BHG - Earnings call transcript Q4 2021

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Operator

00:06 Hello and welcome to today’s Bright Health Group’s Fourth Quarter 2021 Earnings Conference Call. My name is Elliot and I’ll be coordinating your call today. [Operator Instructions] 00:20 I would now like to hand over to our host, Stephen Hagan, Director of Investor Relations. Please go ahead.

Stephen Hagan

00:28 Good morning and welcome to Bright Health Group’s fourth quarter 2021 earnings conference call. follow Group’s will remarks. session question-and-answer Bright prepared Health A

turn of the present in risks expectations. or XX:XX and recorded. call filed Exchange A description call President As we Administrative by information. want Mikan; that we this or and XX:XX being factors Cathy and non-GAAP reports file and Leading as under actual from measures the X, XXXX, Before A in to the Smith. measures. subject to Officer, page Except Mike I fourth the Investor Officer, uncertainties be call, conference obligation the reconciliation Health issued of we with Cowen Health be Group’s of found no we at Mikan. Barclays and XX:XX Form Chief may morning to Bright we reference dated that a and law, company’s this and undertake two that the is statements call contained reminder, some begin, uncertainties I in be in which including over or Management the release may at reports Executive investor Group’s the Securities Care results hosting Conference this March current update forward-looking that, on note laws. materially March from on Mike call our securities to that start earnings XX:XX and contain Monday, Health the to call the call the will Relations the you Commission, in is the is federal can With we accessed week. non-GAAP the Before required Conference will Investor website. Care experience an revise investors.brighthealthgroup.com. These amounts upcoming Chief the and release available cause company’s Bright will to available risks also participating X; periodic today GAAP of with be like any historical we differ page and in remind forward-looking Investor company’s the Relations CEO, CFO are risk press This the could this Group our to U.S. Meetings following statements quarter XX:XX statements are SEC. conferences. on Health will presenting Health now Bright at Information presented X-K would

Mike Mikan

transform Health remarks full-year introductory call. specific Stephen. to to improve then everyone joining our going Smith actions conclude you near-term I’ll XXXX best integrated will is and the and our aligned some truly provide Thank members, brief Cathy in a position discuss Good XXXX. then positioning our we when fourth We $X.X turn building Health the of we million over to are prepared plan by all over results. billion call always with I’ll we drive and of providers. both the due we revenue achieved mission, is quarter Bright taking care, morning long-term health the Health a most to Group thank for Group, to healthcare milestone for X XXXX profitability billion, aligning XX:XX $X.X enterprise of the consumers our making reached Health can on a Group at delivered with Having deliver are do to in built lower Health the about unique can importantly sustainable enhance by now strength local have enthusiastic Group financing which cost variability best resources right XXXX, reaching together at start outcomes of and Bright and We expected $X model, as that the consumers. in and that well we bend believe comments performance for NeueHealth. how over delivered. quarter fourth in healthcare in substantial cost belief and payor better Bright some billion growth for as in healthcare XX:XX growth and the connecting OEP is success. XX:XX healthcare and earnings value AEP, you, XX:XX has model Bright we believe delivery Group’s to Bright always external growth curve care what over and for XX:XX our at our central and We we member results. is expect revenue fully

better our new period that closed that us growth scaling differentiator underlying our with including on tremendous drive preciously strategy fourth business quarter we to highlighted, of large growth operational our once in prior organizational delivered have along members specific In we As special accurately we capabilities taking on and and our continued XXXX. caught was drive fully model that drives significantly we and costs. members the beyond, scores further systems care outpaced path driving risk out. opportunities XX:XX scale can capabilities. XXXX to fully have XXXX members to in and we course as value. XXXX, the as continues to out and start through performance. issues owned attributed higher system our impacted health in we actions saw factors which NeueHealth the costs growth. our in the growth up to executed in also meaningful quickly and these gain on order the Within Bright XXXX our on NeueHealth the aligned and our and our clinics are adjusted anticipated. breakeven processing. in XXXX, model challenging Day XXXX. past aligned we drive to will encountered over executing the profitable medical their were are than outside XXXX long-term in areas experienced EBITDA outlined with list have to conditions a to period, ability capture impacted a Cathy factors of network anticipated look are in to actions specific continuing Health a our care taking our Investor but The we can unique exasperated We in help improved of We improvement we we a drive which will improve our year invest already while expanded this we discuss engage target be Despite base continue we up of the with that emerging focus a and to into growth. more medical company, As progress shareholder year detail, consumers addition, the century changed in better claims XX:XX more a strategy continue XX:XX as impacted from combined care affords pandemic enrollment operational Group's performance differentiated Business and see in the for platform growth results without strong of improvement, larger XX:XX these in remain conviction across a building XX:XX country. in to successfully with our we business And and continuing play serve significant We strategy, technologies our December, process, additional Florida on group build as than that challenges model and XXXX, results on made the combination strategy our our at in the growth affiliated and All our market, capabilities XXXX, out care gaps correcting we XX:XX drive in We XX:XX this refining lower performance. for XX:XX of to hasn't on the model substantial are to partner attract core and we

accordingly. business, guidance an retired to with the Cigna pricing the different balance Solutions XXXX we've we and an still that our Our here, work made improvements medical next and we and XX:XX got move experienced is the evolution, that we Manders that Government the Director. is operator. strategy, to healthcare we were Board actions recently skills taken outstanding President and growth Independent yesterday phase to While with for cost this as we year. from the the that and us team pleased reflects action Matt this initiatives Consistent as appreciate in took our segment joined and their need of as announce Matt and have talent our

areas. results for XXXX Cathy? some I'll will then we on and to success. We drive Officer Smith, XX:XX comments and us us solutions taken take the through additional expect And Bright in Health both Cathy consumer experience deep in the will his benefit and directed now from and in given expertise Administrative long-term Chief actions improved CFO our his results in space our healthcare have position healthcare provide

Cathy Smith

guidance by planned. fourth XX:XX results, results will many you, However, accomplished outlook. our I'll a quarter and morning, aspects, Thank did XX:XX provide In good our we everyone. we and the XXXX. begin updated had not XXXX we financial over for year-to-date full-year in Mike, lot and going deliver then

the ratio our XX:XX improvement driver to top-line our are of basis, of XXX.X% continue of resolving we both and due started compares new our of of We quarter management. at where of processing. in [XXX%] in operations of the of and our MCR $XXX.X medical to improved QX payable loss million which operationally quarter impact specific reflected significantly XXXX, issues [ph] fourth XXXX. million reducing reported quarter to by and COVID Bright in into we premium workflows segment costs, COVID care and to quarter Our headwinds a deterioration all on XXX.X%, the insufficient strength XXXX revenue contributed drove points IBNR in more revenue quarter markets into the of COVID our improve QX results to our capturing is adjustment performance deficiency results of Health We fourth adjustments fourth was processing the Our $XXX.X due visibility $XXX and On XX:XX EBITDA to costs XX:XX to the part loss million lack $XXX catching The MCR level processing fourth was up $XXX.X data, to our our population gross for working related This also legacy impact due continued lack quarter disappointed significant The the are MCR manual up XXX compared a with grew predictability to million was identifiable XXX was estimates, million claims medical $XX prior quarter. COVID increases $XX.X the risk XX:XX processes basis the was risk for fourth resubmitted fourth markets. our reflected adjusted adjustment HealthCare and which require issues, from COVID segment and platform clear, which NeueHealth new quarter included risk and since on in claims growth. the in COVID challenges XX:XX negative a $XXX our was me our XX:XX XXXX associated which our as XXX% had our compounded consolidated engagement our non-cash increased management guidance Our key our the reflect the in timely systems, to the medical margin on million increased a reserves. top-line the cost in fourth lagging and in swiftly $XXX.X relates claims payments, by very including administrative our in a of Let in million fourth were and quarters. of items just and results million year-over-year revenue under prior member the financial fourth The revenue points, procedures adjustment our to QX. of the and claims. in move position. quarter. claims in of Bright improved MCR estimate XX:XX quarter revenue stronger risk XXXX costs XXX for with XX:XX insight costs, provide basis operational our quarters, recognized enterprise increased impacted our in year-over-year are and to XX:XX quarter have XXXX in year. basis impact and of into points million, to A a Group claims in million prior results. $XXX.X by we XXXX. risk

medical Our impact percentage We and the revenue to future $XXX also XXXX XXXX. anticipation our XXXX recognized $XXX million reserve medical the combined in was XX:XX adjustment SEP. in costs including over was XX.X impacted in estimate in to to XX:XX contribution of period prior deficiency expense the GAAP booked of Bright also QX. the results, in The period revenue prior medical period our Health certain in by $X cost the XXX% full-year markets ratio of we risk premium ratios points prior compared costs non-cash changes Turning QX. growth, million membership strong from full-year increase loss contracts billion. of our XXXX, were reflects Full-year Group

the population EBITDA to full-year capture PDR booked a $X.XX reserve risk fourth growth XX:XX inability in the throughout drove billion, the to in $XXX deterioration adjusted membership the year, COVID loss of XXXX. substantial the MCR declined Our EBITDA an $XXX million and quarter the of loss including in direct adjusted million of XXXX. Our versus costs

XXX operating due target XXXX, including our PDR cost we to our higher progress but Difficulty], our on basis reflecting each Investor expenses, at operating ratio drive cost our adjustment. the significant from in for operating a ratio, it and made the on We improvement above cost revenue out risk I to ratio As improvement, Day, was [Technical compared points laid XX:XX to year. expect our pressure

our are XXXX medical to in the the COVID We [Technical businesses inefficiency The operating in COVID, a in and XXXX. magnitude costs XX.X% XXXX XX:XX systems peak a XXXX. compared basis MCR XXX was MCR we our guidance. ratio the confluence XXXX. variance I spend of our continue as consolidate the XX:XX in enrollment taking to lower XXXX minute to and impacted processes, Mike meaningfully will a both and growth, bit MCR by XXXX XXXX our points, impacted detail we to XXX.X% view more points in cost the our of drive as compared the to XXX with want of as cost actions by of performance in Difficulty] of basis special given ratio period extended unprecedented unpacking to previous XXXX the discuss,

While overall point the speak these can with we one-time in XX:XX rate to the in for in will the our MCR most forward and and are nature book to areas of reflect our won't adjusted and of a the specific believe we EBITDA I our our implications pleased business. items which disappointed are XXXX run for expectations results are business, of drove operating minute. that variant, we

had as basis costs compared COVID attributing GAAP XXXX due to accuracy total a we XXX and cost pressure Operational points to mixed the COVID year-over-year year-over-year with growth was points basis costs MCR, the increase. our challenges management COVID to This headwind XXXX of in XXX the to [ph] well results XXXX, XXX enrollment to issues. other XXXX, were higher increase XX:XX of incremental to our MCR up related XX:XX in to medical For XXX than unique Medical medical in [risk MCR, impact million. the delays SEP costs basis population through COVID other of resulting our related period. basis XXX points $XXX] costs [ph] XXXX. totaling] the to special XX:XX there and was contribution an XXXX in changes in Finally, drove basis our part in MCR members rapid in points a points. costs [up expected contributed major full-year contributed as the total inefficiencies

fourth and I on excluded is over at one-time manage of were value delivered consistent our business, $XX.X performance expected the would mentioned prior it COVID a book backlog in COVID adjustment, of based under not noting, XXXX While for the arrangements investment is for partners, QX at ratio, and care expansion you if of quarter growth XX% XXXX. reflecting other to the growth the headwind quarter at our in prior revenue such our new as we patients of the worth NeueHealth million. reflecting in delivered fourth closer expectations the While been from elevated in likely risk served the growth, on compared Looking catch NeueHealth of quarter end XX:XX of the to impacts Centrum costs COVID Our business. with XX:XX XXXX a $XXX.X The given an the closing and our the organic claims clinics, NeueHealth our acquisition quarters MCR experienced we NeueHealth is XX:XX our in have income. our contribution of diversification of earlier. of cost growth Medical million XXX,XXX cost year-to-date income well-positioned example XXXX the for revenue million, medical business, how fourth quarters owned up than the better resulting and QX, strong income of represents Central organic investment revenue external of affiliate the through from in and of approximately acquisition $XX the of full-year the two business start streams. from growth over contribution XXXX year. XX:XX was care of Holdings strong business for investment X,XXX%, $XX million, care

Excluding income, over for rate growth the NeueHealth investment from X,XXX%. was the revenue XXXX contribution

We to growth balance in well sheet. external grow drive expand to channels. NeueHealth as XX:XX through will as continue our and our XXXX, multiple revenue Turning footprint

in liquidity near-term of regulated plans, held meet insurance we continued not Based the XXXX figures have believe XX:XX our the closed which of liquidity The short-term. In liquid $XX to and contributed sufficient including a equivalents Stock, investments equity in support million additional A proceeds. business. non-regulated highly we caused $XXX Series passive billion growth million December liquidity, $XXX on needs liquidity subsidiaries. cash, our in sale of of approximately XXXX, investment we our in include January, and As $X.X by had does million the and by $XXX XX, we million the Preferred non-regulated cash and

the approximately program. of expected XXXX strong revenue our and direct enterprise will in the at trends to NeueHealth the $X.X XX:XX guidance We revision of medical This be taken cost contribution, and offset are Bright medical cost Day. updating expectation with of ratio our the we sources. Bright to HealthCare our our and reflecting be prior offset reported we provided already NeueHealth also are have performance. XX% MCR of on view lot cost expect for payor higher outlined range OEP, by guidance a XXXX outperform this $X.X on update and the our XX:XX expect an members enrollment X greater to and to NeueHealth Investor membership our XX:XX billion, our taking XX% of payor for the EBITDA have upward external estimated range cost enterprise forecasting range on to generated forecast HealthCare modestly to estimate for external now XX%. contracting a operating On XX% the year ratio range are now of actions, reflects reflects forecast, strong for our NeueHealth external reflect We end and revenue we are full-year scenarios XXXX million $XXX payable. efforts million. adjustment with to We higher a year. visibility increase the revenue cost XXXX, risk revenue XX% to various revenue growth AEP improve in segment XX:XX in also the growth updating adjusted January. range we by guidance, approximately expect guidance guidance We partially be above from more a of and growth, year of We widened to billion our conservative with XX:XX the $X.X outlook are to above medical in healthcare full-year to We savings expect of million full-year $XXX a our positive higher ratio at for adjusted the on EBITDA basis, billion a forecasted the we consistent combined prior Included in remainder forecasting XXXX

in NeueHealth participants through growing in announced CMS the Contracting named including of bringing and relationships. are payors Direct external plus new XXXX participating for We participant existing organization, payor for states. the our as the NeueHealth pipeline our recently revenue, expanding six a with Program, opportunities physicians XX:XX

the we a success program that We a ACO approximately fee-for-service to for the Medicare in opportunity is reach a as the XX,XXX model, expect expect improvement EBITDA. direct and well-positioned For population NeueHealth $XXX see revenue model and have great of believe total approximately DCE XXXX, and management program. contracting the long-term our in We million. for XX:XX the announced contribution XX:XX lives in newly significant to addressing drive adjusted in

impacts. Relations EBITDA expect tailwinds provided today impact slides of the taken our million incremental to We help the XXXX details of first, expectations a [indiscernible] will year-over-year. that posted volume, on in the of changes gross increased key And to the drive further net We the provide in to bridge we Mike benefit layout our page each, show financial have but Investor support benefit we revenue the have and $XXX actions I'll to IFP will improvement. XX:XX EBITDA expect and margin

efforts we tailwinds progress XX:XX to for relative million our pricing EBITDA. the adjustment margin risk for costs, $XXX and $XXX have EBITDA what with included significant efforts planned combined gross made expect better to manage medical in We drive our in business and benefit the million contribute have expenses our to XXXX we expect in expectations benefit. our COVID to We to

team the are to our at midpoint together, call XXXX million Health Mike, impact Bright we the results a range. appreciate guidance actions by EBITDA to Working targeted to smaller to XX:XX items PDR combined expenses of the million healthcare. negative approximately support expected taken I combined also $XXX the bridge back of operating want but loss the EBITDA Operating an adjusted growth Before business with I expenses the adjusted non-cash and be the changing benefit. to our XXXX XXXX EBITDA $XXX to million items turn have the I million, in detailed, other XX:XX We drive to $XXX million the $XXX of amazing bridge continued impact $XXX across around of the are approximately country.

building national making additional want thank we we Mike, shareholders on continued insight efforts profitability. to our a here's and performance Care. of as XX:XX better I for support improved are drive for System Additionally, Integrated Now, your strategic operating to the

Mike Mikan

XX:XX Thank you.

As and Bright and in better challenges you a was to we XXXX results Health opportunities XXXX. heard from both year meaningfully Group, Cathy, for expect of be

XX:XX speaking spend has the scale, focused to however of important as on of the While always circumstances and reflect driving beyond. that a taken, will Our important business the actions for have we an level as which to on been tailwinds compounded us this those COVID. I This challenges few milestone business, challenges, created to SEP we an strategy well I extended for well growth wanted on and reached by the specific unique year. XXXX business the minutes to for position believe the

[Technical several actions performance our X% the majority XXXX Difficulty] risk markets. book of COVID areas XX:XX of will membership specific In for expenses. taken that legacy impact for future to at and our reflect have We we near-term IFP across priced against the COVID-related addition, in

an on cost in our reduction XXXX. initiatives. and focusing both businesses our pricing in identified capitalize XXXX we profitability. cost Two, path candidly, XX:XX in XXXX unit were several management unable important across medical Medicare are medical management and lever on also We We unit and opportunities Advantage continue IFP as to that we to as

adjustment I out gain attribution discussed. due to However, our and challenge a contracts, of scale physicians contract have we XXXX. with in able It was value pharmacy make our XXXX significant our that demonstrating taken. faster have XX:XX and processes, issues the optimized structural starts renegotiate risk pricing network As the capabilities. are each efforts adjustment several in we reduce ancillary and drove to we with to outreach data ensure significant their are those structures, investments engagement those of have specialty challenges significantly larger have are network our Accurate cost to systems adjustment efforts is medical manage net actions provide better to in a actions. members we population in more to addition the XX:XX of owned volume, Three, members These affiliate care us cost in adjustment process visibility. existing optimize engage accurately ongoing important and operational year. rates, were Optimizing and risk we we high which and the on better analytics, closely our cases, are manage. and XX:XX network XX:XX now tech that provider we an of the requires risk more Equally to network. end in and to improve risk However, made the suspecting capturing investments ability our earlier members to and end risk teams, of have as process

We care, are their better stabilization. will and network navigate which clinical to expect platform help manage working better drive members also XX:XX we in and claims trends. Four,

operating our place, market of systems mentioned while our The capacity is our out remainder vended our or on new our transitioned to data denial claims people This And our system, [Panorama] building drive few. were administration more of just of talent XXXX, we XXXX, XX% we business high As XX:XX was as numerous Bios, consumer and growth the a I [ph], sustainable addressing critical membership benefits IFP successfully with on of structure. efficiency. transitioning growth today platform to seeing into and membership platform. and on As ability complete our we more performance from and XX:XX are to improve new fully-aligned our payments, we and to visibility us to systems, results. X/X/XXXX. in Not which in coverage. us name to our faster taken cost solutions standard our industry of provider and times, to go five, end-state only we clinical finance new XX:XX the are all accurate BiOS on is and proprietary clinical our have caused performing kick network, but timely Having well. processing our already administrative, and provides A with rates, our greater migrate claims membership on team is operational,

allows with XXX,XXX and significant open and enrollment scale more density the and members contracts. be health annual Texas, year's lives scale of but their plan markets population volatility, XX:XX meaningful reduce organization. and XXXX. the to XX:XX for made tailwinds, cost of management overall Florida, starting five items under only on the I solid XXXX California, better us to membership. membership needed specific in actions have manage retained specific performance. growth and One, eliminate adding to team better was expertise have in to such Carolina risk redundancies, next This not us demonstrable SEP, drive taken XX:XX and appreciate with have our periods, we in that XXXX structure, will scale we to chapter to reduce While across specific of the changes continue specific XX:XX profitable growth here, a highlight got that team, our engage a XX:XX Two, XX% as this us wanted business. and position higher company IFP and portion believe impact the more us of We some evolve and the risk our the allows million X and Inclusive as to Shifting new us We impact North approximately actions efficiency performance. based achieved to at industry providers than diversification. of we took, we alongside

it from information more new on account performance, for While strong including has members rate in numerous of new retention our existing with and members enrollment benefits mature higher special XX:XX accurately XX% while the member including for period. to this and to backdrop markets continued of data XXXX of normalized manage XX% special engage made acute enrollment. our capture the duration costs COVID risk. providing the approximately benefit very shorter to to risk. those capture with rates help accurately and enrollment better also members and us with all XX:XX This member difficult Three, growth to our We start markets. care population us period, population against approximately renewal XXXX, The a

Difficulty] investments XX:XX a normalized adjustment, we we're Four, systems risk XX:XX like challenges much pandemic this backlog. and the COVID. more and The team far our Difficulty] operational last, [Technical I expect prepared saw [Technical year. significant [Technical mentioned We we the And for challenges operational growth with Difficulty]. better in SEP reduced five, made

believe with in streams cases will I us manageable. and while these. with identified rates, increase to COVID several the COVID that [Technical for ways work with we some be foreseeable the will Finally, continue capacity Cigna work vaccination be of also the XX:XX expect future, may Difficulty] while COVID continue direct process opportunities we and We more have explore on with costs can in

for the taking built NeueHealth Group on are While and In for can our about we we we the the in our it Fully near-term for business confident our strengthen few Bright challenging business industry substantial steps we XX:XX the that is that long-term into strategy looking to a remain two to that are confident success. ways are model and going. care working We help Aligned businesses convicted Health face relationship, Bright performance XXXX. of of together are our improve the excited the the and capabilities. Bright XX:XX are uniquely just the combination Healthcare will where companies and closing, of Health’s We and months XX:XX and the future healthcare enhance strength potential are year our growth of optimize are a in our

market of our sustainable a for capabilities are at targeted serving into and the leaning the retail are foundational strengthening greater XX:XX that are and improved healthcare forecasting. that through will market integrated care and model financing combines and with drive results durable We fully care. visibility this aligned growing consumer We delivery

why and team the so platform purpose to diversified have excited want We are As that prepared integrate of delivery and financing and the scaled future, about I conclude my is look future. to to for built I care. the XX:XX the I remarks a

to Bright believe executing robust future thank more the of X,XXX to XX:XX is NeueHealth hard we work, than employees the populations are finally, that flexible opportunities. drives new developing where I'd XX:XX aligned Medicare of and differentiation, Health market healthcare has making interest seeing market now Operator, proprietary model in to a which to that and priorities care manage our right on a strategic for meet our external programs developing both one such it I business. our as is the needs, relationships. the most external and pipeline team And contracts their a let's new We're is NeueHealth partner new suite our like care specifically have or exciting, to questions. is together. at on are that we're up at working future model that built by looking help healthcare. performance enable built execute growth, have payor through Whether the believe to contracting, local we to who edge leading of fully technology direct XX:XX that model. We going, of open is

Operator

question go JPMorgan. [Operator Instructions] XX:XX Lisa Please comes today Thank ahead. Gill you. from first Our from

Lisa Gill

all a what your in for where came then but bit December, very want just go in accruals understand really detail. different, much adjustment I to and conference to in our happened Investor back between Thanks Day January risk the today, XX:XX the expected. little better

the we but One, process price, about you a So, changes to price you And did we what then confidence individual gives raise when things. about few accrual able are think as correctly XXXX? you think are any you making market, secondly, right, itself? going into that to the

Mike Mikan

Lisa. Hi, XX:XX

our understand to the standpoints underlying time year period. of active from [Technical around of coverage that capturing operational we We it's all but in the beginning we somewhere So, starts what to amount And build the the to to our the changed – XX% is, really growth periods effect, referred particularly the had of about can the trends other the that more we loading challenges respect areas compounding fourth to of processing, terms XXXX, in codes we with how network expense were didn't during imagine that of time claim a had or with quarter. of part with talked different with factors seeing. in clean the XX% we we are have underlying the confluence you were that Difficulty] data that process between risk and as from we you from the year Obviously, were it's medical to limitations. out gotten what insights XX:XX

because to don't claims can't many understanding the as and for by with year. for versus new there we new didn't attribute own you there original well a in engaging later the until really so, we’re network. we our at It we So, to them lives it different late, to factors been us, paid medical had When them talked and was Day And closed were SEP in occur that have in the identified but and effectively. increase substantial our XX% the estimates that got adjustment, base, XX:XX of determined impacted having impact about look unfortunately the claim team in impacted we diagnosis And have QX. obviously, were and medical members our Investor to many we adjustment, claims so, risk onward. that we that didn't us but out with late we we in cases we we that that the as fruition part which to do diagnosis certain which in our now impacted code that about We XX:XX and processing. an member as paying. that XX:XX us obviously understand the then too year, are books, kicked risk data for being cases, of as the where through our services, in of our of role, centers not What new in denied talked were to year, watch the from early had starting affiliate with is prior in have we all and January

are Difficulty] happened on build part we our XX:XX there to Difficulty] that been platform. of vendor or so good new outside news into we that news is, team our us system, our in XXXX happening can things that like we to The put do. we which own is, all good that markets other The new platform, own have that on decision able performance. to believe our made the – improve So, were starting system, [Technical a with legacy [Technical in later the team are

position down comes it year [ph], then margin the in a than mentioned, in some much pricing going We're the to to underlying improve to [chronicity] better for necessarily to see differentiation XXXX. we – gross year engage so and potentially many them them with the then our a providers, starting a we're we initiatives data XX:XX that. So got we higher all obviously to gross lever. pricing, And in answer, markets data believe were at look don't markets, also getting to that's that that the one Pricing have a forward, take as consideration Pricing is margin. can't long plans. term answer lot look to those we're we've to manage I Lisa to, giving contribution that going that different up. XX:XX fit is there's to respect to us. where With earlier that in opportunity winded better and to attributing to path look And we want or long we but get, a going

appreciate I question. the So,

Lisa Gill

XX:XX Thanks very much.

Operator

next of question from Kevin America. Fischbeck from Bank Our XX:XX comes

open. is line Your

Kevin Fischbeck

of if wanted degree guess, to XXXX. there kind any that getting to part than of third is in or that that the as, the Is there, to that there did the And think of kind of to the of system together through NeueHealth? party or cited membership some I that guess on way differently growth, two need meant network you're bifurcate networks, broader pull kind of that of it normal. people some is And the performance I that rapid And Thanks. within give a is Great. like of us and I than sounds the more so, better? kind normal the that, current should was be XX:XX about problems seen the versus model performing kind systems was into better then core business of drill points can we first kind in you the addressed issues kind I would see membership have rest being of business? in you XXXX proof model on? network ended was that of that so the that some performing outside, two, XXXX high up issue, perform either your you

Mike Mikan

XXXX, starting on markets put [indiscernible] that X/X/XXXX new forward can specific respect that in so we the – for not sure make all With a the migrate other out decision worked system, first migrate we've made that we and and was we markets Yes. new, we our to make to to time a were XX:XX had go XXXX.

So, at performance. early with so our very we pleased We're are looking far XX:XX activity.

to which the HealthCare the have do – different with to performance looking of a forward XXXX, was for any systems a Bright cost, margin on and you, in and costs us don't do we advantage and gross our care network, underlying partner we've other going time, provide versus greater over risk owned that we we medical see same the integrated adjustment curated we’re cares affiliate forward as was reasons our in is Unfortunately, from customers but – the about have had that in really our challenge impact respect other underlying our not with what external was both care our we're care see the centers, network adjustment Bright HealthCare centers medical in our care and managing on HealthCare on And so, than talked business it to specialist centers Bright we about The of care the XXXX engagement what and own centers model. results no for regardless for curated just it to and broader and the accurate with integration demonstrated believe believe pervasive skews XX:XX coding of that we're network, today. network it, to better a XX:XX NeueHealth with network that job risk going better that data and system medical versus go can a own the at I XX% we With lower affiliate perspective, whether or our versus of is our but owned earlier business. within cost. the that's affiliate put our membership no, migration experience – – XX:XX we

than If customers, model us they perform that proof going forward. the that gives our points is what the look seen average. that's external better you sound we've conviction our And at

Kevin Fischbeck

Thanks. great. Alright, XX:XX

Operator

Valiquette to turn from Barclays. now We Steve ahead. XX:XX Please go

Eric Glynn

Eric XX:XX is Steve. Glynn Hi. for on This

million [indiscernible] of January, end the at the the year. you members So, had you gave the and the little at I a million about guidance today. is calling in of annual for X And that update end think that confirmed over an you

then assumption there the you'll year to partially rolling call is current pure the like and that So, gains in, is redetermined is any that in MA being into by guidance? offset Medicaid IFP the in Thanks. it and in the like assumption XQ normal that baked starting upside have IP business, just attrition monthly throughout members book are or

Mike Mikan

saw Yes, XX:XX don't expect we that right. activity SEP you're the last enrollment, assuming We're normal year. attrition. We

it So, yet don't what roll that's states lives. the out And have understand have we year – to million for and would around it’s we impact the redetermination, of XXXX. end or what of how in gets in approximately assumptions it would us a don't timing anything our

sorry. So, we in or anything didn't our forecast XXXX, put

Cathy Smith

[rate that XX:XX your Medicare we well. Medicare assume would And add Advantage in Advantage growth [ph] your I on] in as do to

Eric Glynn

XX:XX Okay. you. Thank

Operator

go Stanley. XX:XX We now from ahead. Please turn Goldwasser Morgan Ricky to

Unidentified Analyst

this is XX:XX for Ha] Hi, on Ricky. for question. the [Michael Thanks [ph]

already entities, regulated have so, which burn under non-regulated about heading current and find your how top, forward? about investment, going Thanks. then facility [ml] but includes [current million and confirm And cash if you XXX how XXX, a borrowing but to facility, have at can you you XX% add [ph] you capital [XXX you I short-term mentioned, you've looking that's you XXX view XXXX should billion really XXXX, on in the of and investment [ph] and and but of pay million] just of about mentioned, about may into know that, most is reserve. I'm you your facility, mentioned your that you correctly, current infused used XX:XX XXX credit terms [indiscernible] add with capital XXX XXXX statutory if if I that's XXX, know cash] growth, something you [cash about think mil growth of the down contribution] capital sufficient that's So, the liquidity, of position, insurance through X.X can't into do XXX balance credit correct? that enough because to So, position on touch liquidity, [ph], you

Cathy Smith

Yes. XX:XX

near-term that needs what on are to regulatory XX:XX clearly pull So on many can mix XXXX, I then cost the have structure. know, What capital then good to more morning, feel And dependence the Michael, direction. right our in and at arrangement, plans needs for liquidity clear, start we lessen of going and on say meet our your with well. as sufficient our math got to based is, yes, we've big always path you business We the is will exits non-differentiated breakeven our as would to obviously, earlier, to largely we have have think that additional capital pricing levers, a capital needs. share can impact As we continue Mike is we of a quota mentioned we is growth in about some the potential which can lever. market. And growth lever, look

Operator

Our Sandler. Garro next Jeff from question ahead. comes from go XX:XX Piper Please

Jeff Garro

It Thanks taking the I breakeven implies to good seems of FY question. a improvements about XXXX now to MCR ramp FY for want XX:XX target. Yeah, deeper morning. FY XXXX. XXXX like from talk that the

MCR approach for So, you targets Thanks. long-term XXXX? FY what can confidence you your gives that

Mike Mikan

We to medical coating going to opportunities Thanks, We we've point, in we XXXX, that's scale, for NeueHealth, holistically and those XX:XX believe ability have I different to have through FY to scale. Yes. this XX:XX [peer serve, then profitability. by scale XXXX better network, navigation] it's strategy, our that costs. code, to the we've to be [ph]. that XX:XX capabilities, So, for re-contracting our profit then goal Jeff. path significant up to I'd for the capture or, the ability XX:XX the heavy I the on plus for risk by cost have So, we adjusted milestone capabilities. that to management we know levers; community to us in just on Obviously, provides confidence the going by contribution underlying NeueHealth to better or us that magnitude our business are improve EBITDA we we're also community got what underlying manage and underlying have big the drives guess major but you to end growth but challenges and until had that in we growth in get breakeven knowing the those say, the been breakeven. mode can medical that not on population XXXX obviously, record scale, next another getting and initiatives to wanted a holding between you system. that of that medical it's, to know now we help stream overall us and areas opportunities price integrated also So, one and better mean, one another matters model consumer contribution external XXXX. get driver gives

Jeff Garro

Got it. Thanks. XX:XX

Operator

from Justin to turn now Lake Research. We XX:XX Wolfe

line Your is open.

Justin Lake

XX:XX Thanks. Good morning.

quick. a follow-ups Just few here

market appreciate Mike, First, comments maybe exits. the I and on repricing some

top-line you do kind exit, the about XXXX, if year could cause what repricing just think it but that [shakes top-line the Do out] given think is? market next So, broad I you some think you to flat be where you path do instance? growth [ph] a think, of could membership you moderated, for from assume perspective?

Mike Mikan

CEO that going we we our those and Well, appreciate haven’t know differentiation. really our the are how making to markets as made we're have, evaluating into Jay I our pricing, decisions. all decisions just care we're positioned and our structure, although close we question for XX:XX partner Justin, networks and cost evaluating XX:XX underlying you team his Matushak, Interim are So, those we're

that ahead Justin, core growth our in we're So, We believe still get mean, stage. this grow I in we'll don't believe we of want but a to markets I scale. We at company. growth, believe

growth, shown the we efficient while is And growth at we've We've growth growth ACO put And we program going DCE see business. to we to you've profitable model is XX:XX physician we're more that's practices. not level [X.X real to we the [ph] in-line. to get We think so, all believe or structure our that to guidance their of cost efficient model. and that's we get Care going And that get system, need consider for point. seen the one we So, key right to other opportunities us. capital side. and NeueHealth Bright with need be bodes our billion] capital continue to NeueHealth. partner this you’re profitability. We just around drive but and in-line HealthCare that think see growth owned reach underlying or that then, to to of considering potential but the think that growth that opportunities, with to drive that need XX:XX on to our drive We we then differentiator within well a is, do need

Justin Lake

Okay. near-term. talking say along then about or so? like just of us XX:XX – you are does or the you had at sufficient when Could you over felt near-term, mentioned, through the And that quarter the capital Cathy, next of end you least get liquidity for the the the about lines year you you that talk

Cathy Smith

XX obviously to of XX:XX at Oh look or months the year, and point, we so, your what yeah, no. that's Through focus the always on. end

Mike Mikan

strong just talked in the a reduce we're the significant the cost we're more those Obviously, non-core took a a about, action all exiting things a And there forecast imminent, Cathy underlying we action didn't out markets had we cost and of going do managing would We of there, medical turn a year would a in We do, wanted of to just, to year to continue optimized we We been to it we've we managing capital potentially but of one to I importance. but system, [quota we to lot XX:XX costs understand just had have about. note that to Yeah, a management, much we structure capital. the impact see as structure. migrate been cost all coming not addition it’s going Justin. we to We XX:XX cost I talked as better [ph] and redundancies. and that processing We're lot in last didn't just to XX:XX to, better mention get levers that's our that's taking Justin, costs, ton January, start that to manual do in start way shares] have add improve because because we've Cathy position. XXXX the opportunities along. that

healthcare, markets position, taken have the We've a what reasons, of hopefully those to contribute and a they're Entering XX:XX all would you lot this biggest capital. into markets. better for Florida, help So, to as We're going just strong Texas, got in well. in a then capital and I capital has note position. those

So, the that have get we capital you leading rate once you don't about you as to before, up it. to scale, talked burn do

also favorable about well. feel position we So, the there as

Justin Lake

And with one ballpark in of Thanks. let estimate how that? me XXXX can you revenue more. us associated of give just a your much XX:XX million PDR, The squeeze premium $XXX is

Cathy Smith

we aggregate have the in Yeah. and guess, I for Justin, PDR written obviously to you entire sure that loss I'm XX:XX contracts, PDR, XXXX, book. question. not how that requirement know so answer you evaluate is a when

at and we margin gross up limited to IFPs look and operating are of expenses all what of So, versus of requirement. a for MA, have expectations the amount all that our sets the versus

at So, it for business. the business we in all of the MA aggregate actually all of IFP look versus

Justin Lake

is you XX:XX My look a stuff PDR right? to to that take business, you understanding would expect that loss; You have take lose. at look by business a and to you

you your I'm what PDR? had guess, is, of to membership percentage all I a of take premium So, asking

Mike Mikan

us you that that follow-up We [ph]. it, on follow-up [specifically] Justin. Let we'll to appreciate XX:XX question on

Justin Lake

Thanks. XX:XX

Operator

from Jason from question go Our ahead. XX:XX Please next Cassorla comes Citi.

Jason Cassorla

yet, off there argument? them up pick past your experience but IFP question. of [Medicaid individuals. there's [ph] you risk-adjustment redeterminations business, XXXX you’ve guidance trying the I those determinations] that rolled for know [health wanted the the to differ in I individuals the previous nothing and the to understand ability in the capture around to around payment can and how Thanks describe of experience could the back I'm just SEP XX:XX Thanks. status] the Medicaid match just [ph] just where to of question and help you Great. maybe have noted go from capture

Mike Mikan

way, that, I'd this in year. answer XX:XX best I put think it it's SEP maybe last

with in So, really to occurred be if job able normal life enrolling’s you and that to come look events do where significant the a to we're capture the run got at the SEP good rate risk just the typical and will manage population. influx, year, be we Obviously pose capturing to way the data challenge. last XX:XX during a year occurred a in, able

it type manage benefits to we closely situation with we So, we because we And design to would we those we're going pay how XXXX. be on for commissions, closely very our want would would incur very dealt same don't in the it managing that how programs.

way best at can the that's this I think I answer So, point.

Jason Cassorla

thanks. Okay, XX:XX

Operator

now XX:XX move Sachs. We Goldman to from Sarah Conrad

line open. Your is

Unidentified Analyst

improvement XXX This The new for bridge us for points Thanks for MLR, is could on guidance in question. [Lindsey XXXX? Hi. the MLR implies of the basis XXXX guidance new help from you MLR the Nate] XX:XX [ph]. to actually

Cathy Smith

Yeah, posted I'm to XX:XX happy to our did we the in that start slide provide website. were IR materials a and

see And operating around the another to in then in there, there couple Mike and hundred said in support COVID already bridge of taking our medical XXXX, provides but year-over-year taken pieces through and and impact a XXXX, Mike it well as outlined those in management well, by dollars. already expenses million, too or we've you'll XXX doesn't in some for Some as cost PDRs but first that million some good and XX:XX you margin additional offset walked costs would volume pretty as see is then a Slide risk between volume repeat. XXXX see the of in initiatives it there. and rate actions estimates the XX the to expect each XX:XX gross that adjustment and taken. differences foremost, You'll obviously we'd

all of get of us help the year-over-year. So, to those combination

Unidentified Analyst

XX:XX Thank you.

Stephen Hagan

XX:XX I think last question.

Operator

from XX:XX Gary ahead. from Our Taylor go next Cowen. comes question Please

Gary Taylor

morning. good Hi, XX:XX

want adjustments? that July. pay you're adjustment, that have so sense? Just XXXX to to in even adjustment given million current though two, less then wanted of into to I for XXXX, ask $XXX that XXXX, accruals on million when XX one CMS are payment during in XXX which to more in one, making that accrue show you you'll XXXX about million from I million the this ought XXX are July, makes million about that; risk $XXX confirm And So, suggesting risk you've a XXX you year liquidity guide you risk Slide position non-cash you accrual, got and is believe good have if to

Cathy Smith

that's it. think XX:XX know way the I Gary, that don't about exactly I

we single every based you about market. risk So, think adjustment on know, as

to So, better a does as understand second better. and expect improve market numbers year those we

would have dollars just capital our that, though, percentage regards based estimates went obviously, have market, I So for we that transfer contemplated don't know so of we've at said physician. start higher in risk said. a to new that And a the year-over-year we or I like, With goes XX:XX that our the – liquidity, all on expectation you of but year. then

taken we’ve into our And so, when feel we sufficient than like say that obviously to liquidity term that meet account. we we've already near got needs,

Mike Mikan

XX:XX Yeah.

we a the net-net at think in risk degradation I were our the way of did grow you payable, looking business. terms of book

apples-to-apples, plans will you got, that this that up. our to capture the to lot or already We've What care risk we've lives have. about down, go and we that them. that outreaching accurately for we're talking and network, know the engaged of the that know our is, about to we're we’ve already under own partner where payable to I underlying a because would capture to data those was got membership it able going to provided where the down adjustment of a we affiliates, we're risk year, attributed payable coded XX:XX got earlier really we're have talking diagnoses actions demonstrate the and our our as centers, we but don't lot those we've service, a with address risk So, weren't to result our is, earlier we take we specific what a and initiatives underlying

year. this it at better much be to going we're know we So,

and to do improvement thank for time So, XX:XX we year-over-year go that's more, the net you we today. you all candidly. that expect ahead. Yeah, hope So,

Gary Taylor

since mean, adjustment Anything point [zero that or I risk it to Sorry, better are affirming a have that from ACA actuarial at shape [ph], you that how data XXXX in one accruing that, sum this XX:XX there? to accurate? on firms say, you’re was game] adjustment for just is Is risk XXXX? I follow-on going do point more to

Mike Mikan

more price well, team, Obviously, know, obviously and data we're what forward have we through part the at using in took get the guidance, the we mentioned, then Investor closing we year saw were Cathy spring, approach that QX. we how now capture the later inside of from and bake now we out CMS coming trending. look that where show we'll we've we actuarial the what all data our it taken and outside we at in vis-à-vis, based between then the to proof out data time as We the And on data, we initiatives internally. how conservative but what ended improve, consideration. we we that take and business to period in we're and has can closing used increase Day actuaries teams a points and XX:XX on to XX:XX booking going our that that Conference, into got Yes, based actuaries

be to want for we're supported. improve is and that's the Thanks XX:XX right We the want approach question. Of to it actuarial optimistic. but course, this, we taking now,

talking you and to that we forward [Technical again look with So, for thanks soon. Difficulty] of to all

Operator

for joining. today's XX:XX We This call. you concludes thank

now may lines. You your disconnect

NeueHealth (NEUE) 2 Mar 222021 Q4 Earnings call transcript