Earnings call transcript Q2 2023

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Operator

Hello and welcome to the Apollo Medical Holdings' Second Quarter 2023 Financial Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Carolyne Sohn, Vice President, Investor Relations. Carolyne, please go ahead.

Carolyne Sohn

Thank you, operator and hello, everyone. us. joining for you Thank www.apollomed.net. The press the available Inc.'s for website Medical the announcing quarter ended Apollo at company's second the is section Holdings June Investors results of release XX, at XXXX, has To provide some supplemental background on website. available its made the on its deck a results, additional company also of of this will available ApolloMed's be replay A broadcast website at call. made this after conclusion the

other certain that started, information Private ending this regarding the to operational of anticipate, to would guidance provision growth to remind statements for XX, things, contains December conference deliver discussed such company's ability respond believe, can acquisition changing statements efforts. future include, and get like harbor the I These identified statements we sustainable XXXX. meaning outlook expect, everyone Before the Securities strategy, the year by plan, as accompanying continued call any and XXXX, herein plans integration safe environment, Act growth, of terms will forward-looking within to value, and forward-looking be ability Litigation merger the Reform strategic the long-term of among focus, and

investing prove in expectations decision. encourage those Exchange filings will believes company before statements to we reasonable are expectations dramatically differ of be making associated There and to be included ApolloMed reflected that in projected. can are the could is an you statements correct. the in and with which its that no subject actual today, forward-looking those uncertainties Commission assurance risks to results the Securities as about with Information risks investment review its to that the the Although cause from those

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

the X information. the like language, refer disclaimer presentation of you to would further I call conference to Regarding Slide also for

the of an X. accompanying with company supplement, there of overview those the you following along on For is Slide

the developments. Officer, second the second the Financial an of and operational with Chan latest Officer, Sim, the strategy today's call, review floor quarter outlook highlights will Executive follow conclude company's X discuss Co-Chief Chief a long-term On ended results ApolloMed's will on Brandon before and quarter with update XXXX the will for June XX, remarks company's opening for growth XXXX. and questions. months the Brandon Basho,

the call Executive turn I'll Officer, ahead, to go that, Co-Chief Please With Brandon ApolloMed's over Brandon. Sim.

Brandon Sim

Thank in to another driven Partners growth topline you, on Carolyne. payer our and XXXX. achieving more quarter the favorable organic strong business. XX% We XX% membership mix growth in the deliver and same was Revenue compared a Care growth to EBITDA adjusted were growth strong primarily pleased quarter, in by

X operational Delivery empowering geographies; continue effectively. successfully three, Care providers goals: that Care manage key in execute to and value-based and to We Partners enabling to our on to our care; core providers two, glide excellent outcomes One, risk new patient order along in move deliver the our membership our towards growing and path

as a Partners Enablement we On management our bring core membership strength well of see care we of growth as operational result technology, geographies, to in first support new the to Care continue in our strong the as our growing the quality and Care bear and and goal, business business.

newly joining the business partnership a partner new our demonstrate a California a core formed primary of network as providers group partners in in of long-term signed. organically to class groups, Our XX our California in recently XXXX. in with both over growth, with We robust signed continues care partnership as well

of our this We year. expect platform to by onto X onboard this Enablement Care group September

ability success markets. other to believe what highlight in We Southern also is to and we our California our replicate want

high-quality in with onboarding a partnering additional for ensure entering our First, providers our to and successful new groups for partnership operational we reach as us demonstrate And Southern teams the communicated, in and each proven second, a these each management will local playbook the in a joining we includes: with and rapidly Care This would benefit progression market in patient Partners market. our care our onto market group great previously market from finally, anchor flywheel Enablement platform in investing Care risk-bearing to business; empowering believe who we've platform. enter. providers; new market for As in platform enabling in this generate critical to accelerates built profitability mass California and we that allow outcomes

last Texas, Group October. acquisition Oaks of for entered Valley example, the with Medical In we

we to out Melkonoff industry, capabilities, [ph], with are value-based in Vice the the Development. President of over in has experience network Apollo joined Care a executive expected healthcare Partners Jaime President path empowering market responsibly building as of local advance to our Care and country years leadership to in across further play As in Texas, pleased we of expanding of key us platforms care Business Enablement Texas. our out our Texas Care Jamie Senior along build share is providers that a role and glide Enablement the XX

We team look are expansion contributions thrilled our and efforts. to to welcome your to Jamie to forward our leadership

we Next, care. empower groups across continue region partner their value-based to the providers provide with to to high-quality

anchor expect TIP Providers network related the platform of be announced end is we Independent Firstly, of providers, TIP's onto assets the And to a acquisition our in care XXX we to recently Enablement primary TIP. care onboard Care to Texas by or partner providers Houston. for XXXX. segment an expected high-quality its of Through certain

clinical network. Carlos who for Medical will of of for us TIP TIP's We are Dr. Operations continued Texas will Vice join Texas as Officer to Texas continue lead to Group initiatives local our we pleased of and President Executive will Chief the spearhead the as that Vincent and providers; who Director, Roth, join for development ApolloMed from benefit and Palacios, growth leadership President,

IntraCare And onto and platform Enablement of are Oklahoma El members. City. We manages IntraCare's Austin partnership, IntraCare providers providers, advance by Through in of and to Paso, our Dallas, also the XXX join through over announced care end a of partnership in Care Care Fort a XX,XXX business this the Partners care our expected network to the with primary be year. care these value-based regions over onboarded Worth,

We of in Texas our beyond. by the excitement strong the thrilled Care seeing are and California, been Partners terms offerings around we've both continued and Care momentum Enablement in

health strategic regulatory we control Knox-Keene that For of for pillar the towards our May shared Your and or next quarterly acquisition closed Delivery Our of plan. in had Care we providers in Care and path FYB previous the the full-service Restricted California, glide received successfully empowering licensed move care. during approval call is in along change on In our Benefit to value-based Partners FYB's

counties closely Health track of more within existing the working with is our RKK are counties to California we believe and Managed the and on relative members expectations. to expand that add process to We within to Department the other Care

strategic pillar ensuring effectively. most are successfully important outcomes, empowering deliver the managing to Finally, that is we risk our providers patient that thereby excellent

XXXX. closely our slight believe QX and We QX. in that Based did see in significantly this utilization a continue impact overall however, utilization not but authorization do in utilization increase an QX see on for do for data, we uptick trends not or to monitor guidance prior performance will compared to

in and bulk of in redetermination, July. With reside regards arrangements members our began Medicaid California Medicaid to a disenrollments value-based which

or assist yet We a to either our significant care. to and continue the members we monitor mix our have redetermination membership impact on in process ensure access but seen have they to not for

provided With previously pleased these recent for guidance developments to our XXXX. first through year and financial we XXXX, the be performance reiterating are our solid half of full

new our partnerships We and continue and through and membership geographies growth, in to our grow in organic California activities. Nevada core Texas inorganic markets new

continue strategic our business, technology continue investments providers years come. which our We to a necessary believe the support value-based to ongoing make teams growth towards and in accelerate to feature we and are responsibly in to aligned we our

it turn Chan results. over to With financial that, to our review I'll

Chan Basho

Thank you, Brandon.

in of operating income Segment XX% of adjustment the driven the risk primarily for of of deliver results, reviewing versus quarter. second quarter, Care million, to driven second our consolidated organic total prior period. the our business This related reported to year our in increase program in mix. segments XXXX, $XXX.X was reporting $XXX.X more year period. revenue XXX% second growth million compared midyear Care strong revenue of in Quickly prior Partners was the quarter membership and primarily payer our continue million from driven segment Partners quarter in adjustment segment. risk-bearing quarter by revenue the entities payment a to increased this each year increase for an the a prior results the the increased by This retrospective favorable DCE $XXX.X XXXX, by CMS million trend from the to XX% larger of MA $XX.X primarily period We and a

operating Moving of Revenue million million Segment period. $XX prior to second in in the our $X.X Care year Enablement XX% to income was to increased the for segment. quarter the $X.X million period compared XXXX.

continue in make We operational RKK. geographies and investments and new our growth support infrastructure, to surrounding people in capabilities our to technology

end expansion segment members to at margin second management We as Enablement million incremental our or the these half ended expect and we under these Approximately the quarter Membership additional Care within over Partners lives XXX,XXX time Care in XX, of revenue within onboard investments also were result business. X.X managed clients. was our June XXXX. approximately of

year visits primarily period to in was $X.X million period. revenue primary our our at $XX.X of was multi-specialty compared income was result increased footprint ancillary and entities. our the prior patient for decrease expanding XX% Finally, Nevada investments Care period. driven delivery Delivery Texas. in $X.X in the increased Segment segment a in by delivery million to our care million the ongoing operating volume during The and This

million recall, this scale an last may as than to better across provided in we reason, all to to guidance of we business. Due highlighted segment past, in you incremental line view $XX commitment in quarter. the invest results lines to up in As our to this geographies XXXX we new the

$XX $XX.X to million, year income was the $X.XX Adjusted of year operations, up XX% expenditures, second X% $XX from want consolidated determined of XXXX. and that to entities we my share certain in an our include corporate $X.XX, is was aggregate, period. million, groups loss-generating EBITDA account the to in increase an $XX.X per of from year XXXX. dividends diluted quarter ApolloMed and basis I were was and rate $XX.X prior new the of consultants and CFO, up certain million in $XX.X this the prior In filing from Earnings outside with from increase from million, did with certain of the in attributable on XX.X% income income million in associated quarter intercompany XX% the Net a I finance note in including for tax prior period. between completed capacity impact as appropriately tax our XX%. the also Earlier tax tax filings not assistance this period. year, neglected the inventory team XXXX million

income accrued made income that entity tax intercompany the appropriately generated Specifically, the expense for the by dividend. was

ongoing associated this tax restatement gross impact ongoing information to believe additional or measures resulted Today, impact on from about on cash with decrease to the the period in tax-related To after of do with whatsoever EBITDA, have million, the we will or closed, was revenue, our be We XXXX. the million income and the profit, the dividend our which historically reported strength income impact However, net capital. This filed business, not itself has not XXXX need of non-GAAP raise $X.X adjusted operations, clear, market of $X for an any continuing our to no X-K a EBITDA. previously additional restatement a reported net restatement. include the the liquidity accrued. operations, with GAAP pretax

reduce amount our to changes structure evaluating and taxes. Going rate the are forward, cash effective to the we tax tax current of

forward. this We tax expect will which such the revenue, normalized EBITDA. measures have impact the this continuing adjusted result believe by operations, on gross EBITDA, place fourth going has in the or no as from reports Again, put to profit, we pretax company a quarter into rate income

in to second quarter at balance execute compared our We $XXX initiatives. the $XXX We and well-capitalized and million ended million sheet. to end equivalents cash cash of with over the growth to well-positioned the remain XXXX. Turning on

at Our XXXX compared $XXX million working the to debt second to quarter the outlook. end was end reiterate the total capital I of was wanted million $XXX million. at of $XXX our Also, XXXX.

half likely $X.XX of on total be for EBITDA and per the $X.X to expect guidance million lower to revenue the $X.X to million of elevated QX, and we within adjusted to for billion, to Despite EPS most continue in the $XXX for still $XXX rate range. though will tax be of be billion EPS, $X.XX QX between it We share. track

I'd closing for like back it to now to Brandon? turn Brandon comments.

Brandon Sim

with in the California, TIP enthusiasm in and physician-centric thus believe progress advantage platform. taking we've In group delivering and the made strong pleased the announced in record far of we of outcomes with goals the partnerships We forward need Thanks, our recent momentum the to year. our the built and improving XXXX positive growth, care look first We of are excellent Chan. quality in those closing, track value-based half we remain profitability. sustainably and IntraCare, the of demonstrate care market laser-focused accomplishing continuing for and by on the clinical

for With that, it operator, Q&A. up let's open

Operator

[Operator from Blair. Ryan Daniels coming Our first question William Instructions] is from

Jack Senft

is Senft This Jack Daniels. Ryan on for

this can, you you on provide kind expansion. prepared this specifically of in First, this noted possible you RKK and any remarks, then what involves? the expansion. timing your if on And Can elaborate just X, just

Brandon Sim

call this is It's busy it. I a Thanks Jack, today. the joining appreciate Hello, for time. Brandon.

members our be payers, all -- to And we plan. process this on California. Department that groups license, Knox I with contracting And entities. able for believe the the well add the into closely Restricted the process contracting we is is to Restricted as within health that script license provider institutional as relative that includes other include that Knox-Keene working with downstream Health under to that would around at -- to we more remarks, with to with question expand as prepared it point, track expectations. noted Knox-Keene license your Restricted Knox-Keene a regards The in counties with in Care Restricted of are So California Managed --

Jack Senft

this -- about year, the How should cadence the that adjusted adjusted quarterly As of noted you your kind that third came in a assess to we and EBITDA? possibly quarter I through sure uptick forward too? EBITDA sequentially accurately. follow-up rest quick make in better. the preauthorization How about modeling going just we're to in it correctly prepared of impact remarks thinking want will the thinking

Chan Basho

so Thanks Chan. question. much for the It's

think is and rest with line historical we a in be I'd QX then QX the about we've seen in As years. the as in of say year, to going you'll see drop QX

Jack Senft

want update kind I give just on that's noted you And last and to you an that Can Medicaid really one. quick I developments call, in the just few how think months? us the you're see progressed starting final of the past just over redeterminations on some May.

of curious few So months have I'm the just kind past progressed. how

Brandon Sim

Jack, yes, definitely.

a close keeping on. eye we're something that's So

So as Medicaid in almost all value-based of prerecorded in the members our comments. reside contracts California, I noted in

to qualify others being have reasons. seeing California care the hasn't has they community access for sure states disenrollments. in folks administrative and payers thus We very slightly and So Medicaid ensure been material of working We've been to to started closely that if they're that groups, slower far. with one and access July, making not with to start been disenrolled

to reiterate mean, is in would fairly I expect guidance. X -- that a although that quarter the of to what there perhaps that's come. for weaker yet, happen say impact seeing about would do I we're we that the that you QX slightly accounted strong QX. I or part We've mentioned and talking Chan no a when is So material in

Operator

question next of Ron is coming Our from Adam from America. Bank

Adam Ron

in On outpatient terms a QX? -- more seeing color -- would surgery you're utilization, the in Is that be couple be Just Is additional a of But little provide on of it color around in that I what a can helpful. questions. on little prioritizations like bit any MA? have you specifically?

Brandon Sim

sure. Yes,

this at pickup a to so we QX, utilization in QX -- far, not all large in but relative is far question QX. haven't actually know So the in seen so I

in, that a Medicare utilization. authorizations in coming uptick inpatient are seeing However, reviewing the we slight are Advantage prior

into and And so baked for guidance of that's our QXs coming some QX up.

Adam Ron

actually in rate And then it sounds you tax wasn't is than there it California is structural that your of ways were really was produce -- because and to higher I that. tax any in of normalized noticed company like was comment, other terms if but structure sure of we and that kind like that see your that some you cover I

companies a you just Is So managed achievable? then around tax see as what of would hover be the target? reasonable Or most of rate. something like that kind mid-XXs reference care

Chan Basho

Yes, say I'd closer to mid-XXs. low to it's

Adam Ron

down the income thing of higher is range that's the which than And to guidance the only for driving expected really end net your lower taxes the future?

Chan Basho

correct. That's

Adam Ron

were they And contracting they then CMS, one getting competitors from perhaps had retro on interesting data saying your had of One, to adjustment in better based comments. than X a its direct coming positive I trend or was growth guess, like expectations. that expected

results factored at in coming is or expected? that than here that is all better contracting guidance your in So direct

Brandon Sim

today, accrued or certainly. for guidance assuming reach programs, not last projections. either direct possibility, ACO ACO not year the from X That remain year this impacts the incorporated does this we're XXXX we'll conservatism, know in year into ongoing a the incremental have spirit from any from true-up those in reach year. our from impact But of any operations or August For positive for again, contracting positive or either by which a full we

Adam Ron

And or there you if that's saying -- from call? make there it's other? that CMS any but positive that data just getting like one Are you're to early too way the any is

Brandon Sim

would early Contracting got On we from do And the year. final year. the CMS of information final the this end expect or DCE to month CMS any at next true-up to differences XXXX, sometime the already have had Entity last the program that come suggest relative to Direct we that information program not relating for report, from any from we

monthly adjustment expectations, has not getting impact. are around this around in program positive reports about benchmark If you're noticeably been we retroactive with asking that the reach ACO line for year, the

Adam Ron

discussions that And have had rate now larger was for payers the interesting to that And MA supplemental they they were the another are pressure XXXX, of in comment made the base got just than able seeing. expected they plans cuts. with see submitted their they that that was especially MA benefit payers were because

and payer if year more will impact how that were to in think through I'm it your next for And next gives visibility your in and of headwind able partners if to confidence what so manage and terms into you numbers you customer benefits you wondering rate ability seeing year. get your supplemental that you're

Brandon Sim

Yes.

average across on think accurate I the board. that's

going plan I Of to are payers' a on of that due is due course, premium is risk each that their to the their end. management trend we also seeing on adjustment different average, changes little think but the look some to rating changes, and changes star of --

you're is as we're I what it accurate well. saying So think seeing and

I model to been think of from a in have. and those or given the that that our providing of we're always included plans we which already fact not continue may the longevity the the may of going services we're have supplementary providing items and some lot benefits

we to down. pretty changes consistently supplementary have think through model we're as a that shot. of weather think have benefit to our good We up be I decades and with we -- able we expect or

haven't care that impact seen care We over our financials to do our ability all. at or

Adam Ron

it like -- mentioned think panel, these IntraCare, question XXX XX,XXX -- the XXXs, and the of would all patient would And think And patients. you be if last I from questions. one think I for not so of over then -- was X,XXX. I PCP about generally, sorry providers it my But deals,

those total X patients live? the provider. give should that and patient of MA-only And below these think help then in deals you many a the how And could one, if like quarter, of or maybe second, I'm you what maybe are all why not that number patients to if so risk it's if wondering, context sure per you announced that's something? like to add between

Brandon Sim

The members seniors. not XX,XXX Sure. are all

of exactly say, is right Medicare bit Advantage areas. got wasn't aggregate because But take senior we Advantage to risk and patients I and want time. between So all a know. all XXs, on ratio this would that -- does in venture relatively you're model they're point of I'm In in mix move. revenue sorry, exact commercial not at -- number that necessarily our the me in it's do probably If not we to impact. many impact, just probably tell clear, Medicaid, aggregate, little the how let a early patients. high, expect X to speaking. be the PCP to a and But encompass if I the would But I not in in and to higher Medicare

Operator

is question Lake coming O'Neil [Operator Instructions] Our from Brooks next from Street.

Brooks O'Neil

Brandon of is what's risk I'm I -- driving curious, about could think just that, prepared if end you you sustainable And curious it Number elevated year think in talk number two, and the the just one. remarks, adjustment his into I'm payments. mentioned trend is beyond? do the

Brandon Sim

last into the kind our relative outperformance efforts part more focused drove year, XX operational in of that That the we've So something the platform quarter on score deploying we've as related provider elevated risk to of been for quarter last our our same senior the of some which relative over incremental accurately to been XX technological was last this to year. months. on the to conditions is of offices and population that that the capturing

takes chronic up condition. act know, for of you the coding actual payments As adjustment to it a catch with bit of the risk quite time all

now to and the so uplift to come over the from of bear. couple of of years And past the kind are results we've some platform deployed starting

the We that And the our at of actual was conditions was RAF for also under believe our acuity population before noted time the to patients. we senior aggregate of relative inappropriately that score that X.X. quite low low, chronic the

so payments. And terms fruition these of of seeing come in some into RAF we're that

Brooks O'Neil

way characterize fair as your But think Is that additional to it? keep can implement do you you probably seeing systems? improvements you a

Brandon Sim

with year. related, payment to year for payments is these related I performance that were think it the actually think which I that

our we providers. think roll future years we to to continue is future all of that had be in as course, do improvement there Of out to the payment platform

Brooks O'Neil

might that's hoping you about I impact just on I'm you're of Let talking in mine. a license one and particular me just ask asking Knox-Keene timing go that a bit Jack you not deeper the curious the was was But the and just one. little fascination do fact about or that networks? other on pace. provider the of can what does dollar terms license mean you in What of a have it per of terms mean having what think your business patient the just on in be it capture will premium does exactly for your basis? the you

Chan Basho

thanks to as the Brooks, us We're It really excited of into as our new capture to quickly geographies. enablement much differentially us the premium our risk-based will It expand for very dollar about deploy allow so was allow question. counties. expansion RKK services. the ecosystem well into new counties as our will

as In as are expand terms the with new working in. partners of DMHC our counties timing, to are where quickly current to counties we well

As the this in you apprised traction. and as regulatory you of time this we'll terms we takes know, is get further -- efforts keep

Brooks O'Neil

portion. I'm just historically could potentially not having would include quite Knox-Keene I'm And picky that which that those -- I don't curious, me but too can ask significant on Let one you capitation portion you? you've hospital think gotten means but that accept more the not that mistaken, this follow-up license for be to hospitals hospital and true? I'm if include be global trying Isn't the premiums

Chan Basho

of the that on premium able the up path. be terms you XX% in versus revenues now yes, the in we will risk take this down will a Essentially, XX% to brought with with percent risk the great forward we Definitely, are professionals to dollar be hospital of recognized XX-ish we we recognizing along are revenues. our to point And the today. looking for moving RKK

Brooks O'Neil

you -- do the I state you do -- for And less ultimately you all California. can that across Isn't that of that that have serve more think entire patients expand will right? is or

Chan Basho

Yes.

We will goal expand with it lines The across Medicare of Advantage business. our population. multiple start is to

course, going But does this yes, not the is long-term time be take to that expand. and it's Of overnight.

Brooks O'Neil

at quarter, good that. I'm outlook. you Good I'll excited guys. for leave it

Chan Basho

much, Brooks. Great so you. to Thanks hear

Operator

over the question-and-answer for turn floor reached I'd further closing or of any end like We the comments. back to session. our

Brandon Sim

Well, today. thank you all for time your

feel Alhambra, us our any always to are to to speaking welcome the We dialogue area. offices again you. you next all with out to with should investors of Please open look a at our forward quarterly and Angeles in you be on reach We to any to Los questions. additional visitors Thank call. free

Operator

Thank does today's teleconference and conclude you. That webcast.

you at You wonderful this may your line participation disconnect We time for have and a today. thank your day.

Astrana Health (ASTH) 7 Aug 232023 Q2 Earnings call transcript