BHG - Earnings call transcript Q3 2021

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Operator

Hello and welcome to Bright Health Group’s Third Quarter 2021 Earnings Conference Call. My name is Lauren and I will be coordinating your call today. [Operator Instructions] I will now turn the call over to the Bright Health Group.

Cathy Smith

Good morning and welcome to Bright Health Group’s third quarter 2021 earnings conference call. A question-and-answer session will follow Bright Health Group’s prepared remarks.

call recorded. this reminder, a is being As Leading and and CEO, today are Chief Group’s President Bright Health Mike Officer, Smith. the Cathy call Administrative Mikan and CFO

Bright this XXXX, Group Relations company’s to non-GAAP Form of in investors.brighthealthgroup.com. is in and statements the filed on also on This earnings November call reports the to measures. Health Before press risk Chief from release will now in we found we These the at Mikan. current be forward-looking historical be required can Investor I reference will differ expectations. the uncertainties we no could website. statements Exchange measures risks present with Executive is call the this and the U.S. by GAAP remind Mike with cause including may call and XX, issued file to laws. contain undertake A our presented to subject and page experiences conference we any and as some uncertainties obligation which you the to release factors over from morning federal available accessed we company’s that or securities Securities forward-looking SEC. we the Officer, want of description risks maybe filed X-K reconciliation or Relations call available Investor our Except materially to the law, that update and third non-GAAP begin, are periodic quarter revise page of the amounts Commission, actual under A statements Information to company’s reports the this of in information. that or contained in turn the results

Mike Mikan

call. morning and earnings Group’s joining quarter thank Health Good Bright third for you

you aligned around our pleased performance continued integrated are update to and as well our the We as model. on momentum

the outlook and building progress performance provide year, business results, including aligned headwinds turn and it fully to our for tailwinds cover QX on first our of systems and our refined Smith I our integrated and business, XXXX. impacting towards brief Before remarks the Cathy for year-to-date strategy, I points positioning national notable care, over to proof will

for We with cost care, we will which is lower we healthcare the unique delivery do then Bright aligning for the questions belief connecting we central always Bright the healthcare value from is building transform Making believe in resources model and and local Group delivered start when can up cost can is to the our is healthcare audience. how on enhance it delivered. and open at financing truly the bend mission, Health by for consumers. Group. that most better we of We outcomes best right all what with importantly, deliver Health aligned curve and We consumers at providers. integrated is model, fully a that a both believe a will in healthcare

generate. and humbled significant by our are to encouraged continues business We growth the

billion health building continue our as driven meaningful continue We our business enterprise XXXX, to year well-being. revenue by the and our Bright us a between strong future. into HealthCare base now with billion exceed entrust and in membership to expectations, to We internal $X.X consumer fiscal $X.X expect

value deliver long-term and scale, variations, building a As we we shareholder maintain see that we results are over outlook more still we consistent time. to some will quarterly but expect believe

challenging of to disproportionately The a third factors us. due was that quarter impacted confluence

grew a on First, from an during X/X/XX, of in open period of enrollment duration a the Carolina. new members a extended significant with enrollment the XX March Florida of new a North concentration in with we of growth influx as to our in effective XXXX shorter heavy on gross significant and month This year. ACA members result year average special top XXXX every resulted August

Second, in In engage the than adjustment originally Centers quarter. performance. variant. meant region on would COVID-XX challenged third therefore, we concentration our was membership year, for Delta to consistently and meaningful we quarter, to largely the increase this had hit by members the the to and second had in COVID-related COVID-related estimated largest medical premium quarter needs. Southeast, factors, risk members Prevention the data hardest This reported the to capacity utilization our This we the as to in our indicated typically which to Disease risk corresponding is of hospitalizations where lower accurately have resulted ability healthcare in impact compared Control that a an prioritized we treat tripled more and throughout than these and was capture in Due This during revenue. were the a period hampered anticipated. payable XXXX our our is with risk the score decrease critical our

Cathy change procedures, the While and in the population matching cost greater status the risk utilization market. needed is and health medical an later in of for COVID the drive on. in this to for quarter. we will utilization impact experienced payment align to performance resulted third direct-to-consumer discuss the believe direct overall detail in score ratio our incentives modest our population We non-COVID-related a from estimated in certain in reduction increase

difficult we positive we deploy we delivered subsiding, mature. consumers. build clinics. importantly, improved new rapidly Southeast This evidence but COVID-XX engage have more predominantly particularly and despite with Most near-term, greatly especially risk model, health growing these results. especially when the and better that markets in see we indications our in show fully our September population quarter able our significantly Late members, fourth our and to challenges, strong with we is been aligned as estimate early the and However, with in to long-term relationships demonstrably owned our as managed and business, a populations is

strategy. fully driving model us year-to-date business with and in solid driven aligned our additional Looking we gives The operating through our performance, differentiation condition at has growth exceptional our approach results. are

have platform Health a the Bright into tremendous we Group X growth. built Over for years, past

of We fiscal X%, revenue nearly are XXXX year our confidence raising gives the an range. prior on us from end XXX,XXX, which HealthCare our guidance membership upper increase XXX,XXX end-of-year of Bright in to

mentioned I year of revenue XXXX to we As billion, expect billion earlier, $X.X net risk of $X.X adjustment. fiscal now

a continues over XXX demonstrate HealthCare XXX,XXX XX, XXXX. and September of clinics growth of end the our X.X% members quarter XXX,XXX and year-to-date, value-based and total quarter and also performance affiliated the Bright business, arrangements. owned from of serves with commercial the to primary third across serving care lines over second to As Advantage Medicare up under of NeueHealth XXX% patients strong compared of

last XX North differentiated our are assets continuing into expansion to and the the we of and Texas bring markets, including integrated geographic Carolina. aligned owned XXXX, delivery affiliated shortly across announced our In earnings footprint after of we NeueHealth’s XXX span states country. call, our and care will model As care and

same delivered HealthCare frame to period Two, XXXX extraordinary consistent key internal presented continue last in-year quarter continued exceeded enrollment expectations, progress. you the Medicare growth around we update have We and driven five growth. performance. we demonstrated we enrollment Advantage. for have special in as by our extended we our IFP Bright themes One, on the

has variant Three, year-to-date we NeueHealth. disproportionately is COVID, in through Our performed the management overall costs, considering our driving XXXX. performance excluding solid, growth expectations. And COVID-XX on business underlying our medical and are impact our our according Delta of differentiation internal rate to that

seeing our highlight integrated proof care. We aligned fully the systems are that points power of of

We and are in Carolina Florida this Texas expanding it aggressively in to also bringing model XXXX. are we North and

more clinics track year. are or XX next open to novo on de We

technologically We are also our where adding with financially HealthCare. more fully and into aligned model, affiliates aligned clinically, are Bright providers

to XXXX. building external we technology and Four, addition we non-affiliated are are payers one In platform. from expect interest in we payers growth significant strong serve revenue in the today, seeing new

is consumer the measurable infrastructure continue to Our as results starting platform investing we and technology DocSquad provider-facing bio and demonstrate in tools.

which service cost. accelerated near-term our timeline better in some and a one integrate at lower provide of will to benefits also We to better platform, but insights headwinds, structure the long-term cost have results

California, and models; experience markets on functions entry avenues market IFP for revenue include finally, in care Texas, will of we our Georgia to time, health rate large third, ACA expect states We into office making We platform progress expected competitive in future In our on a and we XXXX. service integration of markets and five, three throughout And Advantage completed with be business and the the growth: markets, making second, assets are based diversification we complex cultural across in Bright requiring the the full acquired external corporate solid existing NeueHealth IFP, same in through with including to core addressable fourth, more and HealthCare; within growth. occur our both XXXX. on the expect to with expansion competent positioning XXXX growth, from four integrating of first, for agent integration specific growth states, competitive populations, and vertical XXXX, continued adjustments and NeueHealth of new in primary appropriate all communities with At nation. sources. contribution positioning; unification support expect material commercial operating disciplined plan largest remain focus we a Medicare now XXXX continued our patient in our ethnic opportunities;

mind, in our update will brief a turn themes these I With business. to on

care. model care have that financing of delivery conviction We aligns in our the of the strong with

direct-to-consumer the Medicare We healthcare Advantage are individual models. including other focused on serving retail the and emerging consumer in marketplaces, exchanges,

expect healthcare shifting to enable direct Advantage to market the health that models solutions, Medicare penetration, and we Additionally, increasing employers choice. consumer toward including moving continue employee

consumer, is aligned these well-positioned integrated care the Our around of trends. purpose-built broad to needs the is which model, networks of PPO the address past, the market and not

we results providers compared integrated in am other mentioned partner when members earlier, we proof I population that care I care differentiated Despite network. the for the seeing confluence that to about excited fully in of the to are members systems attributed within most of seeing broader business. I our align are mentioned of challenges As NeueHealth perhaps in earlier, Florida the our points

XX% emergency ratio, and today XX% medical IFP For in lower our cost department lower visits. admissions, our a lower in-patient aligned fully relative example, model members have XX%

and providers, population across aligned These towards year our by we our and is Florida of of we aligned increase are and new integrated Florida, end this seeing today fully proof XX% results In approximately affiliates to expect clinics to Additionally, model in our our virtual attributed expand setting. a and and as attributed NeueHealth our membership are action. add in approximately trending we XX% with continue our and providers engagement XX% markets. capacity points are to IFP aligned we in fully visits South of

results Central Medicare similar populations seeing strong in beyond extend Florida. performance our as serving and IFP our providers with fully are population these aligned well, We our with California

importantly, prospects core in is on We model growth membership consumer-driven I a cost consistently clients, low-XX’s am the optimistic serving risk-bearing uniquely take we in about where Advantage. the XXXX. a marketplace to-date IFP for in through for to has as our model, differentiated year. alignment of Florida appeal offering, our and But demonstrated our to markets view the pleased Medicare-related markets relationship consumers near-term with strong future. headwinds our aligned and the Central longitudinal competitive of am challenging I and face the exchange demonstrates ability aligned more outlook products. remain medical Our and all share This model ratios. The Medicare positive and build our like highlights performance the of integrated Overall,

has we enter growth business terrific build to off as a afforded XXXX. us Our

continue our will a we have in markets Medicare on year. book build of strong We to that core Advantage next business

leverage in competitive the expect we test the Carolina. on growth and we our planned owned North see more the we HealthCare and providers the and better to our IFP members in improving patient model models with our management our continue deliver NeueHealth relationships risk affordable clinics engaged retention aligned and our contracting performance additional in in entry positioned believe of expansion fully with strong are while and with XXXX. XXXX finally, members with business. in providers, XXXX historically And longer are capture to well for positioned strength of care market, supporting into gain expansion NeueHealth our affiliated in opportunities that healthcare We members score pricing Additionally, margins. with of to We Bright build our rates

with in in NeueHealth future. are program direct expect We growth to XXXX, the it for the runway a contributor be and contracting participating business in meaningful significant to

XXXX to to the continue the guidance contributor NeueHealth which the like revenue Cathy the team, to grow to that, see fully enables it numbers. hand opportunity to for NeueHealth during thank us for testament is payers, and take I’d now and also performance. to to XXXX Smith, diversifying our external with of care at be continue We revenue that our model XXXX through a over revenue, business excluding and consolidated an us a meaningful least We investment CFO X.Xx expect be to appeal partners beyond. NeueHealth our will Chief Officer, income, With which our our the Administrative aligned to

Cathy Smith

Thank will then you year I you, provide results XXXX our some updated QX on and as begin everyone. well for Mike and by good through full morning outlook walking our and we XXXX. will year-to-date initial comments as guidance

under quarter Our $XX third consolidated QX. year. of QX segment Bright revenue robust $XXX third $X.X to continued segment million to billion $XXX grew results revenue million growth. XXX% quarter year-over-year in year-over-year reflect Bright compares Group increased prior the and million revenue XXX% revenue membership just NeueHealth in HealthCare Health and to for

margin year-over-year the gross cost was million, both adjustment earlier. impacted of elevated loss quarter risk a detailed $XXX.X and million EBITDA $XX.X and our COVID cumulative to catch-up adjusted Mike by declined third was the Our

risk negative the of our in points third enterprise up XXX quarter XXXX. had third of factors, to XXX year-to-date was compared COVID are QX of MCR Given as in at in associated impact COVID the due basis quarter. more medical the the On quarter a our our reported to view representative with basis in XXXX headwinds a reflected adjustment in from basis, quarter and the the these results XX.X% costs MCR of ratio third XXXX. cost our in business. of points, on XXX%, increases we Fee medical our performance level

and saw up from Health QX As commercial Carolina utilization incidence quarter than impacting non-COVID Despite states Florida increases higher of Bright two and QX. line states, COVID forecast. our COVID significant total Mike hospitalizations. nearly our normalized up and internal below with expense North our QX largest COVID with expense of driving XXX% Disproportionately the indicated and XX% slightly levels in third more our in both the compared in remained to in

in of and substantial payments. the COVID-driven adjustment, However, underlying status capacity combination ability see forecast and IFP adjustment and code for to our risk impacting challenges fully for risk created our our growth membership new patients, capture health constraints

our XXXX period end IFP from September the SEP country the enrollment Our in the growth new of of was membership and to meant XX% organization across XXXX.

the duration a our constrained meaningful time relative frame So third consumer the represented capacity relationships. quarter of to

membership and XX% expansion, represented at of OEP half specifically Looking September. over state on adds September Florida, of XX growth to through the year, are than our and new strong IFP of members more our every during one-one due membership month as this area service growth

Our impact from a is in million XX% capture associated IFP new to adjustment true-up change accrual XXXX. points. medical from with The mix million, seen X,XXX of the non-COVID our headwind benefit prior a impact was making resulting Health to the of in points. net of impact large the impacting a million risk for utilization, total development XXX cumulative in And scoring. than payable XXXX, medical when related the combined cost $X lower development in the $XXX adjustment negative resulted have was underlying impact to revenue, Of $XX this the period returning prior with and year $XXX for approximately first significantly their negative it challenging approximately basis including risk half million which our scoring, The period negative basis risk represents for QX more a representing in risk members an of MCR significantly quarter. first half of of approximately of Bright adjustment in the average larger than from costs new state, coming membership adds higher for XXXX, versus plans estimated

XXXX, to reflects from Bright Turning XXXX XXX% to billion. contribution over the membership compared our first was increase X growth, strong months our year-to-date results of revenue SEP. the Group revenue Health our of $X Year-to-date, including

view and adjustment, risk With in our of our of to performance the COVID variation as business. the the results cost ratio a year-to-date better we due quarterly indicator medical

prior Our but of period, to of a declined in both loss a $XX revenue in year similar the million was of $XXX year-to-date million a EBITDA periods. loss adjusted from percentage

operating points the a of XXX make months on cost to with first XXXX. reflecting ratio our improvement continue X We of year-to-date basis to compared ratio progress the XX.X%,

top growth broker a seeing member by offset are partially our leverage, We commission expense benefit associated line in from with new operating expense growth.

within MCR given our special However, prior basis a both XXXX, continue Both MCR was challenges year-to-date aligned enrollment ability costs to XX.X%, in our we a the reported it compared growth impacted of care peak and through business COVID. systems our points in we HealthCare realized challenges business rapid The year-to-date and solid, MCR extended by MCR year-to-date basis despite businesses and year are the in our the for delivery at to XX.X%. were onboard with improves headwinds COVID Advantage year power by Bright membership impacted commercial of is business we Medicare points to as to processes. in COVID, XXXX period. the of our while care Overall, new XX.X% business lines members as year-to-date in The reported performance in of XXX XXX and see fully was compared we of growth. inefficiency this to XX.X% our consolidate action our for the period model the of manage MCR for XXXX. XXXX unprecedented our

book and significant with care to are we underlying business our largest, deploying approach expectations. networks of a compared medical model with We this traditional in line The why in fastest-growing a advantage highlights integrated good costs have market. provides our

the with payments, adjustment revised guidance we than expectation forecasted. year medical third and COVID-related ratio quarter The was the included an COVID costs, for risk change impact increase cost drives full costs, medical our the more of in forecast. our to combined cost prior XXXX While our substantially for expectation

expenses COVID Looking quarter evenly cost meaningful and due in commercial increase more were in third at geographies. highest had third date, the business was XXXX the shift the our for toward To quarter. negative $XX quarter higher expenses COVID in nearly major COVID-related COVID million the were in in to to our our and our There relative a the Advantage COVID to in was of XXX Medicare cases quarters expenses ratio between expenses more a in prior medical detail, split and commercial. quarter points membership basis third impact of

we indicated to earlier, seasonal non-COVID typical expect line fourth Mike utilization As in trends. quarter be with

cost We forecasting first are are COVID below modestly seeing already the decrease and COVID-related levels quarter two XXXX. quarters utilization in seen in fourth the of the

in X was XXX,XXX NeueHealth over under includes Medical organic value-based Central and and of we the contribution our ended strong closing our the year-to-date patients NeueHealth QX. prior reflecting growth at managed well Revenue from organic XXX months care X,XXX% growth in XXXX. provider the acquisition is Looking business, XX positioned NeueHealth Centrum at of the XXX,XXX represents over reflecting $XXX.X revenue start partners. quarter serve with and clinics, Holdings September the the over risk-bearing drive continued the for The to NeueHealth to expansion compared through investment of for of strong and XXXX arrangements, The from NeueHealth contribution growth affiliated works business year. strong million, income. business growth and acquisition

million, income business from third investment total to $XXX quarter million. in increasing of benefited NeueHealth investment year-to-date Our $XX.X income the

NeueHealth approximately the growth revenue $XXX full year-to-date year-to-date inclusive or year the income, income. NeueHealth investment for million expect revenue is segment investment $XXX from over million, We benefit now million the of $XXX XX%. for our Excluding of approximately

the contributor will to more performance. revenue meaningful look overall NeueHealth a to our we business As XXXX, become and

key we new four shared, are XX least at we’ve markets. across clinics opening As

expect into new model. bring also We XXX over our providers to affiliate

through in external contributing revenue a to NeueHealth grow where as NeueHealth to when performance business the direct we January begin expect well XXXX, external in to numerous to expect continue the the commences, model. capital-efficient contracting overall payers as We program, revenue allowing with recognizing period

of potential wealth the are We our excited next growth business about year.

to sheet. balance our Turning

from $XXX deployed including investment $XXX third classified changes approximately cash position In in million As cash million in non-regulated in XXXX, equity investment, liquidity, and XX, September highly of non-regulated passive as million for quarter, came the we liquid largest had cash $XXX the our acquisition our not growth. and Centrum and infusion to short-term. which held This regulated above will sufficiently our growth. allow of subsidiaries, does support minimums [Technical to capitalized insurance cash to entity regulated at Difficulty] regulatory for additional continued continue and legal figure capital be million levels equivalents by to our

over IPO. During million flow the X of in from generated net $XXX million the we in months proceeds cash and first operating our received year, $XXX

September million we $XXX no have under XX, As credit facility. of our borrowings

guidance be Bright We outlook, driven This billion, half XXXX are risk an updating income, enterprise of range. by the $X.X range partially by our NeueHealth and of to billion the offset upward expect in now full increase strong adjustment payable. to growth in membership revenue our estimated we year HealthCare our in and $X.X revision top was change prior investment the

of new and cost forecasting pent-up SEP This enterprise revision remainder prior expect pressure reported ratio demand points. and driven minus of incremental plus primarily a expenses percentage XX.X%, and risk our of to a above XXX COVID adjustment points guidance reflects basis basis MCR with the upward basis We points of enrollees. XXX medical XX by be our or are

view and and in modestly non-COVID utilization the increasing below forecast a returns the COVID QX consistent the that reflects with Our historical QX trend full year expense seasonality. costs are throughout activity to in of year, QX levels

X% on increase million. XXXX prior $XXX approximately full forecasting an range million for our guidance. estimate On of $XXX,XXX loss of EBITDA adjusted basis, of We from a Bright year adding segment forecast are of end first the our reflects also HealthCare, a in $XXX a revenue for year nearly to

expected also revenue $XXX NeueHealth approximately and of income, $XXX revenue million XXXX year million, of are full intercompany or $XXX investment forecasting million. elimination We an excluding

for provide New at for hosting on some X in XXXX forecast. consider Day be that will for We XXXX to time. December and provide expect an I’ll guidance now, Investor items York But to

business And we the for given growth excluding discussed, have We year. previously are income. to X.Xx revenue NeueHealth for be potential growth XXXX guidance investment we the now NeueHealth opportunities our least our at about next expect revenue, excited

grow aligned to in on continue Bright DCE. value-based and relationships large model expand our our the to expect with HealthCare, external We capitalize opportunity

are meaningful drive nonaffiliated Our go to in external relationships expected as XXXX. revenue growth we into

phase, our view as on HealthCare One Advantage in commercial XX% four also focus representing business states highly a We our time and This more our Advantage believe XXXX are In time. of core our over for entering the capital. move five we In in over business, Bright improve well a better star our and of to will Advantage, California plans platform positioned MA the on Medicare our achieve M&A Medicare for market. this new commercial first focused Medicare continue We strategy ultimately membership. is offering use we as X-plus we are to rating. focusing and

our our business. We aligned extension the pricing our will care remain disciplined of model on pricing NeueHealth delivery markets reflecting across and with our

our growth expect modest of unprecedented reduction Advantage commercial and We business. from across after COVID-related members expect risk In aligned retained an greater accuracy costs, year we contribution integrated of an lines expansion in XXXX. membership both a to XXXX, our system more adjustment of care Medicare fully in improve and a

capture As of our better is we are which members. in our already code member to fast COVID the ability health levels QX, have accurately improving decreased engagement, and seeing

plan we always growth our capital requires. performance, Although our to outlook we expected seek have additional to sufficient business and liquidity as meet growth

investor evaluate any indicated alternatives at/or raise participate we and largest new raising pro capital growth to rata their our support has their capital, levels. intention in above ownership our in plans pursue for of continue We to

additional next will around detail on plans Investor at Day month. our our requirements We capital provide

Mike, amazing healthcare. to I team Health the are call together, country. Before turn Bright changing back we across Working our appreciate the I

Additionally, I want their for system to as build thank continued national care. we integrated of our a shareholders support

remarks. for Mike is some here Now, closing

Mike Mikan

to In and on right nearly together. demonstrated are care X,XXX the thank we face aligned updated through join capitalize and executing making to the of on in year. strategic uniquely and summary, growth consumer additional to as want the of this challenging who model we employees, the we’ve Bright forward the healthcare I work will introduce a progress of two you on Sam like positioned NeueHealth all well growth to at choice keeping business; substantial look priorities Cathy believe working our healthcare in colleagues era Operator, I’d I of so let’s and strength question-and-answer up questions. year. positive Health are the our Bright and I CEO we integrated as as XXXX Schindelman, open Simeon of HealthCare for remain our session, our well in fully CEO Srivastava, business. far it hard that by to

Operator

first [Operator proceed. Instructions] Our Kevin America. Kevin, please of question comes from Fischbeck Bank from

Kevin Fischbeck

love that of in particular, going expect? how the next that you for outlook ability XXXX are visibility I as where pandemic sure margin appreciate I and confident and things perspectives price in the global you Okay. Great, your to as as would that into to that about are thanks. today MLR kind are of stand you guess a make you that growing in is that just during be quarter-to-quarter, your you hear fact see quickly going improvement to kind cost choppy. I guess year to

Mike Mikan

So question. second I the Thanks the got got is which Mike. about. talk Kevin, the I for part. I’ll second This to ask part, Simeon

On you ratio? the – outlook part, the year cost remaining the are full referring XXXX to first

Kevin Fischbeck

right? got year. parts, It base Well, you’ve comes for and into next got the You’ve in this growth then the yes. two year

confident then are and of how to the So year to a confident and next progress you you just how rest into of how that in are sense get things this you visibility? expect trying year in

Mike Mikan

Yes.

look on we business the very is year, thing much you when medical growth back, cost focused the of significant that the given the take mean, book we that I price – So for. a our throughout we’ve ratio, were been

structure. underlying or they that we we more cost our you As are we’re really our very member of about, underlying of that book the and our and take talked and pleased business a population, Florida, of given we’ve with growth, composition business, of the the size compare always And compare to capabilities over mature book price we’ve especially had. to target the it, comparable. When book business

gives us a given that capabilities. lot can of we And population we the so that that our seek conviction to for serve price

about, for us a is key fully we’ve talked As differentiator aligned NeueHealth, our model.

so strong in, underlying got least understanding at predictability And that or and add believe we’ve year. we’ve costs, we when you our managed that of this a

adjustment. our at consistent has you for expense, if that. consumer medical year throughout ratio So, this the consumer pretty confluence that of risk you the starting year we’re the been engagement of the talked terms pleased on year. The about our impacting been look had all it’s medical us about and in and When big cost engagement And strong with growth factors that we’ve we so challenge throughout having take I population. Florida, one-one, time health with resources impact we when consumers the of in care disproportionately this is unique marketplace to engage COVID the limited status COVID, the the basically special had accurately a factor the understand growth, extended period, on couple and that enrollment ability constrained ACA our during which period the year hit code a with focused year you with it Delta when and

signs, affiliates, forward aligned that we with remarks, that the as see care in – Cathy engaging been own centers, signs our our we that’s next a prepared our also going And into strong we year variation fully from said, and we’ve consumers. but tailwind because some biggest as view especially had. So our model, encouraging

and and consistency the going answer pricing? that XXXX. Simeon, improved performance With could we you to leads predictability on question into So that, think

Simeon Schindelman

both structure to that here Appreciate Mike, are pricing Thank question, Mike. not cost our you. we capabilities, is the philosophy, The our you believe, heard Mike advantage. as cost partnership are into Sure, a you basics comments, from clear always and Bright gives And that. and from that with going NeueHealth heard us ‘XX. has price Kevin. underlying HealthCare’s about and as excited medical Cathy’s changed we We earlier

includes costs. Specifically, a on some pricing our our based ongoing level. returning also and normalized more historical XXXX medical includes is pricing general experience towards XXXX utilization COVID

Mike Mikan

Kevin. believe question. I So, And our that question, your next answers

Operator

proceed. Our please line Lisa Gill JPMorgan. next of the Lisa, question comes from from

Lisa Gill

think about talk about it’s But give membership, you and for about for both morning. will MA any probably in then, population, Good and you in your I really Thank you year. expectations? thank I maybe what us membership you this just idea, you for early as XX% sure talk about we about a little with And trending am just engagement this much. your XXXX, two, versus can be? how very would you talk fully the to commercial December. detail. And know Can one, all engaging talked you goal the talked as about is

Mike Mikan

Sure.

of the far of of since we So us, Lisa, without stages just getting too are but ahead early OEP. in kind

well are next early. markets AEP. We that encouraging into into we too positioning year, predictions in participating our far It’s want for We signs in. get although don’t to are the see we given

about Day. engagement, at update aligned we feel share good are model. the what to So, With that. have an engagement Investor we respect our And highlighted was to excited we fully within

a in after the of engaging with owned managed could a of is consumers you where no care resources really than network having you broad one have maybe those and can control. to in deploy So, open benefits different way resources go you

when came up variant in-person the so into fourth Delta quarter, about the our ramped consumers subside with of through was third in have virtual are And excited out visits, late we we outreach, the that our started But engagement visits. quarter. we what to

that’s we challenges. getting fully population clinics. nonaffiliated patient our As see one plan on to of of clinics. our aligned our that same level frankly, we are activity about not virtual XX% And in do XX% now We in of said, And those visits.

what increasing through next said, as capacity we our centers. about are So, are our Cathy year, is excited own we

in also are population. that Texas Carolina. more And expanding and model are and then into aligned we them the help North we target with where it to can taking engage affiliates We bringing

us And next gives we – so work that leaves on strong a next year engagement that that that have got us signs from. of base to we encouraging better have year, top will

have that got, We a said, Cathy into a X% market will more as coming to similar have recapture New Florida. where the we got opposed to recapture in be Year, as

then our for teams their than that’s that. that’s and with consumers, that’s clinical result good think target target, us. XX% a And So, target reasonable a we XX% better in to factors, is good – marketplace. for good terms for feel promote of fully we I for engagement. those encouraging aligned it’s all And think sign longitudinal a and an between between a broader and long-term a healthcare. physicians is We encourage we And with think we that that want and relationship building delivers patients think thing, a the

Lisa Gill

for Thanks the color. Great.

Mike Mikan

question. Next

Operator

is line open. question Nephron from Joshua your now Raskin comes next Research. Our the of line from Joshua,

Joshua Raskin

Good Thanks. morning. Hi.

your you to for keep got of year a I the have so XXX%. combined ratio pricing but far structure, just a clarification, hearing cost underlying First,

Could and XXXX. needs going And to based to it sound that mean you quarter cost are converted? I to right? am pricing loss, fourth doesn’t on you a that about more question $XXX are think capital it margin like you know assuming think the Do that million $XXX you the do I XXXX, looking a then target you about think of the clarification real for sounds positives, or give think assume you like you on we that’s still does will my cash So, Do what raise. short-term color? us margin? as that guidance, So, I exactly just of in in equity? in actually capital. investments, if just a be curious million pricing the sort think just means you something some Like just alluded is means structure you different be things? lose include straight you at as similar will

Mike Mikan

Yes.

we our talk risk are perform our underlying we the the the overall. So, the underlying expenses And cost are we and population, integrate really to integrate and have capability, structure serve. medical the to we – we data, our about the make focused more comments, our the alignment, underlying more on population question expected those able aligned to capabilities, of financial are, unit cost we for clarify on clinically when utilization and better we from pricing it’s

are fully back introduced if forward. it model talking our how for That’s with you our are key us we aligned that’s market that to of We really a what we differentiation go Josh, and are and inefficient that given we But said, expand Obviously, we scale grow making line. to Cathy the we have and the as profitability, just to as price significant business. think of that population. slide, our So, investments we performs bottom broader about. versus going the to the lack would like now, of

over We we a one So, build that don’t believe in we platform, have gain much cost. pathway productivity, expansion have profitability scale and as to scale to as we we time as getting matters. and

to target we talking drive to that are going are those margins We about.

then our So, you about are when really you focused so talking underlying can Cathy, and And medical on costs, underlying we capabilities if around the our answer will, our last question that? capital. MCR. we are costs,

Cathy Smith

Yes.

remarks, I as So in morning. my Josh, good prepared said off, first

We evaluate so new continue alternatives for raising our specifics capital, to no today.

at in more of the our we We at level. our we that details our our of And Day. any growth rata full Board and support pursue they have do plans But will Investor with to are their largest capital raise in really ownership participate give will continued investor. and support, indication fortunate support pro their

more So, come. details to

Mike Mikan

Next please. Josh. question, Thanks

Operator

ahead. please comes question from go Ricky, of Ricky Goldwasser Our from Morgan line next the Stanley.

Ricky Goldwasser

Yes. Hi. morning. Good

real one question. So, question of and follow-up one sort

you to kind need position? investment a in of also Mike, at the you of infrastructure end kind that are question versus and right. of kind in like that So, balance to – then liquidity simple of the off investing what investment. would and of growth. investments Because but you technology, clinics do, building think to is in investing expansion the will us on point of membership follow-up you growth, between on the like sort Josh’s it very clearly infrastructure important investing at kind cash you The in the gave and have in list

members kind your kind percent [Technical are cash? I clinics. full seeing And sort balance as – is I you like nonaffiliated when you we percent of of do And then a actually think Difficulty] line with One, your say think seen like commitments, some what more that or of facing how of engagement you your in think we secondly, kind are of overall like of So, in you the heard about year of XX% of membership seen limited kind about have are is affiliated in you either what kind that clinics. NeueHealth visits membership. the in if

think sense risk ability to and just a think give of us to how about to adjust. I good XXXX that’s going line top

Mike Mikan

one But priorities. capital of that liquidity because and I component balancing it. just to come will So, I start want missed to back I part second I think with

generate So an managing obviously, on our capital shareholders our optimizing and returns. we are of and optimal focused

And strategic as IFP well decisions we the scale. have We in Medicare market that both doing through made been get as Advantage. to have expansion

attention about the think the near to capital the or required are let long-term intermediate-term. me sorry, we more We As to – speak grow. paying obviously to

our We Board have our existing our got from strong investors, insider our for – support growth plans.

going you we going model more if – sources, of and a external in are And to capital-efficient growth in be also, so are we our you believe we NeueHealth. growth revenue are much we we on to our have and going able And will, forward. in to as some from margin But generate and noted, external that’s comments, NeueHealth plan. continue that investing

take where XXXX. markets did back markets step focus may So, core will we only. we to Ricky, COVID, decided a there on in during expand we will when not be new We instances in as any

where proven – have we So, to and prioritize tough the our maximize to past. cash existing going we and make those that have we in are decisions, position, we have

So to efficiencies sources of through in we – and benefit scale, but time new revenue going over are through NeueHealth. capital from is also

with XX% providers. around Your engagement aligned fully question the

clinics. XXX,XXX about of are our today, aligned within our So fully lives

we expect capacity Florida, Next to expansion significantly. in our increase year, that given

in we of members in Texas our also fully are Texas. The greater will that in proportionate We be share expect model. aligned our

model big ours. our significant and will be percentage just when get of markets the assume I take today. two, membership of amount the a aligned into you So, fully within not

enrollment better clear than or be question, will more you sight of We in that to growth will note that the is will have your we it as line be on to both the that answer significantly Ricky? Does But larger today. it those markets. of

Ricky Goldwasser

any had year? have for just risk for you aren’t us, show like maybe you and have members next a of those clinics? guess, to of adjust ability can kind visit is that I wellness do What level, some to sense percent them with data To nonaffiliated get seen

Mike Mikan

I Cathy Stephen – that percentage number. a between impact. don’t follow-up and specific give have exact later you today we the more to can that nonaffiliated for But

Ricky Goldwasser

great. you. Great. Thank be That will

Mike Mikan

Next question, please.

Operator

Our next Sandler. question comes Piper from from ahead. Garro go please Jeff, Jeff

Jeff Garro

to risk morning thanks as number good about and Hi, to and the ask adjustment. and want it base growth questions. relates I taking for the really,

the trends of assumptions members indicators I versus for looking do Just are think forward, ultimately, different telling open to about And any I loyal base? wanted came but around you enrollment, SEP looking existing retention for that enrollment be year? open member this during result members have retention at leading you what in net we your versus internal will ask the members the

Mike Mikan

Well, I any add Simeon, start, if have you will additional and color.

performance to OEP signs market So, of terms MA. retention be generally early – on, on, and But we we terms in seeing in seeing our of early of are look served am expect end at difference. so versus at them at we encouraging not year. retention. markets encouraging sure existing There are in and in obviously for at to terms we us, And SEP the members are we of them. the overall OEP if look are I renew signs. we trying in But

have am not distinguish any answers sure to that. I Simeon, you that? do we So,

Simeon Schindelman

entire front the got through had members elements. compared to that and that we do OEP to me. has year quarter. – third I have We know renewal study year-to-date, of persistency been the in have of good don’t the this numbers that compared we hand of our a just feel good business we don’t the couple although book have I SEP numbers of which renewed activity new the overall right We XX/XX, on of have the But in watch now. end about

has growth overall on basis. total and to So, good contributed about the feel company a year-to-date for we

So, has strong. been persistency

Mike Mikan

looking just program. It’s the SEP, the and extended think given in uniqueness the it of early of I And data. at the newness

but are retention. monitoring watching be Don’t of monthly yet, know next Thanks, are impact as So, basis. question. what and the and in type obviously will a we we OEP on market seeking

Sorry, Jeff…

Operator

think I un-mute muted, is Jeffery you this now can line.

Mike Mikan

am missed. cut I I to didn’t that him follow-up a off. have I might He Sure. sorry. mean

Jeff Garro

how Of have about the segmented utilization going Florida your applies population care in membership versus base with growth we Maybe to nonintegrated integrated retention that think you the forward? as the there. and

Mike Mikan

I missed utilization. on the first part

had you – we the weren’t specific a of have reason, that in in engagement because through. retention higher weren’t building do we for aligned You within getting But without them. whatever terms numbers, coming into just of that expect fully segmentation, providers relationship our with

capacity going into as And we Florida and we we But as expand again, Texas. building affiliate be that. are so physicians well bringing to do more expect into both

we expect aligned positions. with So, do greater retention our

Jeff Garro

it. Thanks. Got

Mike Mikan

Thanks.

Next question.

Operator

line Our Ralph Ralph, of next the question Giacobbe comes from from Citi. go please ahead.

Ralph Giacobbe

be into entry Thanks. the can some why challenge would population given we or give maybe just in going status, all market new lower growth. option many membership at Good ‘XX the percentage churn next you existing earlier, the to either follow-up And your of the as of book, historically headwind markets. some given perhaps of quick of also health existing wouldn’t in given year the saw difficulty But appreciate in all then and the Thanks. displacement to from a percentage a just morning. that matching Certainly even us you what existing or a expect cost retain? a

Mike Mikan

an believe some Florida as take year. having the example. are of are to year, there an things business, existing of tailwinds and But challenge we type have for next same expect – book don’t as that so SEP we scale Obviously, we the us. Well, have we that this

position. a very We have started from different

We that aligned a we going of know fully said We while patient to we from have the base year, comparable up incumbent within start know will as retention market. think the from our strength. with a expectations ramping we we in short, rates vis-à-vis engagement, our have up started we clinics stronger earlier will are – this model. come our are within point And we existing

going in the are that. assume year – population markets, the going going even be are we you to to it’s new manage. to that we be year, in, coated, this status respect yes, you we With So, into excited vis-à-vis, going assume about under always one, of challenging. health But

are be Just It’s the like is reset under you market. every a going adjustment Medicare, to relative year. risk in to though, measure Different COVID. IFP,

are and a it’s reset So, on incumbents advantaged, yearly basis. a

So, the you you their to get have early you more the are you in scoring that getting accurate for risk to them, that underlying code on serve. got to data for about conditions population the know members on an advantage you more can because treat them

about program an As attribute that were base. and Delta we direct we that resources we we Florida. we proportion on seeing lives a our of future outreach in process in example, in to through to through predictive entering And engage FEB. our coupled markets modeling, And that like were we having our lot clinics, we have Texas, assessment good patient to – through the in Covid with as felt share those and rewards as our learned population our months, summer the risk can greater Florida, the our a early growth through activity with sans into we health in significant had by go

our retention, And from rates really will do our Investor we signs you away, we we aligned show then improvement two Florida with about retention when talk fully Day. in expansion to expansion at we more feel going going good are our better in in capture encouraging that and model NeueHealth those more Texas, expansion forward. risk take of then get with data So, and combined our factors into

more will information be that more explicit. on have and We

that please. will then. We Thanks, question, do Ralph. Last

Operator

of from comes line the Lake last Our question Justin from Wolfe Research.

ahead. please Justin, go

Justin Lake

A Thanks. things of here. Good morning. couple

there – through price the lot is a of of exactly kind around filings, First, XXXX. how you questions the piece trying to

in it be book as of tell out price see well weighted new going centers where those hoping pretty to versus I existing least. look business to you do be is Thanks. alignment, are Can that also I are for XXXX? kind positioned the going – you price bunch might tell you Mike, partnerships have XXXX to So, going us you – able are some would us have on you average a we perspective increase Is going where a of of And you there on member said are you on know that what you Texas, just you like be? was center your like to the you from places building to that basis, then looks XXXX at you offerings, where as well? or a are to markets,

Mike Mikan

Yes.

to with get start am into to to believe a we have the half. Justin, me Generally let increases, So, that. you them latter we competitive we I speaking, not don’t is. what about price and if talk specific sure want I position rate want

We are focused affordability. on

are before, said cost as capability. we have pricing, and underlying We our to obviously

at perspective. said, Houston sure least expect as in by the increase, example, product clinics, said, easy groups expected aligned And not price so is in have greater of aligned have I a I you today But a there can plus to am relative measure by Dallas. just with open is I simplify. nuance financial are integrate, partnering if And of to market, membership and at proportion XX clinics, that where as is an to we from those fully we are building look technological clinical, we – and be a in our as that – Texas,

centers our our high our we business. priced bulk the to either talk how so And fully And advantage partner. think that’s want that’s us. at do going will be Simeon, to least we aligned or a with in you And our really about of membership level strategy?

Simeon Schindelman

up as gold some costs utilization revenue to the course, modest it of consumer and year. being overall to utilization we silver, again, have And fully in market back and year going mentioned earlier, bring reflected each next in more an fully associated normalized are ends next – anticipated with into What weighting our strategy some a level. COVID was to as those percentage on is basis on The well. their changes I depend in choices reflect to bronze, decision-making

information Cathy a structural specific fully fully I to down with associated development reflect that the all and and have can we have percentage for Day. is do something, changes and think more not pricing maybe Investor But underlying So, network give and we on the of account the to does accommodate enough mentioned for on Mike you year-over-year getting NeueHealth.

Mike Mikan

some on to and Texas, strategy of – clinics you offering to points as part we just saw to of And that a in to in Justin, the specific our our – price aligned be is because remarks, more our proof our performance centers. then, prepared raised narrow saw And core Florida. we with you

Texas, to are and that encouragement can perform capability We us at we bringing those gives that levels. that same

And so for that. we question. are excited Thanks about the

So with you that look thanks any forward today. for we Lauren, back And time keeping progress. your on for remarks. to updated to you our you

Operator

This and lovely concludes joining, rest I today’s call. day. your you hope of a all you Thank for have

lines. disconnect now You may your

NeueHealth (NEUE) 11 Nov 212021 Q3 Earnings call transcript