Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, welcome to the Bright Health Group First Quarter 2023 Earnings Call. My name is Kelly, and I will be coordinating your call today.

I will now hand you over to Stephen Hagan, Investor Relations Director to begin.

Stephen Hagan

Good morning. And welcome to Bright Health Group’s first quarter 2023 earnings conference call.

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

call to Before from we These historical differ expectations. could statements risks present U.S. remind cause may to laws. contain subject experience uncertainties you federal we or securities forward-looking want materially that and begin, are actual under statements to this that results

the reports description the can no in as forward-looking A undertake current obligations we some or be Securities filed the Except risks of risk reports by the with any our including statements information. we uncertainties and that to and of the in and Commission, revise with periodic law, update required SEC. file found Exchange factors or

also on and company’s Relations in company’s available reconciliation call measures. measures to available reference the page non-GAAP investors.brighthealthgroup.com. This amounts release A the GAAP press non-GAAP the of is at Investor first quarter will

is earnings Information May this in in may XXXX, Form the X-K website. Investor page company’s release morning this of be presented and which Relations call we X, from dated issued the our on contained accessed the

business. exploring We XXth April that Medicare we alternatives announced for our are Advantage on strategic

While are our this on session Directors be options conducting Q&A business, the not for Board of evaluate we a to going this call.

Health With turn conference Executive Chief Group’s Bright Mike that, Officer, now to will I over Mikan. the

Mike Mikan

rest service begin wanted team her like partner few last Thank Health. great Cathy I her noting to Stephen, and been earnings Health. Bright you, leadership Bright over years to commitment this for me by with has will to the past good I’d everyone. and thank Cathy and the call to morning, that the be Smith’s and of a

financial journey transition. stepping CFO into would I wealth on both our Bright we be of later acknowledge week. Jay who of like Matushak, role brings industry Health the as and knowledge continue this to formally will Jay to a also

start regarding the will before on business. our to results. this our announcement year then I brief start over the turning discuss for Cathy business some to strong the Advantage comments quarter Medicare first will the over go to morning call with I our

XXth our As Medicare exploring Stephen are Advantage sale. April business on California we alternatives focus on potential for we with strategic that announced a noted, a

Our evaluation inbound Board Directors of is conducting following this interest.

California Day and Health Plan Medicare of serving New well and Our is positioned business, which Advantage consumers. underserved Brand consists aging in Central

period which targets remains for and the Following membership Cathy solid year, business track Advantage a Medicare discuss for on the further. will enrollment revenue and membership successful annual growth, in-year our

assurances of evaluation While well standing and at business the in for value-based growth eventual there a are market. no position outcome Care this the potential alternatives, strategic Delivery sale the bolster company’s the substantially attractive future care time the Consumer would delivery of business financial our of of

and for marketplace April flexibility statutory facility our as that minimum Advantage our partnership adding our releases XX, banks, also additional the announcement, credit through of of June we the needs through our with capital In XXth in the timing work extended waiver the and for we business. we ACA provided liquidity Medicare an the evaluate from have update capital alternatives down wind business strategic insurance

the model to While our care Bright options our our Advantage focused value-based drive our for Medicare on Board evaluates business, forward. team the advancing Health remains business

momentum business, of payers. continues number a its the strong serving consumers delivery partnerships Care care in driven Consumer through with care value-based growing value Our segment

midpoint from the REACH first XX,XXX XXX,XXX range for income including XXX,XXX had end and the ended in quarter a to forecast. of generating a value-based serving have year, ACO, consumers quarter. up the positive consumers, forecast our raised Care operating strong year consumers, the XXX,XXX our start prior contracts Consumer consumers through of We the to consumers value-based to at our

We robust offering attracted for the payer ACA arrangements segment has value-based partners. care unique multiple continue to our see in marketplace demand and

retention We marketplace patients XXXX these the from of HealthCare to our XXXX. have clinics in driven in former number members in Bright strong total through of solid relationships, growth resulting

Our partners and well geographies. payer, is across business diversified

Our year year REACH and to ACO this in XX,XXX the as business approximately planned business started we continue consumers at expect end.

to meaningfully Profitability have year, we over federally number physician expectations. REACH in expanded We with health meet by the primary care this the our base business XX%. each centers partnering ACO qualified growing of and continues our are

segment continue segment Our the for and year. GAAP first we positive operating quarter Consumer full income in the EBITDA expect reported for Care to profitability the adjusted

prudent Consumer of being ourselves risk adjusted in are setting the EBITDA while up year, fully for taking are and we sharing are risk in level years. for focused on achieving in We and greater models the future capitated the segment Care profitability

Our is Consumer Care positioned well business long-term profitable for growth.

opportunities provide Care to want example I business. Consumer our in one the of growth

on As we bringing we are we physician group capabilities to have the continued expand been value-based have working ways business, to build partners. to our in care services our the

January California national to expanded Xst, with relationship quarter, support a to enter arrangement, payer a a independent largely On Medicaid population. physicians’ in our our the IPA ACO. the this REACH association first we focused major on In value-based major partnering care joined in

upside benefit value we and our on For payments Consumer based fee-based creation. incremental business, sharing through Care some

supported during value-based IPA relationships care through also other additional resulting partner physician expect year. this support the as lives our in they enablement payer through We to arrangements, move arrangement

example the the for We Consumer see is segment. Care of relationship growth a opportunities great in this IPA

risk-bearing expand relationships lines and look through ACO with into We as have business REACH additional long-term developing and our business. to payers continue of provider we across will they been them relationships organizations to support

ACA meaningful wind final business, reaching on discontinued marketplace insurance claims we processing progress and the making quickly down are with our of settlements providers. In operations, our

increased year-end X% closer due continue discontinued estimate our settlement for to to get by X% increased have provider primarily We liability to our to a the business compared forecast, and to certain activity.

XXXX the report, line supporting to-date. we the most adjustment report with risk December was adjustment risk reserve payables The recent in booked

of XX% ultimate end is the be supporting more our liability our our position. complete June and sheet by claims fixed balance becoming and certain We expect to

details provide our performance over additional now our Cathy will quarter to outlook. on I updated hand to first it and

Cathy Smith

Mike, cash and million I will March all discussing our provide you, good recap first outlook. of XXXX, I we in with nearly which then results our over XX, was start Thank a everyone. our review Starting liquidity, will our sheet, and of XXXX of by cash sheet. balance $XXX equivalents. quarter briefly as balance and non-regulated had in morning,

minimums. $X.X or approximately excess in investments had and Advantage business cash billion regulated our Medicare regulatory by California funded our additional long-term We and held insurance is subsidiaries of short- of

drawn of the was QX, of fully of support $XXX million end credit letters contracting in to the when direct factoring facility Our as our million business. $XX credit committed

waiver and on covenant end of our liquidity facility. As the minimum had we of the credit required amendment a by QX,

As an Mike received noted XXXX. through extension labor our covenant that in we the on minimum press June liquidity release XXth, we of April announced XX,

Mike a our is Advantage sale As Medicare exploring potential focus of business our a Directors the noted, Board also business. for on of with strategic alternatives California

Consumer the sheet a make business. of would around long-term Delivery to cannot us we solid driven capital to our While support of our review, any base strengthen a outcome meaningfully allow assurances would Care growth of sale provide value and balance the the business the potential Board

Care first segment the $XXX contributed Bright The Group operations segment quarter, million contributed Bright HealthCare Health the revenue continuing $XXX million. from was In and Consumer $XXX million.

and we quarter with start commercial ACO over very of had in the growth REACH relationships The Care the consumers our consumers. segment XXX,XXX in Consumer clinics a the In strong our includes year segment, XXX,XXX value-based to and consumers revenue XX,XXX more our care terms through profitability. in payers. ended with This than

this of care team former reflects offering. As in our REACH value-based value ACO. demonstrating driven strong in delivery mentioned, It Mike insurance by also strength performance through reflects year-over-year the consumers Bright the relationships, payer strong external growth recapturing our HealthCare

value-based of Care the was by expenses, generated Consumer driving QX, year strength outperformance. expectations, our DCE operating including revenue unfavorable offset Consumer The slightly our quarter. Care in for was positive modestly the Overall, income of revenue forecast partially medical the prior consumers in higher with expenses. ahead ahead modest upside

and benchmark more for period ACO, ACO first the costs, quarter. REACH for This favorable is than REACH unfavorable our expectations profitability in performance. offset preliminary the with breakeven EBITDA in resulting a margin business approximately line In medical modest our gross level prior adjusted

Consumer to Care start our for demonstrating strength the driven segment year, consumers care a value-based off strong model. is of additional The the care with value the

in of the including Turning QX Bright quarter ahead XXX to quarter. ratio XX%, the HealthCare HealthCare’s some basis Advantage segment. the months our versus Bright forecast, was member market, upside cost points medical XXXX. in down MA legacy revenue were Medicare driving

MCR XX.X%. performance California for was

have this period period the been and medical $XX California would XX%. prior million expenses However, in medical MCR prior excluding included expenses

a medical year XXXX prior trend flat stable X.X%. period similar COVID and expenses medical XXXX, each adjustment to in a for in impact Utilization resulted year. full XXXX including from was during of The

MA were costs Within in utilization expectations, with the and California line expenses. prior medical excluding period quarter, our

We to also for normal seasonality QX year below support expect MCR projection be the full our MCR. to the

MA to smaller period from the year, the While we prior for expect adjusted development. business impact to contribution EBITDA due now for profitability segment a continue we forecast the the of

Advantage of business, review sale the the in held for result financials. be asset business the Medicare as our an as of Additionally, we alternatives second strategic will quarter a announced for reporting

medical pressure Medicare loss largely EBITDA Advantage from million. the the adjusted for prior The period noted was business loss expenses that I earlier. quarter consolidated a the Our of the $XX reflects on

full We our adjustments. making outlook morning, XXXX updated have year this modest

to and segment HealthCare billion $X.X and revenue where least are between and revenue $X.X continue unchanged, expect billion, expectations we of Bright $X.X Our billion. segment at revenue enterprise consolidated XXXX

forecast. REACH forecast billion full value-based revenue offset higher upside with $X.X the segment unchanged Care benchmark year $X.X a Consumer the conservative consumers ACO by more Our from billion, is at care to

MA, cost XXX expect year segment. In raised the Bright points XX% to served from I we XX%, to greater period XXX,XXX. the HealthCare basis be HealthCare, to forecast in of as prior end a the and we first medical have expect quarter Advantage a adjusted Bright we range to Due in ratio smaller of contribution EBITDA than earlier, our consumers development Medicare noted by

XXX,XXX of our expect including to other In Consumer at unchanged ACO relationships our an a value-based Care, an XXX,XXX Advantage and forecast REACH payers with of XXX,XXX marketplace, XXX,XXX we consumers Medicaid. forecast now year-end, to Medicare from value-based across from and of total XX,XXX increased total

on company in non-cash cost business an operating operating EBITDA XX% continuing both these which with ratio year. a EBITDA and to We our profitable be profitability excludes result the expect charges of of adjusted combined adjusted segment to approximately contributions we enterprise basis, adjusted expect segments total for

of Our clinics, REACH our performing for ACO long-term business year Consumer within the strength growth, capabilities. enablement well our Care across our us in and business the overall our our for expectations positions range opportunities is and with physician

closely and worked my am have I want last at Health Jay we accomplished go, knows with the Bright of I Health I in that cheer Before am thank proud from I time leaving and Bright I during hands. Health together I years forward over to continuing look to to sidelines. Bright the team. all several the great

for Now some here’s final Mike comments.

Mike Mikan

their Cathy. mission. I to Health conclude team want the Bright thanking by Thank to dedication you, our for unwavering

We for long-term profitable start Care in our year the Consumer are strong the to with segment, growth. in with results well the pleased positioning the business business

the As a given Stephen Q&A we the business, alternatives session. Board is for won’t evaluating conducting Medicare strategic noted, be Advantage

Bright to We Board and otherwise the Health. Thank for alternatives. or in the of you transaction possible your interest the will concludes as joining once the review call soon update for look you strategic as approve

NeueHealth (NEUE) 9 May 232023 Q1 Earnings call transcript