BHG - Earnings call transcript Q2 2022

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Operator

Good morning or good afternoon and welcome to the Bright Health Group Q2 2022 Earnings Call. My name is Adam, and I'll be your operator today. [Operator Instructions]. I will now hand your over to Stephen Hagan to begin.

So, Stephen, please go ahead, when you're ready.

Stephen Hagan

morning. Good Bright quarter to call. earnings Group's Health welcome XXXX second conference And question-and-answer Health Bright will prepared A follow Group's session remarks.

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

Investor or will and or obligation on company's is statements update second on in this be company's accessed to this forward-looking earnings Relations of Information the differ call and undertake actual the securities Before be statements investors.brighthealthgroup.com. laws. Investor contained of we this in with are page reconciliation dated law, A issued remind Relations our by description from risks Commission, in the uncertainties quarter measures measures. we reference we morning of also to some is SEC. statements cause forward-looking the and with of website. materially and subject you release to the available release company's on revise no Securities begin, contain or to reports and including under XXXX, the A file risks GAAP Except call we any Form uncertainties that we available as in experience which current These can Risk results may could we at non-GAAP call the Factors reports our non-GAAP that and found required that X-K to present page the want Exchange may the XX, historical presented periodic August U.S. press from This federal information. the expectations. amounts the file

XX. that Group Officer, Health call, over that, Chief in like With to conference Mike to be Bright September Bright I Conference Stanley Before we participating I on now will Mikan. the would Wednesday start turn Health the the Morgan Group, will note Executive

Mike Mikan

then Health progress discuss Group's joining second and my our everyone, an business, call. on I'll you made open At Cathy with details quarter turn focused making and Good Group, Stephen. mission. quarter on start remarks the you, our Bright I'll earnings we've actions, healthcare call give right over thank are the results. Health to Thank XXXX We Bright our with for strategic on we together. additional the morning, on update always second to

In belief we and performance. Our care, that cost of and outcomes lower business aligning built became by capabilities, since best and better consumers. dramatically a deliver the we public the model scale, on year local delivery matured company, a connecting and is at with the the can healthcare diversification, consistency our resources all for financing in has

specifically We have and the achieved Florida, scale Texas, the Carolina, in in of largest markets across some country, California. North

seniors both We business. growing and demonstrate to diversification rapidly commercial continue our across

of differentiation points making Bright on our progress We demonstrating HealthCare have that while our operating made as of performance integration important differentiated as care our substantial the and Bright continued model operational and the solid significant our significantly quarter, driving team care the growth, and NeueHealth on proprietary key underlying have between improving grown aligned second progress our for biotechnology, our developing our in our performance, all And while NeueHealth deliver fully business, model. fully we business, Group. together pieces performance These underlying Health businesses. aligned drive In improvements. to

effectively core medical our managing We of across generated strong all growth markets, in while costs have our markets.

XXXX, disciplined our business, Furthermore, of we confident improved the strategy to and With adjusted to breakeven in in taken support are for the we pricing EBITDA have performance cost XXXX. moment. actions well capital path our additional underway will we this details our a position we've are planned business, more and always the capital provide on need. in growth and execution satisfying of in our for our Cathy

this has far guidance so reiterate year metrics. us performance key led to solid our XXXX Our

We are for plan management on achieving Through cost relative to we we've that pricing our our delivering million $XXX cost laid changes. are XXXX out. improvements greater the than savings actions medical expectations operational with efforts, track our previously in and savings focused on in line

COVID line Additionally, resulted far our retained better business utilization we are on this expectations of the lower second experiencing entire has and significantly of costs stable being Overall, is And we our an has are ratio basis. member year. that's through base this seeing medical the lower in percentage benefits across so restated year-over-year members a in year. last from with cost enterprise higher and And our been a quarter.

this higher improvement for stable more Florida, in example, we've Our is corroborated adjustment member per showed a data better meaningfully risk the adjustment own risk to the basis. are a base, achieving and enrollment National investments Adjustment period, the In our made. special by XX% year due Weekly Risk initial WNRAR we Reporting, performance retained member on operational

this affiliate earlier. to along and members We owned interventions who efforts with faster providers year. members Our identifying health engagement and care member benefit complex attributed our much care from further are conditions are would

this our plans. for in and also Medicare individual doing members but we family Importantly, not are Advantage, just members in

as around members members the risk supports patient better the helping population us higher patient to our risk serve. identifying outreach, direct us to in efforts care as of accurately network Our allowing we well capture

and year. considerably technology development operational Our this capabilities advanced

well. Panorama benchmarks denials. appropriate claims are respectively we and pay, And claims in our prompt care for prism performing and management achieving platforms, are age new target Our

has our forecasting come have we more have markets claims claims data we in our continued business median on significantly and informing require continues the to the work, our throughout platform and is improving. manual these to Overall, of markets. down year. And of the predictability While additional processing made this progress legacy age claims

set systems, drives efficiency upgrading of year. selection XXXX in provider also help The care provider-facing to for up improvements we've costs. lower our electronic the look increases processes to well care us which We business more sight as automated are adding we next satisfaction of out and better operational our made medical improves and providers,

XXXX for new medical including our implementing on lower continue of management cost expect that our efforts We the consumers. reflect contracts medical scale business, driving to costs

capturing our improvement with members coding engagement in across further these We members the markets. of and accurately expect our risk

We we members. their to of year from we more also driven the year a strong this we Advantage the benefit adjustment. our meaningful second have the expect going data where in on markets accuracy XXXX to performance significantly drive improve into Medicare ratio risk to cost entered expect our will We've And improvement both commercial in in businesses medical XXXX. expect in and improvement our a and continue in

long-term and to the do actions our ACO business the expected strong our closer also year are building business pricing These new subsidies Sunday. competitive positive in last further positioning the Overall, market alter targeted margins. our underlying objective Inflation We expect on into in performance. have REACH actions profitability unit our drive not program, in the direct potential will extension these benefit pricing our pricing of view Senate we the pricing XXXX on being the supports take positive has our passed and first to in taken. Act disciplined ACA move structure We cost actions into environment that a we to contracting meaningfully our the Reduction in account as

now quarter net us it of commercial to updates further and hand our next which fully NeueHealth efforts, to Medicare additional provide benefits both gives to our our businesses. us to over We HealthCare The second of meaningfully Cathy with some a significant to cost Advantage, go will year profitability closer and allow medical result and and conviction model are Administrative EBITDA to aligned combined continue improvement Bright move target XXXX, our in and Smith, from the across combined margin medical XXXX. care gross our also expected adjusted pricing CFO advance strength of Chief on I'll our cost and drive breakeven drive performance business. in the in Officer, over in

Cathy Smith

Mike, I'll over you, morning, start and go year-to-date balance and sheet Thank and quarter outlook. review update, our with XXXX then of our a good provide a second results, everyone.

the payables increased for payables of expectations results to contracting. We in in $XXX forecast in benchmark well revenues risk forecast top-line revenue quarter XXX,XXX consumers and impacted by from prior second ended million solid marketplace Consolidated adjustment member our attrition XXXX and contracting XX% from over quarter Advantage quarter. first the XXXX and the a final year. reduction negatively commercial Medicare growth consumers, Our states, risk million, member XXX,XXX due with million line based year-over-year with Group settlement reflect revised as for of grew increased direct year-over-year on trend billion to approximately the direct and HealthCare revenue and $XXX XX% NeueHealth Bright as Bright value-based well $X.X segment revenue in segment as billion QX. health CMMI across $X.X an our Health XXX,XXX lives. were as to segment new compares $XX to the year-over-year adjustment consolidated impacts

the coding our than and important is lower note estimate adjustment and both risk final the offsetting average were in payable. this market risk It on to resulted healthier medical changes. our population higher adjustment higher marketplace state for XXXX was adjustment seeing in with XXXX, in Our expenses expected a expectations, risk line benchmarks but with we XXXX are

partially XXXX second was $XX.X Adjusted by adjusted favorable by offset the on mark-to-market reserve settlement, losses excludes XXXX a million expense $XX which a and securities which in quarter gains of $XXX we adjustment loss EBITDA risk million million the million, impacted development Our was $XX investment was hold, EBITDA quarter and the of year-to-date. equity medical loss quarter. in negatively

lower increase approximately the expenses. gross premium also neutral population we adjusted EBITDA. net adjustment, increase the acceleration actuarial Additionally, support in risk and an forecast. treatment not a primarily operating XXXX in offset by expectation change markets, our to for second markets into new cost reflects the to in impacted in for million seeing was estimated PDR are have EBITDA the in-year Adjusted higher data result by full-year but be clear, our and the in reserve an as both in reflect deficiency experience $XX in-year This To accounting negatively but certain recognized more margins healthier our quarter. XXXX rather performance, does of losses PDR claims is we our medical

through quarter XXXX The expense benchmark the medical our to revision added XXXX impact cost the XX.X% to at a second DCE MCR the MCR reserve adjusted was at looking progressing year-to-date enterprise the final and increase members MCRs enterprise and first MCR of in change net as a few from MCR from second XXXX. seasonality GAAP from net adjustment networks. true-up the quarter for offset XX.X%, their in revised utilize new reflects risk members XXX our medical minor. offset ratio was partial in appointed the second, second with their in Our The each associated was medical for level members expenses utilization quarter to health more, deductibles, enterprise markets with the points from basis our Typical when The in the quarter to and forecast revenue development becoming QX. provider to impact increase by their our an payable DCE factors. and up start benefits to quarter, with benefits in

costs last year-to-date recall success XX% care of our by cost impact operational that initiative in to were cost strong second to the at comparison COVID impacted at of meaningfully that limited at COVID costs reflects Without lower. future again the MCR our MCR. the COVID, to we first improved much in basis million that of behind have basis looking visibility MCR, cost DCE, QX made the well risk note year-to-date for to two-thirds DCE costs create quarter. you comparison half from XX.X% from transpired, million MCR compared Our With quarter first points that quarter if or XXX be line their year-to-date in impact XXXX. prior MCR would second performance, and fully were enterprise would restated higher performance year, XXXX, the had medical and QX. XX quarter to year favorable also SEP aligned is for COVID basis I'll of expectations XXX XXX management the in down medical adjustment and Therefore, MCR. subsequently and ratio in as model. to looking would I we the $XX a in with we the this impacts medical in $XX would XXXX second XXXX, respect and revenue a quarter a the nearly quarter approximately looking remind COVID COVID be approximately claims points experienced our second of are down the of points adjustments in first at half lower, pricing The Adding as the declined points from processing. booked given but basis XXXX.

impact of markets, was due XX% commercial management. the commercial net with quarter their noted impacted results risk reported results payable medical and and reflects driven our to true-up adjustment line solid XX% adjustment of XXXX adjustment risk MCR quarter XXX medical impact, MCR year-to-date the and by for XX.X%. negatively reflect newer in IFP in Adjusting XXXX I The basis our PDR While strong operational and performance in the on true-up the have were reflect been our in would the The under just the cost quarter earlier. was second expectations second the points by this risk MCR increase operational commercial and our cost efforts. progress

and substantial the improving overall and XX.X% year-to-date the profitability performing expected to continuing was businesses while Medicare has business, year-to-date. team second Medicare Advantage XX.X% commercial quarter MCR franchise. Both differentiated work done MCR Medicare in was the are build a of The our demonstrating Advantage the as

As this our to approach year and risk our expectations adjustment we last a our from for cost forecast last including detailed medical year, learnings prudent forecast. reflect our payable quarter,

our year for our and the in claims in improvements forecast results efficiency we confident significantly this visibility are operational processing increasing Our year. greater MCR and

value-based from the payer perform HealthCare, The of fully in and XXX,XXX, well continues relationships. approximately to from external to were remainder contracting, care Total of Bright Turning patients the capitated from business approximately as members. NeueHealth. including value-based QX end XX,XXX XXX,XXX direct managing

medical to additionally QX. Second our quarter for attrition. year-to-date largely estimates cost medical as second benchmark lives, on lower that with expectations capitated expenses attrition through the are the below in sequential was adjustment NeueHealth contracting offset the NeueHealth revised million $XX member an $XXX lower a by as revenue contracting result line ratio decline direct for risk a the direct in medical flows by loss. expense impacted XXXX a revenue despite The member reduction investment million and reduction at negatively mark-to-market and and prior quarter NeueHealth with revenue. was XXXX reflecting recognized benchmark quarter performance forecasts due solid net to was in and DCE realized unrealized NeueHealth XX.X%, The than revenue to impacts performance the in book The expected well

The from as on is improved that contracting approximately takeaway is to the NeueHealth enterprise performance. affordable direct commercial QX performance, as better, potential breakeven continue while We expect BHG diversification care. adds gross more with performance beginning profit full-year. improved eventually enhanced for the main well margin to providing NeueHealth to NeueHealth contribute

Turning our sheet. balance to

we equity at of and $XX long-term $XXX had non-regulated equivalent in in or Subsequent of the to the short facility, $XX held including As on over quarter, million available credit and insurance short-term. more liquidity, needs. we as XXXX, cash by pursue classified to have million passive million we capital solution investments facility, cash million we permanent June of our XX, $XXX a and in million end the On $XXX highly investment liquid our billion had $XXX $X million had about our We drawn regulated while credit additional a subsidiaries. QX.

Mike we which the said, require our capital year. actively As to are working in will additional satisfy financing next needs,

sufficient raise and are advisors committee special a formed have the and flows. to capital with outside working cash self-sustaining profitability reach of Board We to

financial several strong and incremental and improved discussions taken actions XXXX. markets with performance needs pricing by the well raise. to to have our actions as significant from received reduce from efforts, advanced as our for interest we Apart capital We exiting XXXX, capital taken in financing and have investors are finalize current third-parties in our

continue much segment making now needed. focus to modest earning on reduce Group's capital is Bright capital reaffirmed efficient balanced a the growth, we to we stage. adjustments profitability in business more Our driving NeueHealth outlook, while And in In XXXX to while this Health morning, release our improvements our the full-year forecast. of amount

we risk billion. benchmark, year adjustment, of the in more change be note prior enterprise range. $X.X we expect the now Specifically, would due revenue lower a the billion a DCE XXXX for payable that range the adjustment But conservative $X.X lower in to in to maintained QX, on of view expectation recognized our I slightly to risk be to have and half

pieces and Given partially rates, second DCE then first Advantage in-year quarterly between would Medicare first quarter, run and in half the the by to offset I moving average as the marketplace over a the normal and factor additions. point member attrition revenue rate

We cost full-year the a million to any consistent to loss investment XX% continue $XXX in prior EBITDA million, losses. $XXX range adjusted which the mark-to-market of with from in ratio and to to our to and gains of be expect impacts excludes XX% range be XXXX enterprise of medical guidance

cost approximately expect operating ratio of We XX%. an

continue control expenses a million be On are account segment DCE the to closely taking are Full-year watch our billion revenue XXXX, We external approximately forecast X expected Bright focused operating to expenses. to members. benchmark. changes year basis, to the for HealthCare our $X.X maintaining and our member of adjustment NeueHealth into and on end we forecast efforts risk approximately is vendor

lower lowered also have revenue expected previous billion, approximately elimination our to intercompany $X.X forecast. We end the of estimate our

patients and We XXX,XXX XXX,XXX average to value-based year. expect the during NeueHealth between care

This greater than of expect continue We contracting to $XXX NeueHealth revenue revenue direct sources. approximately includes contribution from million. from XX% generated a external of

that our ranges managing second initiative. adjusted the and targets the appropriate strong on Supporting medical year. for Our guidance view and made performance on and has through EBITDA our have we the of the our MCR expenses are operational been quarter significant progress mid-point

the guidance the for second we optimistic and a been prudent full-year, first our the has half. to reflect maintaining are on ranges While half performance view strong we are

pricing improvement meaningful and a us for our up set for operational XXXX. actions well and Mike As in XXXX, discussed, profitability in the XXXX,

double little into me XXXX Let more. click a

Medicare We management improvement toward of way To across actions of adjusted long-term action us This XXXX. cost of gives our in will to breakeven advance XXXX medical have commercial, gross million to $XXX inclusive taken $XXX well pricing XXXX initiatives. margin products NeueHealth target expect for EBITDA our expected our confidence; and we businesses. trends, on our excess these million our medical in to approximately Advantage be yield cost a margins, we on

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

Additionally, shareholders aligned we of fully integrated system continued their I a for to for care want support market. consumer as build our thank the retail

Mike here's final Now, some comments. for

Mike Mikan

Cathy. you, Thank

made We continue have year. year delivering on to on priorities for our and this substantial progress across business the our focus enterprise

our improving are in the performance. medical our benefits and results management, We seeing our and efforts member continue these expect engagement, efforts to on year-to-date of cost operational

we XXXX, this sets forward targeted our us to successful year As our look well. execution incredibly against actions up

our have We XXXX, year our move of tradeoffs the in each additional manage new more will XXXX and data medical see our In developing more in ability markets. also with other of experience and year with our markets states experience benefits we to an key member on associated in expenses our and our for significantly pricing mature into as adjustment XXXX, two relationships markets, payables. risk

while medical lever trends next improve market changes be look will a cost our we account pricing expect in year, pricing. We to expected as key and taking into margins

Cathy our Operator, Cook and continue to partners. team that, team and as care the now with also Carson me I'd and to Matushak to further we aligned Jay take first to lead let's the on and the Jeff model. Additionally, HealthCare to with like thank Carson, Jeff drive businesses the me question. management questions. we're improve and Cook Bright on work financial clinical our alignment Michael have and for and of the are NeueHealth Board excited our and With rest care to between fully Michael

Operator

[Operator Instructions].

Lisa Our Gill from Morgan. first go question J.P. Lisa, please today comes from ahead.

Lisa Gill

all Thanks about around into back I very OpEx comment just talking you XX%. want the your getting to much. for and Cathy, thank to And go detail.

think out about I you As reductions specific one-time the side about you would OpEx on call as we the talked anything there this this I quarter? in that but is look quarter, know at or revenue,

Cathy Smith

Good you. morning, Lisa. Thank

at would the XX%, That $XX a in year the PDR million. end adds PDR that basis we're or XXX out points XX% year-to-date quarter quarter. the to we So for so I call that noted

next out. year. that on So quarters, remember reverse XX% I the two that'll the solidly over we pull And for so track would for out then are

Lisa Gill

then Mike, new as both your going the Thanks. for into And incremental a pricing insight about the you're of follow-up, talked the around and great. as Advantage think Medicare you into Okay, think with to to how membership you're about XXXX thinking especially we drive about just but really thinking about margin, as pricing just helping IFP year. about business, sides we curious bids, market, next membership thoughts the any how

Mike Mikan

I ahead Lisa. disciplined yet come we're Thanks, want how believe with to Yes. terms well. positioned, but there's we of feel our in information we're overall the to expectations lot in get enrollment. We a Obviously, are of pricing XXXX in out is don't environment of rates. far a too market terms that in positioned

took actions our the in we we of think prudent we're next well-positioned markets So majority year. and

positioning come this our out we we'll that that projections get our point, with closer more with of at is Thanks. we'd to we stay think well AEP/OEP. remarks So prepared overall. believe I kind But enrollment

Operator

comes line open. is from question Valiquette Steven, next Steven The your Barclays. from

Steven Valiquette

traded membership. question seen to pricing Yes. companies exchange to on ask the was of pretty swings their morning, to Maybe I main this the next Thanks. growth that take some for led Yes, outlook profitability. other some membership wild actions Good publicly wanted in we've improve around in everybody. business year. It

that view but books plus favorably. XX% that investors year-over-year, down actually with comfortable growing be could still and profits more seem Some and be to

but you could way bracing next anticipating your how internally or just are I early, I just action. about membership like strategy stands you're wondering So you're pricing your a that anticipating planning your thinking right growth might directionally help us you I just down are framework that decline corporate from be and be now, it as know based -- the year will or still Thanks. on right just it's it growth? large I'm guess, mean, for or now there So how just

Mike Mikan

I'll try which Steven, here we've in roughly as is answer X.X% our exclude as of Sure. on the expectations pretty into too you but it it's if disclosed without overall far revenue. again we getting markets, sit to XXXX, early exit August,

So relatively if year, small, on that you exclude growth basis. next top-line a we expect

to continue it'll more growth We expect we've still while then up point, to be growth, we're growth. balanced anticipating this seen

going candidly, but a come several markets. growth in of fair still and Now we're amount to that's through from looking yield anticipated which is to market forward

So And in-market would then we external any note our financing how business like degradation that overall. Bright is HealthCare HealthCare part expect which in model business, that relationship we're NeueHealth. offset between would balanced where parties. And we'd have on growth is NeueHealth, Bright positioned I our also we continued a we have partially model and of with third

with we've the So that about. like growth -- opportunities that, program top and REACH in ACO of then other talked on --

well-positioned we're growth. So for continued

from moderate what three more we've I has Thanks. robust years, seen been it's Although, would note last growth. growth obviously which the over

Operator

go from from The Sachs. Nathan, Nathan question is please next Goldman Rich ahead.

Nathan Rich

much the that looks year the Hi, going kind risk think And just that, adjustment I your first XX% more capture on is compared had like might more forward? sounds improvement? to but expectations what And that called that and for the first of favorably improvement. be? then, did I maybe can good that XX% where you. on that more Mike, of North relative there could what How and you to, how the to Cathy, of Carolina. ask members a the room you both you any out accurately risk morning. ask for how alluded it in give Florida I'll more like the guess you details -- upfront. were are Thanks do follow-up on needs if Thank financing timing you questions.

Mike Mikan

Nathan. Thanks, Great.

about, year. COVID, And special the performance, we been and we us obviously adjustment extraneous about coupled year fair the a significant then, what last with challenging catch-up and principally talked where result with having with loading grew what enrollment significantly in behind processing period lives So was that switching talked coming throughout of claims prepared on variables, was, Florida, amount year and for growth very that of we've risk contracts significantly a of were the we remarks like. to the into in as Cathy had

obviously operational then them And year the care claim and our we've But that to and attributed affiliates care engaged earlier earlier. year. data improvements got made data centers need those difficult. go that to said, so the in our is with clinical And patients provider our good comparison with interventions we've earlier last our -- really partners, patients the after clinical

and So And our year the with to off helped our of you so. first second greater on, terms consumer last just us them And a retention as question base the then, your that markets better the having we're that we're engaging a year in as our with retained result years going exclude the was earlier. first or if be. with year, consumer. capture know serving we of engage we're with go of accuracy part The sooner can to get XX% membership,

approaching and markets in have be terms Some our risk higher risk XX%. the of we obviously we're accuracy take. going retention of The that to we're we performance given code better capture, the

is So I would that expect over North Carolina than that better characterize expectation. Florida I'm our reduction. not and time, we sure

XX% could think I we to improvement. believe XX% do we

I think we would do. about what earlier. said done We've we talked we that

you've breakeven. Nathan enterprise believe results insured your capitalized statutory talked to more actions periods. respect to as over or and I'll part We've take through capitalize our And part, the of in when months most operating entities, note about XXXX, our XX risk well. that going just the need and the the throughout got of they'll So that to process to we're we've the get and is future building additional year legal we I'd also last early we're improve we've an With get pleased to business Maybe entities. very continue entities. financing our burn. performance always your cash question financing to taken with statutory for the significant our financing,

terms requirements So in in engine decline building going significantly. our to the states an where of going cash growth entity we're is insured big forward these

on with We has meet investors achieving to actions adjusted just And -- need breakeven to in We're raise additional taken our and outlook we've new that. a improved lot additional the from favorable. XXXX. cash always our So we given capital in knew of existing we've still have Thanks, to to strong got talking then our confidence is support investors. would get And and underway is capital. with we the Nathan. needs

Operator

The next go Nephron Joshua, from ahead. from comes Research. question Raskin Joshua please

Joshua Raskin

got thanks. a interested Hi, hear a at that I’ve question NeueHealth about morning. two and then would I question to just the on be as fronts. I'd guess first; the well. progress the be follow-up Good

So membership is you of that approaching performing to physicians remainder platform? the that's new if of Bright to to for ability that's relative could cared NeueHealth to of the first, the your your you're being growth NeueHealth. the And how attract platform then membership cared under how for speak your second, outside and being HealthCare

Mike Mikan

Now, that's two know Josh, you questions, right?

Joshua Raskin

I'm just kidding.

Mike Mikan

known long I've right. that's time. yes, a -- you So

technology value-based think and care model relationship who I our differentiator enable we centers. really providers some and there's within continue care we seen consumer for the a a competitive So Obviously providers, care focus seen we've part. and and where that physicians, stable groups respect the the into with physicians marketplaces attract satisfaction consumer on And attracting We're own yes, the us. pockets quality with very of. the for ancillary in tools, and all our with other most to but to physicians workforce we're we've physician is very proud our some do challenges, our

So and we we new to been growing. along go -- that do attract we've physicians we've and able been as

And that. a NeueHealth. respect somewhere call with maybe continue within pleased our what XX%, we're centers, with care our see perspective. Bright within with lives NeueHealth the risk a the around underlying partners, then we population on cost compared population So non-managed HealthCare the which by both risk affiliate care our are respect on as about the better centers sharing partners being -- to own and that manages peer our it look to we and we Overall, population. to managed at north affiliates population We

So XX% affiliates cost overall compared our in words, centers care other our the market to within in north. lower and

pleased XX% better the what And we improve we're do of that. XX%. favor can targeted. market believe probably that we're time, upon on to can we can we by end That's time. believe but now, we with over We we've than that lower So over the

Operator

Jeff from The next comes from question Sandler. Piper Garro

Mike Mikan

a you do follow-up? Josh, have

Operator

Josh, your line open. is

Joshua Raskin

I'm me? I'll hear quick. you real Can sorry. follow-up

be think million Cathy how $XXX I’m top-line heard figure excluding but So from X.X% headwind million about trying gross to the we the improvement dollars the $XXX or just dollars G&A actually to G&A we’re that for that type out thing up I total margin G&A exit the going we of enterprise up except should mentioned, dollars. to down year? mean to next Does see should exits, expect

Mike Mikan

Obviously, past. year. to want don't be up we the we're in specifics Josh, get, into next productivity the talked to expect improvements. this out expecting Again, more but going We've with don't recognize but about the later, we I we're to we'll come get SG&A modeling,

built built in-house. a the now we've vended of with lot relationships, bringing we organization, we are As which

We’re achieving the productivity on those.

move our system, as about where have biggest off the create our of today. legacy One to get XX% Today And system prism on we'll adjudication. our we auto of have which the vended and system, significantly which XX% we about rates. our we higher we permanent out at ACA off adjudication system, no will we’re coming productivity adjudication. on significant our claim implementations auto auto move productivity prison more legacy is gains of business is that That's

key in to have XX% we breakeven. structure. underlying XXXX ultimately below get that's to to getting to cost contributor adjusted our a opportunities So improve And significant

question, the that's the would I way So answer Josh.

Cathy Smith

Maybe I'd you XXXX, know, Yes. just we're be year, add we like said Mike was just on, better. just XX% for XX% Mike Josh, is this if finishing need guiding which or at to by up, where

those that figure right next what's be and we're plans So it's all needs putting now. are pretty the easy out year to in place to

Mike Mikan

Thanks, Josh. Jeff?

Jeff Garro

one-time to seasonal improvement, about normalizing? medical about half MCR typical and second seeing the maybe start should factors and first headwind, Good more we more the balancing year cost some the on management little taking the how think yes. off questions. morning. I half your Yes, Thanks the bit for want maybe color guidance of a asking just the of

Mike Mikan

Yes.

to guidance our we So XX%. of we're XX% -- reiterated

so half at the a loss assume We got second cautiously obviously And one-time we're ratio we've would mid-year, given medical optimistic. year. We're some XX.X% on items. higher of the

Last As in of COVID as we part the the then stable summer to see subject look in through to know, and you of remainder year. to the remainder of the was us rampant utilization the in the starting seasonality to hit remaining the the especially see Southeast continue we'll year that pretty year, very we're that for going year.

a big that's So unknown.

our think, are get the to So we MCR and and to said, the as point. probably, be you I you, cautiously mid-point we get kind I -- kind second believe range optimistic Cathy of what we're that of guess, to can in interpolate you to if you could half of,

Jeff Garro

maybe inflation of Very little Great. pricing with to your and that there it finding follow-up Thanks. What adjust is helpful. renegotiating, And is, on the how wanted it providers renewals? repositioning rates for a versus bit, new is to for seeking contracts And network renegotiations looking for up those ahead you done to would some scale? me area? Is are ask partners? balance so the for your comments providers do

Mike Mikan

Yes.

of outcomes, care where our care, costs. you So, a to call what we view -- I maybe model integrated want it Jeff, all -- in we're lower if improve start consumer as set care miss. system experience, the the I our I'll quality -- resources, improve with our add and ultimately drive a if aligned anything, the health if we of -- to of partnership But

we as all a kind the And together so since negotiations it go-to-market we're look is contract really in at of together, approach.

And so think in itself. just unit it's it cost really don't partnership it by And a we as overall. of

how of is the volume our about We points of our significant the having as we of of drives that we be partnership for And that model the or levers site improve the differentiation also into where it together, can want one And at have key members care. partners a the that network. experience. to think high to we referral

combined going marketplace, our down. net-net, in have a underlying some that markets relationships so volume drive share in with we our more that, strong with payers, significant with market got the in commercial result and costs Advantage some relationships or the we've we're and XX% market of and other continue And as we marketplace to Medicare from share just the affiliate our unit believe care partners to

anything Jeff, do we that's have way So the else? it. you approach

Jeff Garro

haven’t. Okay. No, I

Mike Mikan

So that's it, we Jeff. think the way about

Operator

from The next question Hall comes from please go Stanley. Michael Michael, Morgan ahead.

Michael Hall

Thanks, commentary financing guys. related Appreciate the today. all

Just of other in terms potential cash levers.

statutory reinsurance may the have capital be one. mentioned think I in to reduce might past, helping needs you

So in markets my much you reinsurance your lever many how how and a be? question that could of is place have of actually

Cathy Smith

morning, Good Yes. Michael.

costs the will about us. markets to another, and to able we're capital you great reinsurance Looking have in to way talked on in we've talked our point pursuing our continuing in exit more a forward you or markets, be or before. know. as eventually we a And arrangements markets, it's right our levers, closure other about the we well. up of we're then, now haven't couple another leverage building of is sheet plus as also pursuing currently regards to With which else's we've work I about balance some think currently coverage to cash with type those operating as three been there actually markets someone to would

few levers So a to got continuing we've work. other

Michael Hall

Cathy, really appreciate Thanks that. it. for

follow-up. more seemingly quarter, a may attrition bit I'm versus see know have also Just adjustment a revenues impacted little quick higher I risk but light bit items but noticing one membership M&A the Street. unchanged. the I is

a Wondering comment of quarter-over-quarter your Thanks. components. additions and you attrition. they're didn't it So there's if seem those member like on in NeueHealth bit looks like

Mike Mikan

not think, attrition estimates effectuate. exactly I for have in I'm the mean payments the pretty true-up sure or portion second have quarter, it's their Street you those what what we I who as if typical were, premium Yes, made and

with And we're from much And were a well we estimate. million at expected. total starting our so where of pretty of if within line in and it's of that kind what estimate end you just year lives, look we

given having with by flow-through, going the HealthCare, that -- So of Bright portion with and way, HealthCare the they're Bright decline would them. business large being degrade or obviously we NeueHealth to their

So Thanks, it we Michael. our the see there. pretty was out in line anything with much didn't normal And expectation. of

Operator

ahead. The please comes next Jason, from go question Citi. Jason Cassorla from

Jason Cassorla

Texas' on how if NeueHealth other developed trends Great. Texas of future specifically. performance clinics in year, hoping in out Thanks detail how this you NeueHealth have so I inform early entering taking IFP my the time. give helping any far considerations but you XX know it's could so or for just questions. is was for helpful. update into you build market also this I could after an your Texas That us would perhaps at to be clinic or

Mike Mikan

Jason. Thanks, Yes.

care. access can we out. underserved So part enter highly it's -- dense where high core of early, aligned of strategy with as the we that It build of includes fully competitive, integrated of course. systems the And makes community. our we points but It's care the clinics pleased with highly for out centers a new in build an especially where sense, to overall, it markets built markets we're performance

Texas with why well is in pleased lower, initial far. population. XXXX below a overall really the we're in was risk But the impacted so healthier So utilization reason our of estimates adjustment on outlook low our just results and slightly part and is

with we're clinics, within indication So managing performance where similar model. -- early trends future seeing our of care but strong in to overall, that's albeit we're population we the the and our Florida did our care as a

it. we're excited about So

Jason Cassorla

Got it.

can NeueHealth I then, And how Thanks. otherwise. give on is just progress my your perhaps in ever hoping around of Thanks. here, update just capabilities or Cigna, us you there kind the relationship with quickly Okay. discussion was north an follow-up on Cigna's

Mike Mikan

relationship. much us Cigna add for relationship the to with but a we're Well, capital we and makes we And but beyond discussed of I as partner as good anything size, our I we've have It's pleased with our said it pleased a to overall sense. think both it before, to where partnership with ways more and we're just don't look work to what our really given continue previously. together, partner organizations. benefits a Obviously, strategic

Operator

Wolfe The Research. from from comes question next Justin Lake

line Justin, is your now open.

Justin Lake

morning. Good Thanks.

to One there number Just about that a that -- of box of I yourself got kind follow-ups. looking know haven't there minimum you a is you're in, don't you think at want of year? got sort next would to raise is quick but you asked a kind a you couple of want capital, least about,

Mike Mikan

the planning the on we've the Hi with -- been We Justin, for type from us. built pleased level business that's a day immediate action the This the specifics want work and I capital in to said one. we since underway. been as course capital get interest wasn't don't has we're raise. an This normal

of And normal just consider so very it part our routine this is we that. course and

So I just we're well assume underway. but get specifics, not into

Justin Lake

when anything within And to there year? timing on you Okay. next expect that announce

Mike Mikan

call do it -- we're near date. I financing efforts. don't term; mean, it's But -- are we're get as we conclude I obviously, to to want specific underway. said, in the a Yes. into we to our we expect intermediate

Justin Lake

the Okay, then on great. pieces you to gave you And XXXX break-even. useful just follow-up, for of us couple put way a a --

improvement. $XXX $XXX to gross in margin million said I million think you

operating I next said to a year. basis for on you think down dollars being flat costs

you you in So kind $XXX moving of XXXX reasonable EBITDA obviously, parts want to there, XXXX? is breakeven that million, or more of trajectory maybe to in to other that $XXX consider to operating would profit improvement, million think a us of kind any

Mike Mikan

think I are assumptions. reasonable those

XXXX. medical take go we we said cost would what do XXXX incremental range North and risk XXXX you when million and executed in $XXX to of we've into think Florida, do, on improved We've I just the kind adjustment in said Carolina. you you back set would for just we of initiatives, what and where we build

million, seeing lower of COVID $XXX $XXX for to costs. improvement for price in we're COVID, obviously did and price didn't $XXX we XXXX million but at and million we Another XXXX, in

also going of So and continue we you believe scale, which together, believe not way fixing product or also book enterprise to towards to more our a competitive we how business a continue believe market market million refine on XXXX, our believe the those to really initiatives, line we improve or a XXXX. disciplined those retention. it's take and higher our plan, targeted line we a be manage pricing it's we're that pricing in lot when we're more that's margins And of ultimately individual moving relationships, us, or business just we've building local XXXX, but we're challenges on leverage we around we're market. for executed at closer to going our in XXXX. disciplined moving the breakeven in deep can But live had an In is enterprise profitability

So those are reasonable assumptions, Justin.

Operator

ahead. Next Bank question go please America. from Fischbeck comes of Kevin, from Kevin

Kevin Fischbeck

I Thanks. $XXX to more color Great. a you $XXX wondering was million that on million if get year. little the looking next improvement you're for

cost you're trend think trend, that effectuate. mentioned trying pricing but above number includes that I to you savings

kind us is Thanks. help of is going above maybe Like and two you getting cost core maybe actually into of trend pricing out there management you of the savings? medical that how much much it can how So parts? and breakdown

Mike Mikan

is safe offer. into detailed we've that place obviously to Yes. year year they Thanks, put year, in the in in cost ours. we integrated initiatives, effectuate year for favorable year specific more upon And weren't Kevin. into more we get we get that And into becoming initiatives than that. closer improve to we've our time have year. more only put and for next But place say We'll that initiative to that believe, believe impact our And this those year, the little incrementally and a that's we prepared guidance then will put they're out can roll year. focus next -- to this model, we're medical got with over of it's of strength that some we initiatives real next in full-year a on that as next this impacted this

and beyond in million Medicare IFP, $XXX more be the And of as get year. as the our additional and incidentally, to Advantage. a cost both we initiatives, into that, medical believe that margin will includes $XXX upside gross next pricing -- we'll improvement yield confident which result medical just underlying million well we that then of trend include feel as above So we're but incremental

We book significant in Advantage of improvement continue business. to our see Medicare

you we As note Medicare a improve down the for to bring profitability. and path quarter to Advantage continue year-over-year our XX.X%. had MLR, second that

major year both talked a we're put improvement, previously. So about that we and our last relation of starting in seeing place the HealthCare the in Bright lot lines we've direct business, of initiatives a to it's

Kevin Fischbeck

extremely guys time is of visibility on and about your Okay. and I And that a data. I lot wide systems improved we're it given and but mid-point focused guidance, the have appreciate through range an in that spent guess, of talking halfway claims MLR you're that, you

in is fact range and improved like why that a to you wide it such a prudent feel you've it narrow visibility? confidence keep little in So got bit, if not

Mike Mikan

appreciate we sure I stay the while make to off that the we're potential of want very -- our Yes. things, obviously other Kevin. estimates. COVID and question, improvements we a strong for while we've just really coming we're challenging confidence year And XXXX. given And to have in we we're in in the that prudent want made, optimistic

best answer I so way can that that's the question. And

Operator

question ahead. Ben Capital Ben, today comes go Hendrix from please final from Our Markets. RBC

Ben Hendrix

everyone. thank you Hi,

made transition management claim a whole auto perspective a with are this adjudication? progress the in little and on electronics and platform? bit, touched detail to go Thanks. the you've process enterprise to Where into but the from getting you think you've the can I about timing submission we more investments an legacy

Cathy Smith

morning, Ben. good Hey,

shared, before all moved We've with about really half year auto shared has platform and onto our remember the We're we've performance. first first this platform you as markets; its on well across really in executing Mike moved, platform new all we're company. the claims a with well. seeing underway. of made or pleased or adjudication new really That's excited team prism that XXXX. progress we've So really great we're half yield our our of

our same it's the that's of all commercial on about markets are platform of XX% business, -- so We'll And all on X/X/XXXX. IFP new markets move remaining markets. that

and move MA ability the on debating we'll forward, XX% visibility year. that process then performance that the and remainder legacy so year different what book, timely we last as to from to we're the tremendously done those the this the for been the book the our we're will So that's commercial into from This its we've and move from on other answer previous, of though, work rest move accurate right -- claims of improve ton platform the now and preparing year. is insight of a -- to on has right

move So into feel year, our team excited we're managing that and performance team next with all of our but good environment. the vendor's really about we're and this its to

As expenses, platforms claims move shared. to to or we're our about we multiple Panorama, we to on our one, on Mike efforts clinical all clinical programs reducing from think moving operating have of which

for but does cost members also So excited that and providers, about very, very our what our for our structure.

Mike Mikan

environment bios the Yes. tools that prism focused claim going platform We're And out we're be on part core the forward. out. we're not building focused of just really that that on invented will

tools, facing an tool, provider rolled mentioned, we as authorizations, increase out we in online So online authorization. significant

So we're expected reducing which to forward. a manual workarounds of moving streamline and big the and is going more capabilities, online interventions driver productivity

that remain we that a of We're has our we're really still noting excited all inefficient. we're working that system about through together, much at better. on legacy we're for been way where And it. XXXX So

as move XXXX. much or addition done better that more where we're excited on XXXX our and -- said, system Ben. we're Cathy we've we're in been knowledge in starting but about and going that's work Thanks, have We favorable, the has new

Operator

today's session. no questions. have Q&A further We conclude This will

to remarks. So closing back the I'll hand management team any for

Mike Mikan

next your you. interest company we the look appreciate future and to Thank We quarter. updates Great. in forward

Cathy Smith

Goodbye.

Operator

This concludes attendance. you much Thank your today's for call. very

your You may now disconnect lines.

NeueHealth (NEUE) 10 Aug 222022 Q2 Earnings call transcript