: Just any color there would be great.

Brandon Sim: Okay.

Brandon Sim: Hey, Ryan, thank you so much for the question and for tuning in. I think we're seeing a very strong partnership and corporate development pipeline as we speak. As you mentioned, there is a huge desire, especially given cost pressures, margin pressures, and utilization trends that some of our peers are seeing, to find a partner that is going to be stable and present a long-term opportunity to provide value back to providers and ultimately back to patients.

Speaker Change: Hey, Ryan. Thank you so much for the questions and for tuning in.

Brandon Sim: I think we're seeing a very strong partnership and corporate development pipeline.

Brandon Sim: Let me speak as.

Brandon Sim: As you mentioned there is a huge desire, especially given cost pressures margin pressures.

Brandon Sim: Utilization trends that some of our peers are seeing.

Brandon Sim: To find a partner that is going to be stable and present, a long term opportunity to provide value back to providers and ultimately back to the patients and so.

Brandon Sim: I think we're absolutely seeing a strong pipeline. There was an acquisition that we announced joining our care partner segment this quarter, the close of the CFC transaction, and I believe we are still planning to fulfill our guidance of at least one or two new markets per year as the year progresses.

Brandon Sim: I think were absolutely seeing a strong pipeline.

Brandon Sim: I think.

Brandon Sim: There there was an acquisition that we announced joining our care partner segment this quarter and the close of the CFC transaction.

Brandon Sim: And I believe we are still planning to.

Brandon Sim: Fulfill our guidance of at least one or two new markets per year as the year progresses here.

Ryan Scott Daniels: Okay, that's a helpful color. And then, as my follow-up, good new data on total cap revenue being at 60%, up from 49% in January. I guess my question is, now that you have both the Medicare and Medicaid RKKs, how might we see that trend kind of towards year end? So where might you end the year in 2024, and then what would your goals be for 2025 and 2026? Because I know that's a nice kind of revenue, really a care management accelerator as well. Thanks, and congrats on the strong performance.

Speaker Change: Okay. That's helpful color and then.

Speaker Change: This is my follow up good new data on the total cap revenue being at 60% up from 49% in January I guess my question is now that you have both the Medicare and Medicaid are KK, how might we see that trend kind of towards year end, So where might you end the year in 2024, and then what would your goldsby for 'twenty.

Ryan Scott Daniels: Five and 26, because I know, that's a nice kind of revenue and <unk>.

Ryan Scott Daniels: Our care management accelerators as well, thanks, and congrats on the strong performance.

Speaker Change: Thanks Ryan.

Brandon Sim: In terms of our year-end target, as we've discussed before, we still expect to be at about two-thirds by year end in our transition to full risk as we work through 2025. We see us continuing to move our membership into a full risk arrangement, and we do believe we will be able to get the majority of our contracts into full risk by the end of 2025.

Speaker Change: In terms of our year end target as we've discussed before we still expect to be at about two thirds by year end.

Brandon Sim: In our transition to full risk.

Brandon Sim: As we worked through.

Brandon Sim: 2025.

Brandon Sim: Yeah.

Brandon Sim: We see us continuing to move our membership into a full risk arrangement and we do believe we will be able to get the majority of our contracts into full risk by the end of 2025.

Ryan Scott Daniels: Great, thank you so much. I'll hop back in the queue.

Speaker Change: Great. Thank you so much I'll hop back in the queue.

Speaker Change: Thanks, Brian.

Operator: Thank you. And we'll take our next question from David Larsen from BTIG. Please go ahead, David. Hi.

Ryan Scott Daniels: Thank you and we'll take our next question from David Larsen from BTG. Please go ahead David.

David Michael Larsen: Hi, congratulations on the quarter. I was positively surprised at the EBITDA. Can you maybe just talk about the claims trend, how that's tracking for your book of business? Some of your peers were hearing, you know, sustained high MA utilization and a fairly high single-digit claims cost trend. I mean, what are you seeing? How did your cost trend come in relative to your own expectations? And, I guess, what is your secret sauce? Why is your trend perhaps better than others?

David Michael Larsen: Hi, congratulations on the quarter.

David Michael Larsen: I was positively surprised that the EBITDA can you maybe just talk about claims trend how that's tracking for Europe book of business. Some of your peers we're hearing.

David Michael Larsen: No.

David Michael Larsen: Sustained high <unk> utilization fairly high single digit claims cost trend.

David Michael Larsen: I mean, what are you seeing how did how did your caution coming relative to your own expectations and I.

David Michael Larsen: I guess what is your secret sauce, why why is your trend perhaps better than others.

Speaker Change: Hey, David.

Brandon Sim: Great to hear from you. Thanks so much for the question. In terms of how we're looking at utilization, first in terms of flu, we saw an equivalent to maybe a higher number of flu cases but a lower level of acuity. In terms of overall claims trend, as you know, because we do have full visibility around our utilization management and care management capabilities, which leads to us having visibility around authorizations, we are able to have a clearer sense of around MCR, and we see across the board positive trends there, as Brandon mentioned during the call.

Speaker Change: Great to hear from you. Thanks.

Speaker Change: Thanks, so much.

Speaker Change: For the thanks, so much for the question.

Brandon Sim: In terms of how we're looking at utilization.

Brandon Sim: First in terms of flu.

Brandon Sim: We saw.

Brandon Sim: And equivalent to maybe a higher amount of flu cases, but a lower level of acuity.

Brandon Sim: In terms of overall claims trend as you know because we do have full visibility around.

Brandon Sim: Our utilization.

Brandon Sim: Asian management, and care management capabilities, which leads to us having visibility around the authorizations.

Brandon Sim: We are able to have a.

Brandon Sim: Clearer sense of.

Brandon Sim: Around MCR and and we we see across the board.

Brandon Sim: Positive trends there as Brandon mentioned during the call we see some areas where for example, due to regulatory reasons.

Brandon Sim: We see some areas where, for example, due to regulatory reasons, genetic testing is now included in certain Medicaid-related cases, so we see an increase there. No real increase, but beyond that, we continue to see MCRs that are consistent or favorable relative to the historical period. OK.

Brandon Sim: Genetic testing is now.

Brandon Sim: Included in certain Medicaid related cases, we see an increase there.

Brandon Sim: No no real Hum.

Brandon Sim: But beyond that we continue to see.

Brandon Sim:

Brandon Sim: M C ours that are.

Brandon Sim: Consistent or favorable relative to historical periods.

David Michael Larsen: Okay, and then can you put a percent number on your per member per month trend line? Is it below 5%? Is it between 5 and 10%? Below 3%? Any number you can put on that?

Brandon Sim: Okay.

Speaker Change: And then can you put a percent number on your premium or per month trend line is it below 5% is it between five and 10% below 3% any number you can put on that.

Brandon Sim: Hey Dave, thanks for the question. This is Brandon.

David Michael Larsen: Hey, Dave Thanks for the question this is Brian.

Brandon Sim: I don't think we've disclosed the exact.

Brandon Sim: Trend line, especially because it differs by line of business I would say that across.

Brandon Sim: I don't think we've disclosed the exact trend line, especially because it differs by line of business. All lines of business, Medicare, commercial, and MA, I would say it's coming in a few percent lower than we had anticipated at the beginning of the year or prior, you know, prior to this year, prior to this quarter. It is still early in the year, I would say so. You know, we're here in May, and we, out of conservatism, you know, reaffirmed guidance, but I do think early results starting off the year here are promising.

Brandon Sim: All lines of business Medicare commercial and that May.

Brandon Sim: I would say, it's coming in a few percent lower than we had anticipated at the beginning of the era. Prior you know prior to this year prior to this quarter.

Brandon Sim: It is still early in the year I would say so.

Brandon Sim: You know we're here in May and we added conservatism.

Brandon Sim: You know reaffirmed guidance, but I do think early results starting off the year here are our promising.

Brandon Sim: Okay, and then can you maybe talk a little bit about your approach to managing inpatient services? I mean, it's my understanding that you actually have Astrana hospitalists that, you know, manage care to an extent within inpatient facilities. So, should we be worried about a spike in claims costs for hospitals once you start sort of bearing more full risk?

Speaker Change: Okay, and then can you maybe talk a little bit about your approach to managing inpatient services I mean, it's my understanding that you actually have a strain of Hospitalists that you know managed care to an extent within inpatient facilities. So should we should we be worried about a spike in claims costs.

Brandon Sim: For hospitals once you start sort of bearing more full risk.

Brandon Sim: There definitely will be higher claims costs, obviously offset by higher capitation revenue as we continue to move into full risk. And we're starting to see that already as we get to around 60% of our capitated revenue in full risk arrangements. However, while that may be a temporary pressure on overall EBITDA margin, as we've formally discussed, from a raw EBITDA number perspective, it's still accretive, certainly. And we think we're well prepared to take on the full risk and maintain medical margins where we would like them to be because of the ability we have in terms of our hospitals, working in hospitals, in terms of our post-discharge care teams, taking care of folks after an inpatient visit, in terms of our deep specialist and primary care provider integration for patients across the CARES continuum.

Brandon Sim: There definitely will be higher claims costs.

Brandon Sim:

Brandon Sim: Obviously offset by higher claims are higher capitation revenue as we continue to move into full risk and we're starting to see that already as we get to around 60% of our capitation revenue enforced arrangements.

Brandon Sim: However, we don't while that may be a temporary pressure to overall EBITDA margin.

Brandon Sim: Formally discuss from a raw EBITDA number of perspective, it's still accretive.

Brandon Sim: And we think we're well prepared to take on the full risk and maintain.

Brandon Sim: Medical margins, where we would like them to be.

Brandon Sim: Does have the ability we have in terms of our hospital is working at the hospitals in terms of our post discharge care teams taking.

Brandon Sim: Taking care of false.

Brandon Sim: Accurate patient visit and in terms of our deep specialists and.

Brandon Sim: Primary care provider integration.

Brandon Sim: Four patients across the care continuum spectrum.

Brandon Sim: Even as we grow into new markets, we're seeing that we're able to contract effectively with hospitals and replicate some of the elements that we've used in California to successfully manage costs of care in both outpatient and inpatient settings. So that's something we continue to keep in mind, for example, as we enter full risk delegated contracts here in Nevada, Texas, or beyond.

Brandon Sim: Even as we grow into new markets, we're seeing them, where we're able to contract effectively with hospitals and replicate some of the elements that we've used in California to successfully manage cost of carrying both outpatient and inpatient setting. So that's something we continue to keep in mind for.

Brandon Sim: For example, as we enter forwards delegated contracts here in Nevada, or Texas or beyond.

David Michael Larsen: Okay, that's great. Very helpful. Thanks very much. And then just the last one, like CFC integration, how is that progressing? Just any thoughts or color there would be very helpful.

Brandon Sim: Okay.

Speaker Change: Great very helpful. Thanks.

Speaker Change: Thanks very much.

David Michael Larsen: And then just last one like CFC integration how is that progressing.

David Michael Larsen: Just any thoughts or color there would be very helpful.

Brandon Sim: Sure thing. Yeah, the CFC integration, as I mentioned in the prepared comments, is going very well. All of the providers are now already on our Care Enablement Platform, obviously, given that it powered CFC even prior to acquisition. From a regulatory standpoint, things have been settled, leading to the successful close on March 31st, the second part of the CFC transaction. And throughout the remainder of the year, most of the CFC members are already in forward contracts dating back to the middle of 2023, and there are additional synergies with our existing business that we'd like to capitalize on for the remainder of the year.

Speaker Change: Sure thing, yes, the integration as I mentioned in the prepared comments are is going very well.

Brandon Sim: All of the providers are now already are already on our carrying them on the platform. Obviously given that it's powered T S. Even prior to acquisition.

Brandon Sim: From a regulatory standpoint.

Brandon Sim: Things have been settled leading to the successful close on March 31st and the second part of the CFC transaction and throughout the remainder of the year at.

Brandon Sim: Most of the senior team members already in fourth contracts dating back to the middle of 2023.

Brandon Sim: And there are additional synergies with our existing business that we look to capitalize on for the remainder of the year.

David Michael Larsen: Okay, congratulations on a great quarter. I'll be back in a few.

Speaker Change: Okay. Congratulations on a great quarter I'll hop back in the queue.

Speaker Change: Thanks, so much Dave.

Operator: Thank you. And we'll take our next question from Adam Ron from Bank of America. Please go ahead, Adam.

David Michael Larsen: Thank you and we will take our next question from Adam Ron from Bank of America. Please go ahead Adam.

Adam Matan Ron: Hey, super quick one. So the 60% number that you're talking about for capitation that you're using, I want to make sure I understand it. So you're saying for 60% of what you're reporting as capitation revenue, that number that you're reporting is, you know, some capitation rate, let's call it 85% of whatever the benchmark that you're managing is. And if that's true, that I'm understanding that correctly, on the remaining 40%, what is roughly the capitation rate that you're doing today? And can that go to 85%? Because that could give us a sense of like, what the dollar opportunity and revenue is from here.

Adam Matan Ron: Hey, Super quick ones.

Adam Matan Ron: The 60% number that you're talking about for capitation.

Adam Matan Ron: You're using I want to make sure I understand it so.

Adam Matan Ron: Youre, saying for 60% of what Youre reporting of capitation revenue.

Adam Matan Ron: That number that you're reporting is.

Adam Matan Ron: Some capitation rate, let's call it 85% of whatever the benchmark that you're managing is and if that's true that I'm understanding that correctly on the remaining 40% what is roughly the capitation rate that youre doing today and came back with 85% so that could give us like a sense of like what the dollar opportunity and revenue gains from.

Speaker Change: Here thanks.

Brandon Sim: Hey Adam, thank you for the question. Thanks for tuning in.

Speaker Change: Hey, Adam Thank you for the question thanks for tuning in.

Brandon Sim: You're absolutely correct in your understanding. 60% of the capitated revenue that we report in the Care Partners segment comes from an arrangement in which Call it Yeah, approximately 85% of the premium dollar is being given to us in a capitated value-based arrangement of the other 40% of the dollars. I would say that those are mostly coming from arrangements in which we have outpatient risk only, which would be, you know, illustratively call it around 35 to 40% of the premium dollar.

Adam: You're you're absolutely correct in your understanding 60% of the catheter unit revenue.

Brandon Sim: We reported the care partner segment comes from an arrangement in which.

Brandon Sim: Call it approximately 85% of the premium dollar it is being given to us in the calculated value based arrangements.

Brandon Sim: The other 40% of the dollars I would say that those are mostly coming from arrangements in which we have outpatient risk only which would be.

Brandon Sim: Illustrative way call it around 35% to 40% of the premium dollar. So there is.

Brandon Sim: So there is additional opportunity, and we anticipate capturing some of it over the remainder of this year, some of it into 2025, in terms of converting some of those contracts into full risk, you know, 85 percent or so of premium contracts.

Brandon Sim: Additional opportunity we anticipate capturing.

Brandon Sim: Some of it over the remainder of this year or some of it into 2020 five in terms of converting some of those contracts into forest you know 85 approximately per cent of premium contracts.

Adam Matan Ron: Okay, no, that's perfect. And then, in terms of the MLR, it seems pretty significant to your point that the trend was a couple percentage points lower than what you thought it was, which, you know, on a 10% margin business is pretty substantial. So, yeah, just curious, one, why you didn't raise the guidance, and two, what are the big factors versus expectations that are coming in different? And then three, somewhat unrelated, but in the 2025 rate notice, one of the surprising aspects was in Los Angeles, the rate for growth of trend was 5% while the rest of the industry got like 2.4 or something. So curious if you like it.

Speaker Change: Okay, No thats perfect.

Brandon Sim: And then in terms of.

Adam Matan Ron: MLR seems pretty significant to your point, but trend a couple of percentage lower than what you thought it was which you know on a 10% margin business is pretty substantial so.

Adam Matan Ron: Yes, just curious one why you didn't raise the guidance and to what.

Adam Matan Ron: What part of the Big factors.

Adam Matan Ron: <unk> that are that are coming in different of the three.

Adam Matan Ron: Somewhat unrelated but you know.

Adam Matan Ron: In the 2025 rate notice one of the surprising aspects was in Los Angeles.

Adam Matan Ron: The rate for growth rate of trend was 5%, while the rest of the industry got like two four or something.

Adam Matan Ron: So curious if like.

Brandon Sim: CMS's view of what's happening in L.A. County is different from yours, where potentially they're saying the trend is accelerating. And then, on the other hand, you know, into 25, is that a tailwind for you or is it entirely offset by, you know, what the payers are doing with benefits? Thanks. Appreciate the answer to the multifaceted question. Yeah, of course.

Adam Matan Ron: Cms's view of what's happening in L. A county is different from yours, where potentially they are saying trend is accelerating and then on the other hand.

Brandon Sim: Into 25 is that a tailwind for you or is it entirely offset by.

Brandon Sim: What the payers, they're doing with benefits.

Brandon Sim: I appreciate the answer to the multifaceted question.

Brandon Sim: I'll try to take them one at a time, Adam. Well, I just want to clarify in my prior response that the 60% of capitated revenue that's full risk is as of April 1st, just the day after the end of the quarter here. Right, right. In terms of the utilization trends that we're seeing, we are encouraged and cautiously optimistic about the trends we're seeing in terms of utilization. We are seeing, [inaudible] Overall, the trend is very, you know, it's positive.

Speaker Change: Yeah of course.

Speaker Change: I'll try to take them one at a time at them. So.

Brandon Sim: On the well I just want to clarify in my prior response to 60.

Brandon Sim: Percent.

Brandon Sim: <unk> revenue. That's four risks is as of April 1st just the day after the end of the quarter here right. After the close.

Brandon Sim: Just making that making that clearer.

Brandon Sim: In terms of kind of the utilization trends that we're seeing as John mentioned that I.

Brandon Sim: I talked about I'll give a little more color. We are encouraged cautiously optimistic about the trends we're seeing in terms of utilization we are seeing.

Brandon Sim: Kind of broad based support.

Brandon Sim: For the increase or the decrease was rather than utilization trend across different lines of business different pockets of the business. There are a couple of pockets that John mentioned earlier for example.

Brandon Sim: That are maybe higher than expected but.

Brandon Sim: I would say that the reason for not increasing guidance at this point in time, you know, thoroughly in the year, Adam, I think we are again cautiously optimistic, but I think we probably still fall within the range. There's increased, there's a couple, there's a bit of increased investment in the teams and new market entry. And, you know, we think we're on track, and we'll provide more updates as the year progresses.

Brandon Sim: Overall, the trend is very positive.

Brandon Sim: I would say that the reason for not increasing guidance at this point in time.

Brandon Sim: It's early in the year, Adam I think we again cautiously optimistic but I think we are.

Brandon Sim: We probably still fall within the range. There is increased there's a couple there's a bit of increased investment in and the teams and new market entry.

Brandon Sim: And we think were.

Brandon Sim: We're on track and we'll provide more updates as the year progresses in terms of the question on Los Angeles any benchmarks.

Brandon Sim: In terms of the question on the Los Angeles M.A. benchmarks, overall, I would say we were fairly disappointed, as others were, with the M.A. rate notice, the final notice. You know, I think the... As you mentioned, the L.A.

Brandon Sim: Overall, I would say we were fairly disappointed as others work with the MA rate notice the final notice I.

Brandon Sim: I think the.

Brandon Sim: As he mentioned the L. A.

Brandon Sim: Benchmark came in, you know, a little higher than we had thought or compared to other regions, so we think that could be a tailwind. For sure, but that's again, it's still early in the year. We're still negotiating and talking to payers, working with our partners around, you know, some of the benefits that will take place in 2018, how the plan will be designed, and so all of this will probably go into the final, kind of economics that we anticipate for 2025. So we'll have further guidance on that for you in the coming weeks.

Brandon Sim: Benchmark came in.

Brandon Sim: A little higher than that.

Brandon Sim: Then maybe we had thought or.

Brandon Sim: The other regions. So we think that could be a tailwind.

Brandon Sim: For sure, but that's again, it's still early in the year, we're still negotiating and talking to payers and working with our partners around.

Brandon Sim: Some of the benefits that will take place in 'twenty fives, how the plan will be designed into all of this will holistically probably be.

Brandon Sim: What will go into the final.

Brandon Sim: Economics that we anticipate coming back so what further guidance on that to you in the coming months.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Adam.

Operator: Thank you. As a reminder, please limit your questions to one with a follow-up, and we will take our next question from Jack Slevin from Jeffries. Please go ahead, Jack.

Brandon Sim: Thank you as a reminder, please limit your questions to one with a follow up and we will take our next question from Jack <unk> from Jefferies. Please go ahead Jack.

Jack Garner Slevin: Hey, thanks for taking the question and congrats on the quarter. I want to do a bit of a double-click on the Nevada contract. Can you give a little more color on maybe what payer class that that risk contract represents and, you know, sort of what you're seeing that made you want to flip that on immediately in Nevada or if sort of the infrastructure and the market entry costs you've been building up over the last year are there and ready to hit the ground running on it? Hey, Jack, thanks for the question.

Jack Garner Slevin: Hey, Thanks for taking the question and congrats on the quarter.

Jack: I wanted to do a bit of a double click on Nevada contract can.

Jack: Can you give a little more color on maybe what payer class that that risk contract represents and.

Speaker Change: Sort of what Youre seeing that made you want to flip that on immediately in Nevada, or if it's sort of the the infrastructure and the market entry costs you have been building up over the last year or are there and ready to hit the ground running on it.

Speaker Change: Hey, Jack Thanks for the question.

Brandon Sim: Yeah, so in Nevada, we've been in some shared risk arrangements or partial risk arrangements for about a year, maybe a little more than a year at this point. The full risk contract that we turned on was a Medicare Advantage contract, and it's one in which we actually have delegated payer responsibilities.

Jack: Yeah. So in Nevada, we are we've been in some shared risk arrangements or parcel risk arrangements for.

Brandon Sim: About a year, maybe a little more than a year at this point before is contracted we turned on the Medicare advantage contracts.

Brandon Sim: And its one in which we actually have delegated.

Brandon Sim: Payor.

Brandon Sim: Responsibilities, so we had prior.

Brandon Sim: So we have prior experience, you know, utilization management, care management, claims, credentialing, contracting, et cetera, which very much looks similar to the infrastructure we built in California. We felt comfortable turning it on after looking at some of the results while participating under a shared risk arrangement, as well as the confidence in the infrastructure we've now built in Nevada over the last, call it, 12 to 18 months. So that's something that, while still a fairly small book of business, relatively speaking, we're excited to continue to prove that the model scales outside of some of our core resources.

Brandon Sim: Management care management claims.

Brandon Sim: Credentialing contracting et cetera, which very much look similar to the infrastructure, we built in California.

Brandon Sim: We felt comfortable turning it on.

Brandon Sim: After looking at some of the results.

Brandon Sim: While participating under a shared risk arrangements as well as the confidence and the infrastructure. We've now built in Nevada over the last call. It 12 to 18 months.

Brandon Sim: So that's something that while it's still a fairly small book of business relatively speaking.

Brandon Sim: We're excited to continue to prove that the model scales outside of some of our core regions.

Brandon Sim: Got it. Thanks for the cover there. And then just on the forest transition, you know, a lot of moving pieces that we're hearing from MA plans in particular, but sort of on cost trends broadly, just thinking about, I know you guys have a lot of visibility into, you know, the opportunity there, given the role that you play currently, but as you think about adding inpatient risk throughout a lot of what is probably the California base.

Speaker Change: Got it thanks for the color there and then just on the Flores transition them you know a lot of moving pieces that we're hearing from and made plans in particular, but sort of on cost trend broadly just thinking about I know you guys have a lot of visibility into the.

Brandon Sim: The opportunity there given the role that you play currently but as you think about adding inpatient risk throughout a lot of probably what is the California base. How are you measuring up sort of moving pieces with cost trend.

Brandon Sim: How are you measuring up sort of moving pieces with cost trends that are underlying and moves that plans might be making on how they bid into next year when factoring in how you do transition those lives? Is it sort of still just push on as quickly as you can or do you have to be a little more selective given the environment?

Brandon Sim: You know that our underlying and move that plans might be making on how they bid into next year. When factoring in you know how you do transition those lives. It is it sort of still just just push on as quickly as you can or do you have to be a little more selective given the environment.

Brandon Sim: Okay.

Brandon Sim: Okay.

Jack Garner Slevin: Yeah, Jack. Sorry, John. Go ahead.

Brandon Sim: Yes.

Speaker Change: Oh, sorry, John go ahead.

Brandon Sim: Oh, no. So Jack, in terms of our contract, I don't want you to think we're moving contracts over if, actuarially, post analysis, it doesn't make sense for us to do so. So we are looking at our claims trend. We are looking at the overall medical trend. We are looking at the unique capabilities we can bring to that market in terms of our medical management capabilities, our care management capabilities, and the technology that we can offer in that local marketplace. And as that links together, and in many markets, we have a certain amount of risk already, we then move forward in a very prudent fashion.

John: Oh no no.

John: Checking in terms of our contracts.

Brandon Sim: I want you to think we're moving contracts over if Actuarially post analyses.

Brandon Sim: It doesn't make sense for us to do so.

Brandon Sim: So we are looking at our claims trend we are looking at overall medical trend. We are looking at the unique capabilities, we can bring to that market in terms of our medical management capabilities, our care management capabilities.

Brandon Sim: And the technology that we can offer and that local marketplace and as that.

Brandon Sim: As that links together.

Brandon Sim: And in many markets we have.

Brandon Sim: Amount of risk already.

Brandon Sim: We then move forward in a very prudent fashion.

Jack Garner Slevin: Got it. Appreciate the color and congrats again on a really strong quarter.

Jack: Got it I appreciate the color and congrats again on a really strong quarter.

Jack: Thanks Chuck.

Operator: Thank you. And next, we will go to Jailendra Singh from Truist. Please go ahead.

Speaker Change: Thank you and next we will go to jail interesting from Trust. Please go ahead.

Jailendra P. Singh: Thank you, and thanks for taking my questions. The first question on the care delivery business saw around eight million sequential declines. I understand last quarter in Q4, you had some true ups, so that probably was expected. But anything you can highlight there in terms of trends you saw in the business? And is Q1 a good run rate for the rest of the year for that business? Just trying to understand if there was any impact from the change healthcare disruption on that business.

Jailendra P. Singh: Thank you and thanks for taking my questions.

Jailendra P. Singh: Question on the care delivery business.

Jailendra P. Singh: Sorry down $8 million sequential decline I understand last quarter. In Q4, you had some true up so that somebody was expected, but anything you can highlight there in terms of trends you saw in the business and is Q1, a good run rate.

Jailendra P. Singh: About a year for that business just trying to understand if there was any impact from change healthcare disruption on that business.

Speaker Change: Thank you Linda.

Brandon Sim: Thanks so much for your question in terms of the change from Q4 to Q1. Q4 and Q2 are usually when there are annual quality bonuses as well as any one-time true ups that happen on the delivery side of the business. So that's the change that you see. In terms of change and the impact, we have a very minimal change-related business, in terms of our delivery assets, so that there's not an

Speaker Change: Thanks, So much for your question in terms of the change from Q4 to Q1.

Brandon Sim: Q4, and Q2 is usually when there's annual quality bonuses as well as any one time true ups that happened on the delivery side of the business. So that's the change that you see.

Brandon Sim: In terms of change in the impact.

Brandon Sim: <unk>.

Brandon Sim: We have very minimal change related business.

Brandon Sim: And in terms of our delivery assets, so that there's not an impact there.

Jailendra P. Singh: Okay, so use Q1 as a good run rate for the rest of the year, right, from a revenue point of view. Yeah, you will see some enhanced profitability in Q2 and Q4 from those bonuses as they come in. Then, my follow-up: a managed care company last week called out pressure in their ACO business driven by some data they received from CMS impacting their 2023 results and also their 2024 assumptions. With you guys entering MSSP this year, and I believe you are accruing towards breakeven margins, just curious what you have seen in your data.

Brandon Sim: Okay.

Brandon Sim: Is it a good run rate for the year right from revenue point of view.

Jailendra P. Singh: Yes, my follow up we'll see some.

Jailendra P. Singh: Enhanced profitability in Q2, and Q4 from those bonuses as they come in.

Jailendra P. Singh: Right.

Jailendra P. Singh: Then my follow up a managed care company.

Jailendra P. Singh: <unk> lost we called out a special in the ACO business driven by some data that is he buys from CMS impacting the 2018 of those and also a bit of 'twenty 'twenty four assumptions with you guys entering and Mr. Speed. This year and I believe we are going towards breakeven margins. Just curious what you have seen year to date I understand clearly.

Jailendra P. Singh: Limited, but just curious do you put anything to flag for me had experience point of view and similarly, I would say it a bit $47 million and just when you called out in Acos. Each can you talk about your experience in that group in general.

Jailendra P. Singh: Yeah.

Jailendra P. Singh: I understand it's clearly limited, but just curious if there's anything to flag from your experience point of view. And similarly, outside of the $4.7 million adjustment you called out in ACO REACH, can you talk about your experience with that program in general?

Jailendra P. Singh: Andre Thank you for the question.

Jailendra P. Singh: Aye.

Brandon Sim: Hey Jailendra, thank you for the questions. I think your first question, and please correct me if I'm wrong, is around MSSP and our experience so far. It was early on, and we had underwritten to approximately break-even given the first year of our participation, and MSSP, we are still underwriting this quarter to break-even given the lack of.., you know, large experience in that program. I would probably guess that MSSP profitability, especially because it's coming in on a 15 to 18 month cycle, would probably show up most likely in 2025 financials and not this year, and we haven't contemplated any profitability from MSPACO in this year's financial projections.

Speaker Change: I think your question first question. Please correct me if I'm wrong is around MSP.

Brandon Sim: So far it is early on and we had underwritten them to approximately breakeven given the first year of our participation.

Brandon Sim: M S S P.

Brandon Sim: We are still underwriting this quarter to a breakeven given the lack of.

Brandon Sim: Yeah, the large experience in that program.

Brandon Sim: I would probably guess that.

Brandon Sim: Mississippi profitability, especially because it's coming in.

Brandon Sim:

Brandon Sim: You know on a 15 to 18 month cycle would probably show up most likely in 2025 financials and not this year and we haven't contemplated any profitability from M. A C. S. P. A C O did in.

Brandon Sim: And in this year's financial projections.

Brandon Sim: On the ACO REACH business, which we do have more experience in, a couple of clarifying points. The first is that the $4 to $5 million adjustment that Chan mentioned was fully taken in terms of the charge this quarter. It's a one-time thing. It also isn't related to our ACO reach, but rather separate ACO reach businesses, as John had explained earlier. In terms of our ACO reach performance, we're actually seeing pretty promising results. We are booking a bit of profitability this quarter, as John mentioned, because of the increased visibility and the confidence we have that the medical cost trends are fairly positive, even in the ACO reach program.

Brandon Sim: The ACO reach business, which we do have more experience than a couple of clarifying points. The first is that the four 5 million dollar adjustment that Tom mentioned that was that was fully taken in terms of.

Brandon Sim: The charge this quarter, it's a one time thing, but also isn't related to our ACO reach but rather a separate lithia, which businesses is trying it explained earlier.

Brandon Sim: In terms of our ACO reaches performance, we're actually seeing pretty promising results, we are booking a bit of profitability this quarter as John mentioned.

Brandon Sim: Because of the increased visibility and the confidence we have that the medical cost trends are fairly positive even at ACR each program.

Speaker Change: Great. Thanks, guys.

Speaker Change: Thanks, Linda once again.

Operator: Once again, Star 1, if you do have a question. And next, we'll go to Christian Borgmeier from TD Securities. Please go ahead.

Brandon Sim: Once again star one if you do have a question.

Christian Borgmeier: Next we will go to Christian Borgmeyer from TD Securities. Please go ahead.

Christian Borgmeier: Hi, everybody. This is Christian Borgmeier. I'm from Gary Taylor.

Christian Borgmeier: Hi, everybody. This is Christian borgwarner on for Gary Taylor, Thanks for the question.

Christian Borgmeier: Thanks for the question. So as we think about the Medicaid redetermination period winding down, what are you seeing lately in terms of re-enrollment through exchanges and commercial products? Are you noting any disruptions in care for patients as they navigate through any re-enrollment process? And if there's been a lapse in care, what tools does Astrana deploy to re-engage some members that may have not been seeing their PCPs lately? Thanks.

Christian Borgmeier: So as we think about the Medicaid Redetermination period winding down what are you seeing lately in terms of re enrollment through exchange and commercial product are you, noting any disruptions in care for patients as they navigated through any re enrollment.

Christian Borgmeier: And if theres been a lapsing care, what tools with Australia deploy to re engage the members that may have not been seeing her pcp's lately.

Christian Borgmeier: Yes.

Brandon Sim: Hey Christian, thank you for the question. As I mentioned earlier, we still saw growth in Medicaid, around 7% year-to-date, even net of redetermination. And the commercial class exchange business rose by even more than that. It was well over 16%, I believe, in the commercial segment, based on some of the recapture, as I mentioned, of redetermined Medicaid members into exchange. I would say that the efforts have largely gone successfully. Medicaid as a business has still grown, you know, despite redetermination, and we're not seeing any higher acuity levels in the remaining Medicaid members as compared to prior to redetermination.

Speaker Change: Hey, Christian.

Speaker Change: You for the question.

Brandon Sim: <unk>.

Brandon Sim: As I mentioned earlier, we still saw growth in Medicaid.

Brandon Sim:

Brandon Sim: Around 7% year to date, even net of Redetermination.

Brandon Sim: Commercial class exchange business rose by even more than that.

Brandon Sim: While over 16% I believe in the commercial segment.

Brandon Sim: Based on some of the recapture as I mentioned.

Brandon Sim: We send them the Medicaid members into things.

Brandon Sim: I would say that the effort largely gone Luckily Medicaid business has still grown.

Brandon Sim: Despite your determination and.

Brandon Sim: We're not seeing any higher acuity levels and the.

Brandon Sim: No remaining Medicaid members as compared to prior to meet their needs.

Brandon Sim: As you mentioned, the redetermination period is ending in a short while, so I think, for the most part, headwinds around that redetermination program are generally mitigated from our point of view. In terms of member engagement and continuity of care, we think that they're really a strong point of differentiation for our model. Patients who redetermine or are in a different type of insurance plan or even a different payer—I know it's not your question, but even for Medicare Advantage—still have access to the exact same care team, social workers, post-discharge planning, technology platform, and primary and specialty care providers.

Brandon Sim: Hum.

Brandon Sim: And the Redetermination period is ending.

Brandon Sim: And it's for a while so I think.

Brandon Sim: For the most part headwinds around that they're making program are generally are mitigated.

Brandon Sim: Hum.

Brandon Sim: From our point of view.

Brandon Sim: In terms of member engagement continuity of care, we think that's a really a.

Brandon Sim: Strong point of differentiation for our model patients who've come in or in a different type of insurer science plan or even a different player I know it's not your question, but you can for Medicare advantage of access to the exact same hurricane postal workers post discharge planning technology platform and primary and specialty care providers now increasingly.

Brandon Sim: Now, increasingly, 60% of it for their institutional network as well. And so there's really a strong ability for us to continue care in the exact same way the patient has experienced it, leading to... [inaudible] Okay, I got it.

Brandon Sim: Some of it.

Brandon Sim:

Brandon Sim: Are there any pieces on that work as well so there's really strong ability for us to continue care.

Brandon Sim: It came with accretion.

Brandon Sim: As experienced it leading to you.

Brandon Sim: No more longitudinal relationship with the Cleveland and ultimately investing allowing.

Brandon Sim: Allowing us to invest more on the Christmas health over time. So we think that's a big part of the model, but it's good failures that we are so diverse in terms of how many certification.

Brandon Sim: And we think that.

Speaker Change: That's paying off.

Brandon Sim: As we've gone through this Medicaid would be similar to the process.

Christian Borgmeier: Okay, I got it. That's helpful. Thank you. Thanks, Christian.

Speaker Change: Okay got it that's helpful. Thank you.

Speaker Change: Thanks Christian.

Operator: As a reminder, please star 1 if you do have a question or comment. And there appear to be no further questions at this time. I'd like to turn the floor back to Brandon Sim for closing remarks.

Speaker Change: As a reminder, star wanted to do you have a question or comment.

Brandon Sim: And there appear to be no further questions at this time I'd like to turn the floor back to Brandon <unk> for closing remarks.

Brandon Sim: Thank you, everyone, for tuning in this evening to our first quarter of 2024 earnings results. As always, we are around in our offices in both Alhambra, California, and Las Vegas, Nevada. If you're in the area, please don't hesitate to email us if you'd like to meet. We look forward to discussing our results next quarter and seeing you again. Thank you.

Brandon Sim: Thank you everyone for tuning in this evening.

Brandon Sim: To our first quarter of 2024 earnings results as always we are around in our offices in both all Hammer, California, and Las Vegas, Nevada, If youre in the area. Please don't hesitate to E mail us if you'd like to meet them. We look forward to discussing our results next quarter and seeing you again. Thank you have a good evening.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.

Operator: Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.

Operator: [music].