Q1 2024 Ontrak Inc Earnings Call
Good day, and thank you for standing by welcome to the Archrock Health first quarter 2024.
At this time all participants are in listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message you're putting your hand is race to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hear.
The conference over to your first speaker today, Brian hosted please go ahead.
Thank you operator, and thank you all for participating in today's call.
And me today are Brendan Mcgovern, Chief Executive Officer, and Chief Operating Officer, Mary Lou Osborn, President and Chief Commercial Officer, and James Clark Chief Financial Officer earlier today on track released financial results for the quarter ending March 31, 2020 for a copy of the press release is available on the company's website before we.
We begin I'd like to make the following remarks concerning forward looking statements.
Brandon H. LaVerne: All statements in this conference call other than historical facts are forward looking statements.
Words anticipate believes estimates expects intend guidance confidence targets projects and some other expressions typically are used to identify forward looking statements. These forward looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties other factors.
So that may affect <unk> business financial condition and other operating results, which include but are not limited to the risk factors described in the risk factors section of the Form 10-K and Form 10-Q as filed with the SEC. Therefore, actual outcomes and results may differ materially from those expressed.
Or implied by these forward looking statements contract expressly disclaims any intent or obligation to update these forward looking statements.
With that I'd like to turn the call over to Brendan.
Brandon H. LaVerne: Thank you Ryan and thank you everyone for joining our call today.
Brandon H. LaVerne: I'd like to start with some great news about our newest customer community care plan as.
Brandon H. LaVerne: As we've mentioned the Florida Agency for Health Care administration, otherwise known as Orca has approved on track as a subcontractor for community care plan, a south Florida based health plan to serve its adult Medicaid population.
We are deep into implementation and expect to initiate outreach to new eligible members of community care plan in the next 30 to 60 days.
With the addition of community care plan, our overall outreach pool of eligible members for our whole health plus program is estimated to grow by upwards of 10%.
I would also like to highlight the significant opportunity for us to grow along with this new customer within the Florida Medicaid population.
Community care plan is one of five health plans to be awarded a contract by aka or the statewide Medicaid managed care re procurement, which concluded in April 2024, and goes into effect in 2025 for the next six years.
The care plan, we will be expanding its reach to five of the nine acre regions across the state representing 19 Alliance counties, which is a significant expansion from its current service area of just one region with one aligned county.
Additionally, the number of payers awarded under this re procurement was reduced from nine under the prior contract two five competing for approximately $1 3 million Medicaid members, losing their prior plan coverage beginning in 2025.
This presents community care plan with a unique opportunity to significantly expand helped by membership and will enable on track to expand our targeted outreach pool organically.
Archrock is proud of the value of the products, we offer and of the increased efficiencies and higher ROI generated here's how we do it.
Our net promoter score is a consistent indication of our ability to deliver a superior patient experience on.
<unk> is an industry leader with a net promoter score of 77, which ranked higher than the healthcare benchmark NPS score of 58.
Next our enrollment success consistently highlights the effectiveness of our experienced interacting with members with.
Brandon H. LaVerne: With whole health plus Ontrack engages the REIT member at the right time.
Through our AI and predictive analytics, we accurately identify the appropriate members for outreach, ensuring efficiency effectiveness and engagement and a member friendly way.
As a result over 60% of on track enrollees of our whole health plus program enrolled after only one conversation.
Speaker Change: Member retention is the next key element in our success.
Flexibility and customization of whole health plus allows us to vary the length of the program to optimally match the needs of the member.
60% of Archrock enrollees participated in program for at least six months with an average length of enrollment of $7 six months.
And on tract flexible graduation, and can accommodate the unique needs of each enrollee.
On average it takes 12 weeks to progress through the various stages of behavior change without program, averaging significantly longer members are far more likely to achieve durable outcomes with last name behavior change.
Identifying new mental health diagnoses is another key component of our whole health plus program.
Contracts program helps our health plan partners more effectively identify and engage members and deliver beneficial behavior changes.
Across on tracts current book of business, 28% of behavior health diagnoses identified during enrollment in our plus program were not present in claims during the 12 months prior to enrollment.
Diagnosed or undertreated symptoms can negatively influence behaviors that impact overall physical health.
By addressing those behavioral health symptoms individuals can improve their quality of life general health and reduce the risk of developing or worsening physical health problems.
In addition proper coding of these diagnoses and some members record increases reimbursement rates for payers generating incremental ROI opportunities for our health plan partners.
Further.
Using a <unk>, 7% in ph Q nine patient health questionnaires, we continually assess our effectiveness in treating anxiety and depression.
Speaker Change: For example, in our Medicaid line of business. During these follow up assessments, 38% and 46% of enrollees completing a three months follow up in the gas <unk> and PHP nine assessments, respectively had a clinically significant improvement of five or more points of a reduction in their symptoms.
Medicaid enrollees: Similarly, 42% and 49% of Medicaid enrollees completed in a six month follow up in the gas <unk> pitch.
Medicaid enrollees: PHP nine assessments.
Medicaid enrollees: And 58% and 64% of Medicaid enrollees completed a nine month follow up in these assessments have been clinically significant improvement in their symptoms.
Speaker Change: Each of our lines of business, whether commercial Medicare advantage, our Medicaid So I'll further improvement as members progressed through three six and nine months of the program further showing the durability of our program.
Speaker Change: We are also delivering significant health utilization outcomes.
Speaker Change: Contracts Holthaus plus program delivers proven health outcomes, while reducing cost and increasing engagement leading to increased quality scores.
Contracts Holthaus: We reduced emergency room visits by 32% inpatient admissions by 62% and overall medical costs by 43%.
Contracts Holthaus: We achieved these results through empowering enrollees and enhancing efficacy due to the removal of social risk barriers, improving health literacy facilitating appropriate care navigation and offering coaching for behavioral change the.
US program: The increased efficiencies and ROI that <unk> will help US program offers towards health plan partners is more important than ever given the challenging environment faced by Medicare advantage plan.
Speaker Change: We deliver improved health outcomes and reduce medical costs, while increasing member engagement, leading to these higher quality scores with that I'll turn it over to our president and Chief Commercial Officer, Mary Lou Osborn Marilu.
Speaker Change: Thank you Brandon.
Speaker Change: I am thrilled to provide a few additional updates on our new Medicaid health plan customer community care plan based in Sunrise, Florida. It is a privilege to partner with community care plan, whose mission is to be the driving force ensuring that every community has access to equitable high quality affordable health care.
Speaker Change: We are full speed ahead with the on track implementation, which is advancing on schedule.
Speaker Change: On track, we will be providing community care members with whole health plus on tracking gauge on track access our member portal and quality support for heated measures.
Speaker Change: I will briefly highlight each product.
Speaker Change: Oh health plus this is our AI infused targeted solution for high cost high acuity members.
On tract: On tract will identify members with chronic comorbidities and unaddressed behavioral health conditions.
Speaker Change: We will reach out to the members and enroll them into the whole health plus program, which consists of up to 52 weeks of whole person evidence based care coaching plus access to behavioral health providers as needed.
Speaker Change: On tracking gauge.
Speaker Change: This program is for members across the acuity spectrum.
Contract: Contract will provide inbound and outbound care coaching.
Contract: Our inbound care couching members can access a care coach by calling a dedicated toll free number.
Speaker Change: For outbound character <unk> care coaches will be calling members with a diagnosis of serious mental illness.
Speaker Change: To help support their whole person care.
Speaker Change: On track access.
On track: On track is an accredited credentials verification organisation.
Speaker Change: The National Committee for quality assurance.
Speaker Change: And has contracts with behavioral health providers in Florida available to the health plan when needed for access and availability.
Speaker Change: Member portal.
Speaker Change: This is a dedicated portal available to all members.
Speaker Change: It includes links to wellbeing sites and articles to help members better manage their physical and behavioral health and wellbeing.
Speaker Change: Quality support for heated measures.
Speaker Change: On track will collaborate with community care plan and supports specific key this measures for the members that Ontrack is serving in the program.
Speaker Change: We are thrilled that community care plan was awarded five regions in the most recent Florida statewide Medicaid managed care contract re procurement extending for six years.
Speaker Change: This Medicaid award is an incredible accomplishment.
Speaker Change: Community care plan has a tremendous opportunity to grow in the state of Florida.
Speaker Change: And on track is prepared to support community care plan with its membership growth and expansion.
On track: Also there are potential future expansion opportunities with this new customer for additional populations they serve.
On track: On the Medicaid line of business in the state of Florida.
On track: In addition to this exciting new customer contract and implementation we remain in the final contracting phase with two prominent health plans.
On track: Presenting over 2 million lives across all lines of business.
Speaker Change: Both health plans are interested and beginning a pilot partnership.
Speaker Change: One for our Medicare advantage members and the other for Medicaid members.
Speaker Change: Both health plans have approved on track financial proposals and have received on track statement of work, which are in final review and approval.
health plans: So health plans have stated once clinical and financial outcomes are achieved.
Speaker Change: And intend to expand to a larger membership cohort and across other lines of business.
Speaker Change: Our pipeline remains strong with approximately 26 active prospects, representing 15 million members across all lines of business.
Speaker Change: Finally, we are happy with our continued progress in expanding current customer relationships.
Sentara Health: As we reported in our last earnings call. We have expanded our behavioral health products with Sentara health, a longstanding health plan customer.
Speaker Change: And as far as offering hope health plus to a broader commercial population and to a new ASO population.
Sentara Health: This represents a 6.5 X increase in the number of Sentara members eligible for the whole health plus program. Additionally, we have executed a new Medicaid amendment to offer home health plus to Sentara Medicaid members.
Sentara Health: We are currently finalizing the number of eligible Medicaid members and go live date, which we expect in the next 60 to 90 days or sooner.
Sentara Health: We are proud of our accomplishments for Q1.
Speaker Change: Beginning with Florida's agency for healthcare administration approval to begin implementation for our community care plan and our new Medicaid health plan customer.
Speaker Change: In addition, we have executed multiple new Sentara health amendments for an expansion of home health plus to a broader commercial population and ASO membership.
Speaker Change: As well as Sentara is Medicaid line of business.
Sentara Health: We look forward to delivering durable health and financial outcomes for all of the health plans and members. We currently serve as well as new customers.
Speaker Change: Now I'd like to turn the call over to our Chief Financial Officer James Park.
James J. Park: Thanks, Brian Lou.
James J. Park: During the first quarter, we recorded revenue of $2 7 million.
James J. Park: A 6% year over year increase due primarily to a 15% increase in total average enrolled members during the first quarter of 2024 compared to the same period in 2023.
James J. Park: At the beginning of the quarter, we had 1758 enrolled members.
James J. Park: Ended with 1521 at the end of the quarter or a simple average of 1640.
James J. Park: That equates to revenue of about $504 per health plan enrolled member per month for the quarter.
James J. Park: Increased from $546 per health plan enrollment per month in Q4 of 2023.
James J. Park: The decrease from $528 in Q1 of 2020.
Speaker Change: Regarding our Q1 member metrics, we enrolled a total of 925 members during the quarter compared to 654 in Q4 of 2023 and.
James J. Park: 825 in Q1 of 2023.
Speaker Change: Q1, gross enrollment buyer outreach pool, which averaged 3417 for the quarter annualized.
Speaker Change: Annualized two of 108% annualize enrollment rate.
Speaker Change: Compared to 63% enrollment rate of Q4 of 2023, 62% in Q1 of 2023.
James J. Park: The elevated enrollment rate was driven by new members in our August call as a result of expenditure with Centaur.
Centaur: And you figure that we have new members in our outreach pool, we will have we will experience higher than others and your lines enrollment rates for a short period of time.
Centaur: These are new members, who are being reached for the first time.
Brian: As Brian indicated we've seen upwards of 60% of members enrolling on the first call.
James J. Park: Sure.
Brian: Our average monthly <unk> was this enrollment rate was 22% in the current quarter compared to 16% in Q4 of 2023 and 12% in Q1 of 2023.
Brian Smith: Current quarter had more just enrollment due to the customer that did not renew their contract beyond Q1 of 2024.
Speaker Change: Without the impact of these members are monthly some of them are right for the first quarter would have been approximately 11%.
Speaker Change: Further we graduate of 194 enrolled members during the quarter.
Speaker Change: This equates to about 11% of the enrolled members in the program at the beginning of the quarter, which is slightly higher than prior periods.
Speaker Change: The impact of all this was a net enrollment decrease of 237 members in the first quarter.
Speaker Change: Our gross margin for the first quarter was 63, 6%, which decreased slightly from 64, 6% in Q4 of 2023 and 66, 5% in the first quarter of last year.
Speaker Change: We have been able to maintain our gross margin at these levels due to the efficiencies in our operational processes.
Speaker Change: We expect margins to remain at these levels, but can fluctuate in periods, where we have large number of enrolled members as we hire our members member facing employees in advance in periods, where we have significant increases in our members enrolled.
Speaker Change: Turning to the balance sheet and cash flow.
Speaker Change: Our cash flow from operation in the first quarter was negative $3 3 million compared to negative $5 million in the first quarter of last year and negative $3 6 million in Q4 of 2023.
Speaker Change: We ended the quarter with cash of $6 $4 million down from $9 $7 million at the end of last year.
Speaker Change: As previously announced in March of 2024, we completed the amendment of the keep whole agreement that gives us access to $15 million senior secured demand notes, which is setup as monthly dropdowns over the next year subject to approval at the time goes wrong.
Speaker Change: Subsequent to our quarter end.
Speaker Change: April and May we drew down $1 $5 million of demand nodes or an additional $3 million.
Speaker Change: In addition, we received cash proceeds of $2 million from exercise of warrants during April.
Speaker Change: Which continues to build our capital to execute on our pipeline.
Speaker Change: While we can't predict if and when the remaining warrants will be exercised.
Speaker Change: Amount of warrants after our stock price would equate to an additional $15 $9 million of cash.
Speaker Change: For Q2 2024.
Speaker Change: We anticipate revenue in the range of $2 4 million and $2 8 million.
Speaker Change: Now we will open up for questions.
Speaker Change: Thank you.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Operator: To ask a question you will need to press star one on your telephone wafer your name to be announced to withdraw. Your question. Please press star one again, please standby will be composite Q&A roster.
Speaker Change: Our first question comes from the line of Jonathan Aschoff of Roth and Ken Your line is now open.
Jonathan Matthew Aschoff: Hi, Jonathan.
Jonathan Matthew Aschoff: Oh, I'm, sorry, I'm on I'm on mute sorry about that.
Jonathan Matthew Aschoff: I was curious what sort of annual revenue do you think you could attain with community care plan.
Speaker Change: So I would say that we are trying to avoid.
Speaker Change: Specific customer revenues, but.
Jonathan Matthew Aschoff: Community care plan as we had indicated.
Speaker Change: We're launching in one particular county, and so it's a relatively small plant, but the what we don't know is how many members can ultimately come in over the course of 2025 as they as one 3 million members in Florida have to choose one of the other five.
Speaker Change: Plans out there and so for now it's relatively small.
Speaker Change: Say.
James: James Correct me less than $1 million.
James: However, it could ultimately end up being much larger than that in the future.
James: Okay.
James: I was curious how many potential clients comprise your current pipeline.
Speaker Change: Can you help us out with that.
Speaker Change: Thanks.
Speaker Change: Alright.
Speaker Change: So.
Speaker Change: Our health plan customers right now we have three health plan customers, but within those customers. There are multiple lines of businesses that were offered to.
Speaker Change: Okay.
Speaker Change: So where do you believe.
Speaker Change: <unk>.
Speaker Change: It may be able to add I mean I'm sorry.
Speaker Change: When do you believe you might be able to add the next new clients.
Speaker Change: So we are closing in as our as we reported in our earnings call two prominent healthcare plans.
Speaker Change: Are in final stages.
Speaker Change: Both are.
Speaker Change: Finally, reviewing our statement of work.
Speaker Change: We expect to receive.
Speaker Change: Customers comments within the next 30 to 60 days.
Speaker Change: And then shortly thereafter, there would be an execution of signature.
Speaker Change: And we would be able to launch within 30 to 60 days.
Speaker Change: Once the signatures are finalized.
Speaker Change: Okay. That's helpful. Thank you lastly is all of the dis enrollment fallout from Medicaid losses gone now or do you expect to see more of this.
Speaker Change: Near term.
Speaker Change: Okay.
Speaker Change: From what I've seen.
Murdo: Yes go ahead murdo.
Murdo: Go ahead, Brian I was just going to say from.
Brian Smith: From what we've heard.
Brian Smith: Vast majority seems to be behind us.
Brian Smith: I don't know that its complete I know that some states have.
Brian Smith: <unk> expanded the timeline.
Brian Smith: On June <unk>.
Speaker Change: So.
Speaker Change: From what we've seen we did see significant reductions throughout the last 12 months and it seems to have slowed significantly.
Speaker Change: Okay. Thank you very much that was it.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions at this time I'd like to turn it back to Brandon Laverne for closing remarks.
Brandon H. LaVerne: Thank you Marvin I'd like to thank everyone Ontrack health for their hard work and dedication to our cause and also thank all those who participated on the call today have a great day.
Brandon H. LaVerne: Okay.
Brandon H. LaVerne: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Brandon H. LaVerne: Okay.
Brandon H. LaVerne: [music].
Brandon H. LaVerne: Okay.
Brandon H. LaVerne: Okay.
Brandon H. LaVerne: Yes.
Brandon H. LaVerne: [music].
Brandon H. LaVerne: Yeah.
Brandon H. LaVerne: So.