BBLN - Earnings call transcript Q1 2022 | Babylon Holdings Limited

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Operator

Good morning and welcome to Babylon’s First Quarter 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Leading the call today is Dr. Ali Parsadoust, Founder and Chief Executive Officer; and Charlie Steel, Chief Financial Officer; and Steve Davis, Chief Technology Officer.

Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and as further described at the end of the press release that is posted on the company’s website. and Babylon’s information based company materially. currently subject various reflect beliefs, the and statements cause to and could assumptions, available risks forward-looking current at on expectations company’s are actual These results that differ uncertainties to the

Babylon forward-looking these after Factors are company’s report on the this from different factors of of no Securities these be call. company to Risk Commission. reflect that expectations any the actual to Descriptions on revise as statements that can filed and materially in the and results the statements could changes section found XX-F believes undertakes filings Although XXXX of annual reasonable obligation with March that Exchange other the to cause XX, form occur some

the the addition, non-IFRS of will important that, are Babylon’s be of like the Please relationship IFRS on can is company’s the the on also and slide the evaluating release note In website. certain found that ahead. measures measures non-IFRS call they between be that to the company The measures on believe non-IFRS press please CEO, presentation financial company’s financial Dr. With at comparable, these Ali performance details posted website. for turn available to that to today’s the call go end over in is most measures I’d historical Parsadoust. discussing reconciliation

Ali Parsadoust

investments in Charlie revenue Officer. our for I quarter our and my then you four assessment Financial provide analysis Today, Technology details welcome first an thank more joined provide interest Babylon highly everyone including members. for then on to to I our in Davis, enabling pass our and platform, would by how Babylon. I before to growth advanced will will we focused teams. XXXX business comments outstanding on for call and Steve data questions. our and call like share our will our Officer around risk the the around cohort technology today financial Chief time like engagement. Steel, are key results progress update your color I’m technology today the would best I Steve to in and Charlie Chief class more open center and

Firstly, continued growth. experimental revenue our

Secondly, our discipline. operating

with Thirdly, line our continued our finally, technological on I After share comfortably begin of expanding growth coming record continued This the achieving $XXX XXXX. million strong first our to times XXXX full this a revenue from first under $XX by the $XXX X.X engagement of growth in our generated quarter. revenue million of I has the into growth shy revenue at entirety trends, just Babylon advantage. am and time million And XXXX pleased our top quarter by well estimate. XXXX. to amount beating of that quarter it’s growth consensus represents in will

on in greater increasing than of represents year. we fourfold at least we range a as XXXX from growth Importantly, this level of optimistic are billion a confident top full year. tracking growth prospects the Accordingly, $X and extremely to achieved achieve up and billion for of our billion We are that guidance This the million levels will are dollar Charlie to revenue our about growth greater remain excellent engagement revenue last of a of $X or customer while maintaining were $XXX from for satisfaction. we discuss previously able we revenue few to threefold a XXXX to minutes.

been care Our by revenue growth our has a robust membership. expansion based powered in value

U.S. which XX. members three This of launch driven BBC new based quarter, contracts XXX% three to March, year-on-year lives membership as a XXX,XXX Our across of care grew value XXX,XXX further by this U.S. than BBC was by states. growth more over the added

we proud of [indiscernible] has States, word. variety one Blue growth from at in in against today, should investors same dominant United to never is level a view, innovation. everything. in including companies do and view seen provide the most And has come have of a bias are for stay the I in many growth not appreciate work New broad And BCBS these come always stay environment our the other the on profitable to now any growth in them. everything we believe in unfashionable and We around do California. to winners. revenue that with the investment plan now Anthem, on Humana, that mantra turned become prevailing the an to growth cycles go. services is growth ultimate payers, the believe Cross Aetna, scale to across be that we sustainable clinical at cost and subscribe But the oblivious the I states Like will is growth. from way that profitability the In Mexico profit not platform will eight focused dominant are We my executing previous and to in and United hand deliver always businesses continuous and curved

achieved, for to Your more substantial enlarge cash incremental cash margin line. shows every the the scale to as will that directly contributed in gross it dollar should shortly I should operational lead that leverage once generation detail highlight is the to

my to on of quarter adjusted consensus the of Moving an later second XXXX for than to operating no make expectations. discipline, profitability regarding towards progress ahead EBITDA delivering goal point continue our we

the a at the this contracts focusing to and disciplined we on the balancing deliver As in in key structure. that quarter exponential have demonstrate time to same growth, growth priority of their beyond our perspective call, continue cost a is we while approach all emphasize and to fourth XXXX can to cost that the diligently monitoring market us to for from

year one, on until that drive improvements we maturity. and from year taking neutrality when can with focused to are margin on every see those the gross example, we to potential only path after contracts, margin For a new significant where

In commercial sense, continue that is on focusing consideration with resolution our outlook even accept are timeframe. we in grow are disciplined targeted achieving to Medicare new factored very in initial into objectives. with and are that our Medicaid expanding or manner, selectivity being start by our This To portfolio Medicaid, to our of beyond with line only those demonstrates population. of addition, Advantage the ahead selective our our above or and decision existing the in growing our we contracts, and or our of approach a profitability and

testimonial across a we of health pattern their we our Once are Engagement members are upfront and MORI this key XX%. highly our page pleased to is we by a this able few to up saw members and We engagement. study patient have National on In most UK seven An journey. to further to model to study is services acute can our this. appointments care creating our over downstream to for Moving in and help the By I return relations overall the love a high ER same our website. why VPC a review across take our their of independent about proved of by showed XX% to understand minutes reduced Service to that create members Babylon, create the of very you Engagement we the annually. access are I’m about talk is savings Missouri and U.S. our and an appointments one savings business the attend we why accompanying appointment, to discussing quarter. accessible visits with in the average deck on is contract cost member’s to become the to which more Ipsos the our contracts. service these shared key seeing first already returning an return peer system. observing to conferences engagement gateway ability experience of like And Health the posted cost members would care to annually, that keep average four we through positive proven engagement, contracts our our investor UK for trends you we’ve mature

leads this to of contracts, be up visits to emergency this addition also see the avoidance with BBC success emergency expensive urgent we only a and seeing visit. X% over also are ramped of rooms all to room engage that U.S. to servicing In across faster our all resulted engagement, we appointments Moreover, has that of quarter our even care members in time. ability reduction to

up For New to to compared highest members contracts, rate and older has and and in new times respectably four faster. signing Mississippi of the Georgia XX and to X five contracts Missouri example, times, been our York, our

approaches. We able of to this optimization outreach been continuous due have to do our

an initial focus volume call to but the adding to our creating manually up by sign members, on outreach by shifting example, from staff ability For quality live high and for high interactions. of fewer our phone

with the beneficiaries. It confidence assuming primary our scale are today partner can on and members the these first this the that What We to October by XX,XXX will and historical lack based way faster were are XXXX COVID-XX will global based of midst beneficiaries success Medicaid of we took on very we up that further Babylon’s future Babylon in of tomorrow utilization. ramp is intentionally noting value of in care we pandemic, future. on give optimize selected structural deal and and risk its learning in even advantage a onboard pleased engage continue speed. care approximately that some Babylon worth payer a

endemic XXXX, quarter for utilization increasing the Medicaid in the seen total behavioral XX the Members, as our by XX% especially engaged accurate Over MLR members of for we they Medicaid cost from levels, membership of COVID, higher fourth XX% the members. contract, Despite projected model accomplishment, year. all are of decrease enter system. a the integrated the and our nationally The performances, health have Babylon many and population. of of presence observe when that have with were a headwinds plans the last savings. the healthcare quarter, cost XX% and This months MLR, of historically of the health. primary profile faced divide these beneficiaries our patient once and contract our further digital whereby members first nearly added added by in able underserved the lack digital our to care, This in first Currently is historical our maintain engagement to information significant in engaged disengagement UK the markets, at in last access definition, and U.S. BBC we a during while contract over significant Babylon’s deliver is the population, given are rural care medication the saw headwinds households system. platform, of worsening was have this on

to expect investments upfront we However, these cohorts turn time, in healthcare cohorts, in these engaging longer to proactively these as contracts reduces the impact the flip care, as preventative our see of over mature profitability term our our technology. members costs. in call to the In to the Steve by give But advantages platform. a detail like technology before I to expand more I provided would upon I will some do, on you moment,

stated our As differentiator investment in R&D we key our the for technology Babylon. a ongoing and past, are have in

population, Our stratify detailed while driving to AI costs. data and influence ultimately outcomes positively assessments analytics down will risk and be able increasingly conduct

the to to significant cost health costly both members switching Babylon savings sick analytics for investments our of the improving suite in ourselves. creating and key care healthcare reactive advances Our are technology and partners and proactive and from

time. our pace accelerating to clinic technology collection, the prevent scale ability to unlike how predict of our innovation computing and certain processing be to will costs the cause of unfold peers, that exponentially will our speed we data of cannot of focus we with expect improve While

advantages Through within across model. flywheel licensing margin we our expand partnership technology, revenue the the that key has revenue. in a bring approach learning structural licensing and Our there continents, to three will wrong a Technology to past digital and and are do against be proved of our future. so able our belief the remains in betting will reach are high technology first often in business very

technological the with XXXX We driving continue technology goal and competitive key pipeline growth later year from to XXXX. of building capabilities understanding is towards Babylonish importance the licensing the to our to Understanding than revenue pipeline to convert expectation our increasing profitability licensing no of focus advantage. moat on this

and developers as company. AI, and a in a just We employ technology science XXX specialized predictive as We company are XXX areas engineers much we a over healthcare with analytics. roughly of data are

curve to and to to between Through reduce year over further are revenue. alone, XX% stay of expect over of just already innovation ahead million the operational invest quarter $XXX our made XX% technology, able us XXX% We three $XXX leverage. in we competition. since XXXX. This stay our the a cost by to on this progress, our year somewhere of technology, $XXX invested technology of revenue of enables top million percentage line to costs of this significant our technology million leaps investment we having ahead we as to by whilst growing of Last achieve revenue. the quarter, And our reducing our technology

scaling to we bring investment addition and a our our of steady reach our operating leveraging this state business, In down costs profitability. and will to goals

Before handing year. like closing to hard entire out team the over work in I far this Babylon their to my remarks Steve, thank so for prepared

and factors, many to sentiments has not general to I liquidity stock price make this specific am company celebrate. also the around of the continued Our has to of performed progress our that have well. we market the and our to much course conscious challenges strong both due share quarter

all do will of to part this is returns hands. challenge the our We in address that

As inaugural compounding in letter, long to over competitive I our mentioned advantage focus term. delivers the us has that to in a always Babylon the platform shareholder create my been

the in is market the market term, voting weighing a machine. term, wrote, is Graham machine. the short the Benjamin In a long As

over that We that work healthcare will to technology amazing it. drivers to I’ll proud I so weight our everyone remain the details of the and on that, focused Steve, accessible the call our With team on high will you. putting more for the continues quality affordable term Babylon to goals on Steve, suite. long about advantage. over of make who provide to towards pass am relentlessly

Steve Davis

Thanks, Ali.

Having most here One organization with human strategy a technology an and such industries right the was that an so assets Babylon over fueled hundreds at will joined have the investment valuable incredible and to the achieved much belief the purpose lower we around where world and the built can life of the in I in potential of that behind. to the reasons world worked already unlock Babylon higher unlock of providing industries, year at mission. AI data same as ago tied level one in impact yet a continually that the healthcare by in the consumers lag is of the of platforms result scale value I healthcare quality other saw millions cost and for seems

into provide Graph is Babylon value systems. on platform believe, at based at led now the that global believe growing our to into time real provide real integrated in health delivering experiences, our while which of our cloud hard in past use and the ingest strategy IQ well both investment service. providers, us as product, care record way and a time record competitive to data Babylon that of of Over our Babylon that the advantage blocks all gives segmentation, core of teams Graph of that in platform leading powers the Health clinical and a services building to various strategy. This our members. advisor will our causal service that is These the predictions been data, to our structured, of our into to blocks the which for clinical competitive of enabling effective core coupled year, we and the of triage investment be teams will platform care has have of Graph Sitting scalable Health Furthermore, care value higher provide industry volumes us risk. advisor. a Health delivery with AI hundreds is analytical our wearables, cases. product our ability immediate value, and based growth codify predictions a work. advanced from and a care delivery which They our of health access our investing library our care we unstructured as of focused batch, and Health us time provide At building platform AI advantage, with The allow enrichment large capabilities, that and strategy allows continued creates platform. scalable Health growing guidelines member member insights real core delivery. our and ability platform members is top care actionable includes may on teams simultaneously and our IQ

delivery with to core our a it company. improve reflects mission and way Our most deliver technology, care, scale. cost and elevate investment This is goal quality the our of its as in accessibility, the effective at

built on capital remains latest our a and continuously experience our more is which assure give large Charlie? It platforms to purpose that on a applications to value seamless quarter. and hear technology care. and coordinated financial goal call a will our an upgrades pass sustainable day markets I’ll of at about to to platform single the over You May, Charlie with to development release, our update our improve progress effort our that, introduces the delivery XX. advantage proprietary With competitive based our this

Charlie Steel

thanks joining you, provide our financial QX, on time in guidance. appreciate And as perspective and we’re the as Thank everybody an as and for call. providing interest We revenue Steve. in performance results, today XXXX trends update seeing review the to Today, some XXXX on further our the I’ll we business well Babylon. your

$XX reach exceeded million and very are with quarter EBITDA we’re financial delivering our pleased our revenue this performance mentioned, of Ali report we million. revenue over quarter happy the As estimates for and growth we consensus to can $XXX by

of Georgia, for and and the for the revenue this ahead like our adjusted Financial QX contracting year. have Direct based discuss quarter, in We the line a our guidance such XX% increase value negative some of care for in DC financial also our highlights delivery I’d business to full XX% consensus performance cost EBITDA achieved and negative and of our quarter. of one margins and and our impact margin, of new as new contracts in Mississippi, KPIs our care of our

expense or with combination top line expense management discipline in significant generated also year-over-year operating We our significant leverage growth. with

XXXX. Moving X.X quarter in was growth times the care which by to value nine care for came our financial in million revenue the our segments revenue generated mentioned at results, generated XXXX. $XXX again over value driven was in based line earlier, quarter than the revenue first based of Top is quarter and we the more first times we as revenue the

contracts care includes XXX,XXX. During this new which customers global UK also our first membership the members [Indiscernible] in to managed initiate quarter, total we bringing new over to XXX,XXX over

through In California terms of during contracts top adding contracting a $XX.X the to based Iowa line management crucial based and of BBC been in QX has base, significant in was membership in $XXX.X revenue. mix, contributor in $X.X beneficiaries our XX% model. as in contribution XX,XXX the arrangement. in million care revenue. including QX direct the first CMS related revenue by Medicare care Georgia, revenue partnership with XXXX. by significant total quarter first with of California almost growth, part the $XXX.X members a versus million and for our to care driven million value and accounted new and contracting Licensing to direct BBC QX, increased XXXX XX,XXX increases to million members This of provide value entity services Both in in quarter

to in of item, year Although year-over-year with normalizing million. connection this due decline X%. the increased licensing one growth to upfront arrangements year-on-year revenue in have licensing QX this revenue is would software $XX.X by is the recognition last this figures largely When

increase be XXXX. in to mentioned in New York which during growth includes proportion million the as Ali aim profitability our in additional the revenue our last our revenue XX% well key quarter X.X $XX.X pipeline, well building clinical the year-on-year the licensing margin actively services UK. as in towards at UK in attributable growth in in is Clinical also year revenue, contributor XXXX, our licensing a by our Rwanda, $X.X and with XXXX. memberships services This of as is which high services GP the quarter will we of was of service hand year, business, to Licensing organic and the the first to increase an As engaged million this are added XXXX. million members clinical first in USP as of

XXXX, quarter next Medicare more first XXXX, XX XX,XXX, of from entity. primarily partnership BBC to the to Over were diversify to than with XX,XXX our value U.S. direct continued X.X members due population the increase times our we’ve contracting from to

was with So this Compared to was we’ve reported based XXXX, U.S. of XX% we had members XX% where the Medicaid XX,XXX of first quarter, value XX% U.S. value members to of based which commercial end with total X% XXX,XXX of and the Medicaid, quarter were Medicare. XX% and Medicare.

focuses utilize enhance the One key scale. margin, and leverage delivery of cost in to care as XXXX operational is of we our

margin of highly Our operating cost delivery up to expenses of proactively matures members care claims value prices is scalable on Of which of reduce proper as claims revenue the discussed impacts margin healthcare cost From We’ve essential components, we XXX%. the and by starts costs is in range each driver in continued by delivery which with a reduce our care profitability service a based rapid believe previously, expect had delivery team metrics are our over in show to we’ll down our care model. a we order the revenue to done scale. costs. rate their able carrier growth the it to term engage these incurred of be members value And delivering cohort associated differentiate expensive comes breaking market, as that to components into care care XXX% the short reciprocally has time. out, we offering, based main two we more long care help front, this order clinical Babylon expense. in our associated costs between to In we’ve expensive and without damage prevent clarity spends provide broken term quarter, the

value XXX,XXX $XX.X from addition For primarily has in based care last this the quarter claims QX, which over expense the new million XXXX million, increased year. of due members in to of $XXX.X

in our optimizing where previously which processes this new QX, our signing Ali we’re results are [Indiscernible] in members based us for seeing we members QX, coming and in the year-on-year continue earlier, the quarter health care claim of value million of up expenses and XXXX, risk expense first from impact in we $XX.X high XXXX. engage $XX.X Clinical at As increased allowing to delivery two medical even launched care mentioned, patient contracts performance. million up XXXX,

expect revenue to delivery We quarter-on-quarter to as operational highly seen quarter to and across delivery clinical in this our clinical care of progress and in the a quarter leverage care be XX% scalable, XX% percentage our X% progress expense dropping we’ve this network. expense, first X%, quarter of XXXX utilizing across and

We’re to exploring economies our further additional of operational scale. leverage opportunities

safe we licenses have year match on clinicians services. basis, a example, national efficiently states care to more XX across For in the better for which allow a and deliver supply practice U.S. demand conditions clinical utilize all

We announcing first. to both increasing quality came is practice Trinity model high care significantly for care are clinician million of from payment virtual cost workforce delivery efficiency. also XXXX. Combining figure for the increase $XXX.X an this $XXX.X QX, our the Further, million which at longitudinal expense quarter, allows

we’ve However, points our to on revenue by costs. from QX, to delivery six discuss of basis, of revenue now to for XXX% move quarter-over-quarter XXXX. XXX% essentially cost improvements operational I’d like percentage seen dropping from in care

quarter. operational leverage scalability, earlier, profitability SG&A both mentioned the in a key pillar expenses on revenue our is this to technology path As falling and

an application XXXX. is research expenses of of development which $XX.X increase first and platform $X.X expenses quarter the million comprise in which XXXX and expenses from million and QX, technology Our were

SG&A XXXX our are our due compared $XX.X of from greater XX% revenue While expenses decrease a result actually to to the leverage decreases in million XX% this platform from was to of than technology Similarly expenses, which potential were increased around million first by expenses as QX, of in revenue. our quarter versus the quarter more XXXX, total quarter, XXXX. expenses just quarter revenue SG&A increased half technology this and this operational quarter. in this XX% $XX.X also to cost in

company. also operations, our and from publicly of in the scalability of the significant SG&A amounts demonstrating considering being listed expenses increase So a our coming

Moving on to discuss adjusted EBITDA.

EBITDA quarter QX, our first million. adjusted loss increase XXXX of $X.X million, from loss $XX.X XXXX an the EBITDA For of adjusted loss

XX% mentioned XXXX. the $XX.X this have can we excluding continuing would recognition, includes see previously this loss EBITDA XX.X On adjusted one EBITDA trend QX, figure loss piece the comparative improvement marginal million XX%. of QX, adjusted XXXX. improvement million, a year-over-year in compared However, licensing margin percentage year QX, in been XX off XX% normalized our basis, represent for revenue points of and in We to in ‘XX the was guidance the

sheet, Cash context on balance flow cash [Indiscernible] XXXX. balance at cash the totaled some sheet the and the XXX most provide since relevant to Moving information and and rates XX, and changes. million, I’ll equivalents that $XXX.X million March October XXXX,

received debtors the of of at at executed on the issuance which earnings caption growth as any call costs, funds the and mentioned XXXX, million As end debt included This mentioned. receive expense interest XXXX is end the for fourth we our of quarter Ali $XXX will we March some that additional funding XXXX. of in for QX, just arrangements

share without end raise additional our like cash of our capital. need call comfortable also to fund We’re can lockup period year April. on the operations to outstanding following address through I’d efficiently to count end borrowing the and our capacity the

of revenue XXX As we registration XXX by guidance out XXXX, and million our for range million to from guidance our giving that XXXX X.X earn which document to million from we outstanding, In stock I’d shares issued shares. January currently [Indiscernible] million sponsored to performance. $X have to end includes increase this like shares XX.X million out ordinary signed holder XXX.X billion.

guidance, comfortable greater. current billion quarter, revenue as XXX billion As very and million run our rate Ali the increasing during month, per a mentioned, prior we’re exceeding million our attainment to to dollars now our or now from achieving revenues given again over first revenue dollars our $XX a revenue

adjusted by maximum for guidance $X to guiding year billion expectations EBITDA our $XXX adjusted the and updating the loss and EBITDA for also We’re mark. our million revenues at

incredibly strong year. I work and look to our alongside of this now reiterate We all work EBITDA financial health delivered open And that continue questions. profitability care this for [Indiscernible] XXXX. quality forward team And an our results to and we the see to for positive thank so high hard confident terms and to like to with to far deliver make are mission amazing by Babylonians accessible quarter. our expectations that I’d for makes are everybody. of operator continue affordable That

Operator

a conducting from Thank answer David question today you. And I’ll coming be from Our Instructions] and Larsen session. [Operator first is question BTIG.

live. is line now Your

David Larsen

the What’s high speed you. side quarter. them? Missouri on the helpful consistent a color Any beat side initial Can that maybe the are of doing measuring tech members about on are lives? value costs. mentioned at has relative communications for bit that? those the very on risk will identifies think which new claims groups what accelerated like, that perspective Hi, you the of members more the risk and your in interactions and communications especially automated from tech there driving cohorts. are of Thank be you with the highest to based significantly rise an AI And how congratulations rate little you with for you care on-boarding high I a talk

Ali Parsadoust

you question, is for Ali. thank David, your this

we improve as forward we had we our organization. cohort, we learning based of on significant highly members, we we as And again. week what the that a interactions are can time with our we amount imagine, And spend new what in how encounter our go interactions a can you do, analyzing we every As with past. done them learn any

better eight results that, Georgia the as around still approach, I of believe approach And rightly result a quite will compared and should I learning goes time And that the That advantage think data they’re the period organization better to same analytics. times in time by is based improved data for can a Mississippi. the our our that to of and fundamentally on a interaction of that we see you it. five continuous of expect as you result and of That continue, say, is learn our rightly by, for advantage and learning approach. we as very of is capabilities. at beginning period times a improve same And learning every you four as in to quite from the time, said, As technology based of Missouri.

David Larsen

can about bit winning that mix maybe I plans Okay, very of see increasing. Thanks. Medicaid? some that commercial of are penetration a those Medicare the the And like of in RFPs? your what to And new rate Thank for can and helpful. can I Are is then talk that’s, lot you’re that’s you then Medicare mean, about relative and little more talk lives, is economics a commercial how part you. the shift,

Charlie Steel

Thanks, David, here. Charlie

reason also once quite Commercially great the through, and part And the help for come is that employers it’s of for we strongly. us. easier And people DC away for said, you’re numbers past, through a more those well as again. the seeing I accelerate engagement get see as we I previously the think been from in improve in have we Medicare the accounting Medicaid of purely think Medicaid it’d to past, to the be that is opportunity mix want where population. funnel the pretty announced lot being we us to to drive

particularly I forwards, you’ll that of first in sort more and of result lot more going evolve, of commercial as DC. Medicare a the what as Medicare, So think for of a more with and quarters see change starting but to mix I is say, us of

David Larsen

Okay.

the that, can we’ve those with public a program how providers and lives other Street, of to it couple contracting lives. with I many CMS, mean, contracting So are time direct direct Oak stabilize seen and that take in like

going breakeven be or any lives harmful. XXXX, Just contracting, are those thoughts any they to color will on as is in there be were Medicare or

Charlie Steel

sure. Yes

DC that got adopted say, about There MLR think David, are on a top that. CMS we you we and very of you management ratings to we’ve the on And because that, on retains take, the how for accrue couple And as So we been quality a approach actually conservative we well again, exactly percentage get conservative that. points as DC. the XX,XXX of revenue then under the program. we’ve on how from lives quite

and MLR around first DC in our So XXX%. assumed we’ve is quarter, that

can that’s we overall the it’s majority the for as that you improve. business, So drag of the on actually making of MLR see, built course the the over up to expect basically but the year,

David Larsen

the that make How let’s their your year, Is When and into sure one mid you single prices to to for increase increase and health do an back is that not? fair get contracts plans every the hop call or me, I’ll that? last you Okay, digits. there then share premium go queue. built and it your typically of in high Thanks.

Ali Parsadoust

The of cannot we to answer the to the exceptions MLR sometimes amount of the We the yes, MLR take some a they’re is take totality of be part David. absolutely percentage MLR possible, the influence. the part we where of there of premium just will the

the we sometimes goes those, our of also we is revenue may the otherwise which and a of premium result usually the exclude as go So the up. percentage up, a premiums as MLR totality take but

David Larsen

hold at pretty So it, and earnings back even for can or reduce stable a to improved increases pace trend or through cost premium cost trend should assuming the margin those you? you flow

Charlie Steel

Correct.

David Larsen

quarter. good on on back the queue. Congrats I’ll Okay. a very hop

Operator

you. Thank

coming Next Dev question from from is Weerasuriya Berenberg.

live. now Your line is

Dev Weerasuriya

great I’ll want quarter. just on Thanks up Hey, to for David’s it questions. question. off good and follow kick morning, everybody taking my actually

Just to percentage, expenses the kind gap premium you of stay you’re to as going to really where margin? that cost expenses kind to and between Is confirm a premium as in it’ll a increased of claims to taking stable. inflation of have percentage of expense do or the cost additional and think has benefit claims premium inflation increase address be

Charlie Steel

exactly Yes, that’s correct.

a going that. the costs there’s in that But hold up, assumption we And clearly general stable is you reason that the of going underlying up can beneficiaries of overview market because an As there’s up. the price general, be cost the that. the go take will does a why prices

costs holding Now you’ve costs I been stable. coming get where as revenue, whilst so we’ve those to been efficient need do the say actually on continue stable, the through very we that as those but on benefit do holding also far we

Dev Weerasuriya

margins. And expenses? I’d to a the your provide little ask from claims a of in absolutely. sight Could technology delivery into around then about care questions on clinical talk couple bit the particularly of side. Yes, just just a line you like a little leverage expense care And color bit of

costs? And bring or contracts Is little implementation minute then costs, Any more be down. you what who you bit bring it it different are time. different dramatically I those get over as does would the very geographies, would on pretty of that to assume a on kind contracts helpful? new them that up. takes set goes As Thanks. color on

Charlie Steel

Yes.

cost small. So OpEx of very new very, on states taking the actually side incremental the are on

business, the massive come leverage in why I relative in last massive, seen reason basis you’ve on couple quarters, operational where absolute the the through the of revenue, think that’s particularly increased the we’ve hugely. and both

So largely think we that that regulatory But new sort have by new the in need business bit on when same And of cases, rare that. leverage there sits have stuff little of IT as well a amount costs large, contracts. time as the is level about have might then to taking you business, small to of around there’s a customization. you that on costs we with the do In the though, some and use by costs But you we variable of operational amend. the at marketing, people huge OpEx have also, take some platform.

Dev Weerasuriya

a sight the get peers there how into a that Yes. just technology benefits you enable of you claims into about and to expenses line on claims does Could see then of ahead technology? talk extensive. kind sight of get to versus far kind the And of line using maybe

Charlie Steel

need well, account we understand and for to you about your XX% members your is expenses. The healthcare, of XX% usually fundamental thing very of that and that do we about do all

of important to The and them those them instead with is time hit hospitals, crisis try engage crisis. and and work away sitting are, land to reactively, to those keep and from who and proactively XX% emergencies for is to back waiting to in healthy identify of them ahead

takes Our they what healthcare a analyze have reach we employees take over technology we our data ability as those do that deeply from the nutshell, in healthcare costs. available soon is proactively will you the fee contract bring as our members their the the enough on with they their as and any to programs is and should and and mean, out and we save I healthy. until them the But members, challenges able to journey a course, what to to to try to reality service who wait usually to sign and them them sick healthcare. to throughout be you and be up away to of That them on try usual of one get things be is know, most sicker for that. system then do to company designed you benefit the go through of keep companies called is

very approach of make a different philosophy how have you work. we So and things these

Dev Weerasuriya

more, hop then back. one and just And I’ll great. Okay, have we’ll then

any Medicaid differ? and up interactions the between the contracts, between it of the different like whether seems Could engagements, interactions types On it’s talk quite Medicare, the or in nicely ramping the members, you engagement whether about here. up or differences commercial it’s ramp

Charlie Steel

cohorts found traditionally, that cohorts most the the started, have engage. which we or difficult engage. to the to community Often the or to insurers has difficult community, the been most find, the that Medicaid Absolutely, the us, you have payers with have community as know, been given

them, little found then them. and have members, they the to because all engage or included existing sometimes, seek they wanted health And with very been and in engagement system, they help had them,

from through the And times get new that a a four much one XX% at you even always number they Medicare to by as result identify now Often is the has online when so clinic them done the what company would to people of engaged people you in a not can whose are by bring addresses, work addresses, our that of should who So time. team five a increasing engage at numbers, as identify, accelerating very eight your this that or them. found. structure or Missouri, to to are cohort therefore, joined cohort a not or easily people be engagement definition, contracts, be these is have these first are our phone of have employees with normal practice on is email cohorts to work

see these will what move you significant the a Medicare, commercial, think simply to the because improvement I I to think to is corporate then the lot it’s exceptional. engagements we from And easier. and Medicaid as on

Dev Weerasuriya

Great, color. so Appreciate it. for much thank you your

Operator

Thank you.

Grosslight from coming Next question is from today Daniel Citi.

is line now live. Your

Daniel Grosslight

this the at are for likely projections geography, states Hi, in of year. back And taking the to to pretty look the if half your hit redeterminations some some Medicaid thanks get you going second questions. come growth hard guys, of a are of how curious Georgia enrollment, and factoring going redeterminations in when around and forward? go strategy enrollments your I’m Medicaid you’re Medicaid around redeterminations guidance just into Medicaid a and Missouri in third back. down down come quarter projected to by

Charlie Steel

question. Yes. the Hi Daniel, thanks for

so said massive a think as put before we I we pipeline.

revenue factored as some on note, more will capital redeterminations day sort will that out that originally the our of we increase well. to XX Medicaid actually sort than we announcing May be that bolster we pushed But have contracts that therefore as guidance one is thing well. markets in. at also though, that the We the One And year have for our believed been to factors the of the of full had was year. at of ability further start in

Daniel Grosslight

I first profitability, That’s in that prepared remarks okay. point to kind and about your day. of you Yes, analyst burn path mentioned. on And appreciate then profitably. forward helpful your looking just And growing cash Ali to color, that

that target You to going you’re by latest. reaching profitability at the still XXXX mentioned

flow grow rapidly cash have if to to going free hitting before of capital bogey. million you raise you’re based to need burned You continue It around million this to seems XXX going in you’re value of XXXX now cash care, quarter. additional around that XX

as So target? run capital can profitability towards your needs you just help bridge you that

Charlie Steel

Yes.

to I about and strongly about what this this raise reiterate on goes we take year. And thinking Ali very, very to cash do contracts. in out Daniel, that we’ve now So said I’ll need of when with new sort that think we said again not capital ride what requirements order is,

expecting you see the that It’s think rest cognizant this focusing incredibly to be during to reduce of We’re to I us burn. be of and year. on should very the that important

that of need though will got at as that one far this pipeline. stretch guidance how our advantages we a any feel revenue. of any massive, any think we’ve And raised twice year don’t we moment of so got stretch We’ve already therefore by is and imagination the the contracting to of we some chasing the and we’ve be type think be massive in about

us can selective perspective. revenue sure cash we be beneficial a from on making we that’s to that about the take incredibly So and

Daniel Grosslight

the fund I was type in propensity Yes. that or of that think and really not outer should XX providing talking And through about XX. quite you’re debt more yet. more to either But years guidance equity burden about that how we know I issue just to Should come growth. your outer should you we growth think about capital reach years don’t back have markets capital profitability, before additional with to in ‘XX, guys to you you yourself in have outer or in titrating down you ‘XX, so funding we ‘XX years? and

Charlie Steel

coming At Exactly, XXXX, since intend to to massively same turned the That XXXX, sure. for we year. we when of the last market November basically very we’re in though, he market. has to coming is market to be don’t intend the the cognizant do this back not time, back

I in we market environment in XXXX different six months be XXXX. very different And might market versus think we’re were than in very ago. environments today we a

the our it time, And same that’s focus And capital. growth the we’re I we whilst that the at two our though, revenue to back would we growth. think years. So additional goes to by really taking how say fueled on never want a about than where never engine create that’s rather in

Daniel Grosslight

Okay, the me, back great. one queue. And in one I’ll hop last for

I behind I And that’s your Medicare sorry, substantial flowing get and your in curious of quarter? add that, largely particular, thoughts that just just on that membership uplift cadence causes is forward. DC but mix You assume PMPM to how much to that to going DC on IPAs? the DC California through then question, on this was to amount saw due of shift in the a to

Charlie Steel

to start going through the California. So with, DC is all of

in you’re a exactly Medicare the uplift the So where coming contract And PMPMs. Medicare. basically It’s DC. our Daniel, that’s DC correct it’s based. big It’s through all is

Operator

is next Our from from Thank Jefferies. Glen question [Operator Instructions] Santangelo coming you.

now is line Your live.

Glen Santangelo

in maybe that in profitability. And about on some then experience higher the path generalized just to prepared trends of you describe to them they of your Thanks that are now maybe little what you profitability and seeing you I U.S. about the have these a was my for what cost I the wanted a costs, there you’re remarks, if they contracts talking wondering typical question. you terms that, you your path the engagement they higher Ali, for the taking in originally profile more in UK Hey, versus bit Yes. prepared talked to sign the normalized remarks like. platform, some flip were enter could looks when follow profitability suggesting when up also,

very what like and I the maybe And the you so United have up. I wondering similar Thanks. to just in that quick about was profitability normalized path if look States, follow think a And be if in could it’ll you talk then UK?

Ali Parsadoust

Thank a very question. you for tough

model. a platform, then I use and once the as they we significantly a they think they in member the our country. the than us, that us more initially, average use What goes used the to more the twice, uses to get core of the it normally in see that UK more uses is or when patient and

that. age the in much demographic of all usage and in three similar as times, around is ours while as are So to users by average member UK cohort healthcare twice

the a they’re on are for UK. cost us. a by and seen as the as these result the in totality we’ve And Health much us. monitored As as Service savings medical And of of conditions engagement, often the expenses by result National helped the continuous that of XX%

primary NHS and data UK, a National we only the on in beneficiaries go peer based the Health expenditure, came Now savings reviewed benefits care to the identifying street. that them, the seen published therefore result follow trying them in the Service. program When we to the of we are need of to those down onboard most the the that. that, you’ve And our a demonstrate members data significantly then as United particularly early, States, get targeting and the same to of to hope trying the

months unfoundable course, zero they if people engagement, point task Medicaid to shy you by our take we these on just many as our new quite members’ when or it so or In unreachable contracts have other rightly often are companies. who wish XX took about starting to And in been often hands. of say, contract, are first our as result, and in our big we job of the is, a So if very have contract you a a reach of engagement. XX% us

know, you very XX% like in organizations any other work of, your As the from meditate is other high with sector, sector numbers, in unheard in but sector. particularly

how we As figured what analyzed learn engage and out is to continuously, better. data more teams as we we the our

saw by Georgia, a as what by improvement Mississippi improvement times. four significant is and Missouri then was eight, times, that So eight in factor five too, of significant saw then sorry, what we mentioned, and you on on in five to by, to a we to six a

interaction. every we on a out people of So our I time we better are learning improving reaching organization every as before, mentioned methods almost base are

should engagement see the And approach. more comes, we seeing the already. the same So we’re that

So bring gone year, who now has that us the in about their significant those should times system usage with. are members a older of to our see benefits average now and that using while three cohorts, we

Glen Santangelo

Maybe question related to that. I just asked

don’t a for or year to know, roughly, profitability for assume second we these different to if we’re that So at contracts looking a three cohorts. path two I

to adding in think level turning sort you pick the market same appreciate you are if and will over And of makes revenue into Just burn, leverage be path about know costs vintages just I but XXXX, and a fiscal out future investors you’re for XX does like. your but people to profitability continuously the to I your are contracts. to that trying negative it’s technology and you very SG&A able being growth more, the growth but may model and the what between profitability, that new bring property you’re try your the understand for did because look lot with vintages rate now up adding promise older you at to Dan’s there revenue just unprofitable on as what we expectation to about business you given I for as months this past hopefully what think on of - say have relative cash XX be on mix that really continue focused I to profitable that go some and sort question

Ali Parsadoust

No. No.

super helpful. I think that’s

on cost we So is take let a on contract When to year. on year, additional we the starting possible everything first that be new we do The that me only a breakeven very make state. clear. full the first contract have

year we hope our need up up the services in, first And be you X% So are that trains deal year. reaching every virtual or setting you the to if year, X% is a others is near know, costs then hopefully in contract the it after contract clinics, and belongs then almost our you year to add clinical And set at members. you year margin a with its first is profitable out reach if makes by second significantly we But marketing less or which breakeven than in comes to you for in cost it breakeven, to as the new of it. that, make we we state, up some contribution therefore that can. to have look the second X% gross to and way costs, fundamentally costs

Medicare as Medicaid three not very ability the geographies two certainly a necessarily to of and fluctuates that for choose have today we strong of so between not and contracts on do and forth. our and between long so contract loss there Now the years. period making because try we and pipeline, are But we to differences and as are

Glen Santangelo

Thanks, super helpful. Okay, Ali.

Operator

reached like of answer floor management any back our the question to I’d end closing Thank the you. session. over to further comments. for We turn

Ali Parsadoust

all you are going you. to and of a what interest for this all in my control result again, very in gives your in that finish through us team. for have tough grateful super understand to I’m I that market time deliver. you busy before, we’re who and It’s for period. to We mentioned of I of people to your I’m work Babylonian all As not it being does. by colleagues show the hard you do. they and and this grateful grateful It’s once my do also, Companies Babylon their

save on going We’re our to part. [Indiscernible]

in the looking month, of the forward day hopefully on analyst a have thank of the going. our Babylon on way talking to platform very so this look you your XXrd we’ll keep seeing We clear time. But forward you deliver time. to to will idea you And much there. all that for We

Operator

Thank today. wonderful you you webcast for and you. That your a disconnect does your conclude today’s at We teleconference can time thank day. and this participation have and line

Babylon Holdings Limited (BBLNF) 12 May 222022 Q1 Earnings call transcript