NEUE - Earnings call transcript Q1 2024

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Operator

Good morning, everyone, and welcome to the NeueHealth Q1 2024 Earnings Call. My name is Drew, and I'll be the operator for today. After today's presentation, we will begin the Q&A session. [Operator Instructions] And with that, I'll hand over to Emily Lombardi. Please go ahead when you are ready.

Emily Lombardi

to Quarter welcome Call. Earnings and morning, NeueHealth's XXXX First Conference Good

and a being President are Mikan, is this and Jay Leading Mike As call today recorded. reminder, the call CEO, CFO, Matushak. NeueHealth's

no description call present Before we to subject some uncertainties we reports laws. can any update factors and including forward-looking differ want reports of actual law, the begin, be or obligation to in securities from expectations. risks statements under found in federal experience statements that forward-looking undertake materially as may could file results risks risk we that file U.S. Exchange cause to the that the Except revise the periodic remind statements These Securities with by and SEC. contain you we the A this or are or and information. and historical with of our current uncertainties required Commission, to we

non-GAAP measures. on presented the in call Relations reference quarter this available the release also available will at investors.neuehealth.com. earnings page amounts company's is of release call A the Form the company's issued each website. XXXX, of company's to that such morning and measures may this be our and on This first which GAAP of non-GAAP Information reconciliation is in in the contained Investor the X-K page Relations earnings X, May presentation, Investor dated we and related accessed from

Mike With over NeueHealth's I to Chief Executive that, now Mikan. Officer, Mike turn will conference the

George Mikan

First you and XXXX everyone, NeueHealth's Earnings thank morning, Good Quarter joining Call. for

business by continued first quarter NeueCare strong for momentum and to driven our pleased NeueHealth are report We in both segments. NeueSolutions results

for lack value-driven model We are believe of limited growth model It the experience and focus of we we interests traditional on a is rely consumer. our care better consumer-centric long-term sustainable align XXXX, strong networks focused represents provider driving with health alternative for the a care create to In built all. broad through of care care. health as future coordination which on our approaches on

in relationships serve, model strong focused an This trusted long-standing, managing payers grounded understanding consumers and ongoing to more we means care a and local seamless, is not Our episodic basis experience. the on partnerships with communities, of encounters. we the are proactively on coordinated care onetime power deeply in providers create fostering

to populations we of gives in knowledge to ability approach the take relationship-based in Our risk-sharing and our continue on serve. us we build communities local our the confidence future as the greater manage upon we

we across population serving model, our market. Medicare large including and a addressable diverse differentiated a base, Marketplace, growing consumers and are which Through the Medicaid, ACA is

drive differentiated categories and allows payers to limiting ability Our concentration throughout while across risk. with to industry capture the providers product us results opportunities

in partners our consumer satisfaction. resonate continues with engagement marketplace, broader model to leading and Our strong the and

effectively understand For is ACA deliver served the consumers us in of the of allows Miami-Dade care. health example, to market, and This there them. significant and needs have total year, this past better we manage XX% Marketplace of were approximately the consumer, approximately outcomes each and unique XXX,XXX cost

continue we scores. satisfaction receive to addition, In high consumer

payers model long-standing For partnerships X.X-star consumers instance, a our providers Google as across rating. we have Florida score retaining industry. of consumer-centric as value-driven, leading to XX an and the in our NPS market, care Overall, attracting well with is and and

this value-based adjusted us quarter, million. strong delivered $X.X we care model This year. to in Enterprise and to of capabilities continue first EBITDA advance our a the position In puts

detail. Jay to performance review a I'll more This update over morning, I'll NeueSolutions provide financial in on our turn it NeueCare Then brief and segments. our to

Florida XXXX, footprint we consumers to expand across to of the serve million quarter. a in for existing we especially Central $XX.X EBITDA year, for and value additional expansion the manner, this consumers. built, Starting adjusted and our owned start Marketplace in leveraging the NeueCare first XX,XXX the our our capital-efficient the the We delivered approximately arrangements. segment ACA our ACA are in Marketplace we payer relationships strong operations results completed driving trusted in This and serve partners we relationships driving to performance-based expansion in have affiliated demonstrates managing population expanded clinics.

to more presence Premier years XX strong more local Health, Medical a a we and Associates bring look had than grow have for presence clinics. as we our across communities. AssociatesMD better our care experience the Centrum forward We to in continuing through to And state Florida health

strategic not we And of evaluate a Florida but remainder place opportunities the strong XXXX, XXXX for have footprint, throughout We beyond. our to in only believe we country. in and value-based expand continually the pipeline

circumstance, In we progress approach and trusted are holistic guide ongoing to journey. of a engagement, the care on maintain starts plans, provide for health deliver on us with coordinated. experience the taking that their and seek right relationships affordable, This our care results clinics, comprehensive care consumers, convenient engagement. and to we improved point need is this treatment personalized entire and health our matter a drive no or and With tailored to focus throughout follow-up proactive strong to consumers all helps that care,

first our segment, our provider in tools ACO NeueSolutions continue of as including our business enablement capabilities health business, as and well suite our we quarter. the REACH In population advance to

year you with call, enablement our starting business. we in As served on our increase note. recall, may lives serving the a we that we fourth In the announced XXX,XXX provider secured we first groups provider consumers, are partnerships on the new strong off earnings quarter, that approximately quarter

opportunities, this in to categories to leading opportunities partnerships diverse future new specifically key NeueCare consumers driver segment, clinics. additional to and and through growth affiliated a in and provider owned of payer as We our serve our see business product continue

and ability in strong the high-performing and are quarter Looking we our group deliver REACH partners, we we improved XXXX performing in carefully-selected first line margins are provider with our year, program. expectations. at results, a performance in our ACO confident This have of to

proactively optimizing our rising-risk closely working of site are care delivering initiatives beneficiaries. management We avoidable care, and partners service engagement on patient high-risk with and identifying readmissions, preventing focused and on consumer-centric provider

provider high-quality, will We personalized deliver tight Medicare we collaboration the beneficiaries with our care to we partners as continue maintain manage. to

Jay provide it now on first additional over details I'll quarter to to our hand financial results.

Jay Matushak

I'll you, NeueCare our consolidated update Mike, our first performance well start go our a Thank as on NeueSolutions our sheet. our over and business morning, each the segments. balance everyone. by wind-down I'll for as brief business ACA reviewing good quarter of financial insurance and Then of provide and NeueHealth

our talk Finally, I'll through XXXX outlook.

that focusing results our NeueHealth business be segments. and in of and financial are our and of discontinued As include included a our our reminder, XXXX the I continuing contain each will NeueCare NeueSolutions operations. release financials on earnings results GAAP

REACH NeueHealth's development first of the ACO in impact revenue our as the volume prior $XXX.X as consolidated segment. moderately was million, quarter which for to NeueCare lower in year due well slightly is expectations business below our

gross quarter was first million. margin $XX.X Our

and for adjusted as our years, was NeueHealth's to our expectation million. drive $X.X Due seasonality year for first year, adjusted NeueHealth EBITDA second in million. and in of have of the to business, the increased million we $XX previous the half we quarter maintain between EBITDA the $XX growth of full we expect

first segments. approximately our quarter, we served the XXX,XXX across consumers NeueCare In and NeueSolutions

expectations, million the from resulting clinics. $XX.X was first revenue our segment, slightly in below NeueCare in quarter, our lower volume our In

XXXX. expect year, the in XXX,XXX new of in to maintain we clinics course payer of consumers our expectation the number the through partnerships, and serving serve we Over grow between existing value-based consumers we of and and our XXX,XXX

NeueCare operating performance. operating costs were for expectations approximately with quarter. payer with the was NeueCare income $X.X million XXXX in in certain favorable incremental quarter, we costs including medical strong first from line surplus the contracts for realized

continue this year. build momentum positive on We this to expect to

agnostic all mentioned, to year, we of category, serving the and in a at approximately a understanding consumer as and see we the deliver strong high-quality to have of competitive XX,XXX our care our knowledge continue Mike As product developed local we deep experience our consumers, advantage. the affordable Through serve, markets Central start of base. populations, expanded ability Florida, we to additional of

our each to right is the in manner right to proactive timely can setting. the personalized in deliver care continue a a engage approach consumer We so we receiving care ensure and consumer-centric leverage consumers and experience

quarter, trend adjustment retrospective Turning NeueSolutions revenue $XXX.X in first ACO was the XXXX resulting million our NeueSolutions expectations, below from the business. now slightly segment, to in our of impact REACH onetime the

moderately First costs costs quarter operating were with in with lower. expectations medical line

NeueSolutions quarter. for segment operating the million loss was first $X.X

and Excluding REACH NeueSolutions operating income in our business, the with in revenue were quarter. both expectations period for line the prior development ACO

our results expectations. we Looking in REACH our consistent ACO at well, are with performing our business, XXXX

Medicare key beneficiaries ability improved year. ACO Medicare beneficiaries care through partner and we We and confident we portfolio, managing expect to execute support are initiatives serve XXXX, the to have patient optimized business. results to continue and XX,XXX engagement REACH approximately against management in an to we this In our drive our are

On the for side first approximately quarter. our the in service served expectations which we provider the NeueSolutions XXX,XXX our quarter, enablement consumers slightly segment, revenue above of generated

to NeueSolutions new long-standing provider future reliable with population partner our thrive see and affiliated enable we provider partners, enablement growth We with a opportunity the tools arrangements. and segments with source value-based in to and country, continue in our our to business and groups build addition and as We clinics relationships providers own NeueCare both across clinics. relationships health of our provider deepen in deploying capabilities our serving owned

turn I'll planned first wind-down to Next, to which the quarter. progress continues as in insurance our the ACA business, of

in the our satisfy XXXX. business entered which final As we XXXX obligation. At fulfill billion obligation, CMS adjustment XX% XX, agreement remaining XXXX. to repayment ACA of a a approximately to reminder, we to time, represented that paid This obligation, risk due insurance CMS March comes of with into adjustment our on risk $X.X September

obligation We expect in remaining with adjustment in of risk connection sale Medicare million business offset Molina. our with the to $XXX the escrow to held Advantage

wind-down quarter, insurance cash approximately our due under costs the had of and including adjustment CMS. risk business $XXX excess end obligations our not after in the anticipated for ACA At repayment reserving medical other expected with million expenses, agreements first

predictable retrieving some our stable position discontinued the early continues our from infused with several insurance have and states capital ACA We with have our more year. prepayments already. made to a this business agreements, remaining decline, associated entities, was in repayment had in liabilities placing we which steadily with business Overall, success much and CMS in

at we amounts investments, our Now in of entities. March cash total as regulated had balance our looking in XXXX, $XXX.X XX, million and including sheet,

as cash Our to million short-term $XX incremental credit of investments X, an million. term April into with up NEA that our we amendment and first our entered the loan we $XX nonregulated to of increases unsecured the facility end were that by On announced commitment quarter.

our business. to which continued intend the demonstrates We XXXX including are confidence for largest commitment corporate the strategic to the priorities. of use pleased We incremental investor, this have general our of our future of ongoing support in proceeds purposes, to support

brief outlook. I'll revenue now $X consolidated XXXX continue a we expect review XXXX, In to billion. our provide of of approximately

Specifically, NeueSolutions segment. between our we and from $XXX million our between million and $XXX $XXX $XXX NeueCare million segment from and million expect

confirming our addition, through and XXX,XXX segments, approximately ACO $XX value-based consumers solutions, between in XXX,XXX consumers million enterprise-adjusted our EBITDA XX,XXX expect In both XXXX, XXX,XXX XXX,XXX serving be of consumers At across NeueCare between between end and of we our XXX,XXX we are NeueSolutions expectations million. $XX new and REACH. and clinics and to to and serve the between for XXX,XXX including

corporate corporate expect ratio costs. Finally, operating XX%. excluding this XX%, adjusted is costs, between to XX% XX% include cost our we When to you be and

NeueCare year. with NeueSolutions to remain We the performance strong continue pleased confident quarter our segments in results our the and the of drive through first to and ability remainder of both are the in

back to I'll it Mike over some now remarks. turn closing for

George Mikan

Thank Jay. you,

morning, you've this to well-positioned for and a continued NeueSolutions we heard NeueCare As success. with this are start strong off our segments year

industry model care. that the shift towards value-based We have a differentiated built with aligns

year, power allows our start receiving. proposition and by across Grounded as formed the driven and evidenced NeueHealth Medicare mature value in to continue long-standing proactive high Medicaid. this and are and the of we our key more payer deliver personalized relationships populations growth the marketplace, market, consumer provider business capital-efficient partners, scores have to more ongoing a the the the us we experience we with a and resonating focused year is the see consumer for broader ACA and satisfaction coordinated, all with model we have to strong, relationships engagement, care

strong all. We performance ability are we confident our drive a in on maintain focus to as creating continue to better care health year experience this our for

forward To to conclude, extend drive continuing care team stakeholders to to ecosystem. continued I as sincere entire we value to commitment the their health transforming I'd care. across like my for look for health together to NeueHealth gratitude the work

you your in up open NeueHealth. joining for interest Thank now the call We'll and for it for questions.

Operator

you. Thank

Q&A Nephron We today's today comes will ahead. Instructions] now Research Joshua question [Operator Please start LLC. Our from first session. go Raskin from

Unknown Analyst

Marco actually is for ] This [ on Josh.

balance the the it that, sheet, in the $XX XXXX? balance proceeds quarter looks the have liquidity speak up just With cash to help then also seem like liabilities that can total and in and in don't changes bridge at down million quarter of despite cash you first Looking either. net against was the uses for only to much debt Molina us come

George Mikan

we from go cash in Marco be bit $XXX confused potential escrow ], future what you and the liabilities. cash I'm [ Yes, back we million the call, have reconciliation. what closing XXX you about if coming to by little cash last consider to that after But we have just proceeds about a talked to or to transaction, your back Molina offset the continue of -- what

at of number recall, first quarter, you the that was end the to million. If $XXX closer

So we've things is fund had like that other XXXX, guarantees that, had and based that reduction restructuring to financial severance for seen that. a on that costs, really our offset estimate, and and in we we

$XX as note our As the quarter, by but you April credit will with million. facility after did about well, we early increase NEA

year So capital that, were stronger our that's we Obviously, but a position obviously feel capital the we we're look in way there's position. to than a much we contingency ago. at

Unknown Analyst

it guidance on flow specific you segment like points cost the basis for EBITDA Is there what but in, prior for could squeeze are versus other ratio cost XXX helpful. outlook, the question seeing And that coming reaffirming one And was I up operating adjusted if you looks about if medical then through? That's the line any so, that? guidance. offset are

George Mikan

XX%, for our referring cost, previous corporate was to just that part always on but that model. was no, the didn't excluding in -- -- XX% Yes, from we a the guidance miss to were we -- the in the

costs million, just added line. include corporate we that of So about that. bottom you When remains the $XX

So terms of in nothing's guidance. changed the

Unknown Analyst

of lot sense. you. Thank a Makes

Operator

back for have Instructions] it line so I'll further this hand no questions over the time, team the remarks. at [Operator We closing to on management

George Mikan

your future. for NeueHealth. Thanks in the forward look to further updates interest We in

Operator

That concludes call. today's

You may now disconnect your line.

NeueHealth (NEUE) 8 May 242024 Q1 Earnings call transcript