BBLN - Earnings call transcript Q2 2022 | Babylon Holdings Limited

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Ali Parsa

I would like to welcome everyone and thank you for your time and interest in Babylon. I’m joined today by Charlie Steel, our Chief Financial Officer, and Darshak Sanghavi, our Chief Medical Officer. Today, I will share an update on our performance in the second quarter of 2022, including our financial and operational results. I will then pass the call to Darshak to provide more color around our clinical initiatives. Charlie will then provide more details on our financial results before we open the call for questions. center today to themes. three like would my around comments key I

our growth of track delivering Firstly, record results. and continued strong financial

performance our the disciplined future. in seeing to cost strong key we outlook care approach performance the for our operational finally, including and margin our And indicators. and contracts, improvements Secondly, value-based are

members taken XXX,XXX through In Our in few the in came standard. times exceptional contracts value-based quarter revenue was today period, the new X.X were same where additional from we know is at growth increase five any a I six as U.S. is on we months merely important care this have by states. ago, but for U.S. not as last $XXX year. growth an it million, a

on occasions, an therefore an exceptional growth mentioned of market company’s I a of believe previous performance. leadership is future we important and indicator early As indicator

we announced greater, guidance rest revenue are Looking the of more is XXXX. which $X to of growth than threefold XXXX, the from reiterating revenue previously billion have we or

we with While relationships growth maintaining quarter, simultaneously focus year in and existing to and to margin our of in each new as neutrality profitability players discussed both pipeline improvements on year build examining we’re only new from committed can margin United opportunities, through When deals. potential last a a continue I the profitability its every to path we evaluate States, and consider top proposal we to reach on see those where thereafter. one significant

significantly revenue to Commercial diversified footprint with members. in the VBC balance As Medicare States, mix exposure United have our we also and we grow our Medicaid our

which the of members care Commercial XX,XXX revenue approximately launch new Advantage from of of quarter in contract overall Medicare membership the Mexico, provide new announce also further start Medicare to QX and revenue. diversify revenue value-based a will our our this at services happy up populations New to mix. to approximately am result, a As and made I XX%

from Medicare fact, our up In overall than more as XX% revenue. of make to alone we population revenue expect of July, VBC

value-based beyond. expect of rise and We proportion revenue XXXX as and to to look we care to Medicare continue the Commercial

our in we to continued improving contracts. trends to first cohorts of I’m beyond share Turning profitability our as their performance existing to few our margin glad VBC our VBC have in examine across age all contracts that months. populations see

engagement make rates times take Mississippi, once rise again we we Missouri of Clinical cohorts a the just Over newer continue this X In should have months our on more indicate revenue, of rise Mississippi precisely our are and are we made the Care and all contracts margins. of we and mature us seeing with already weekly, proactively results commercial quarters, and the margins manage claims of in in demonstrating before, our as to that of identifying up as as grow. a impact expenses very XX%. further their which total Medicare our rates, them engagement QX we a define In X us still risk our our percentage and Furthermore, penetration alone, we continuing and negative time each on Across as should learn these which allocated the expensive X% our and XXXX rates of Georgia New minus days each of a zero sign the our percentage is due needs faster Medical they over Expenses. members have cohort XX% last reduction and Georgia two this be Expenses great before above of improved revenue to quickly launched more increasing. have giving to both across remembered only older Margins we the improvement more operations, to to Medicare Claims penetration Missouri, X% one Margins, below X.X% three contracts while our we and household saw difficulty and cohort. allowing are to and contracts, business markets. our at us members quarter York margin medical In helping the better from Medical six Delivery member as members, times in marked of the Indeed, we reported most the were high avoid need quarter, VBC VBC improvements. our It to the saw each to onboard our given crises, provide contract, to of and since first now faster show already members risk most their performance members, expenses most to and who engagement, more signed in more high-risk to sustained quarters. X up this to to we members often health more This improvement in respectively medical mature Babylon. to expect we were in where are than who QX quarter, services span can from the in just for we biggest a early our

services as Our percentage quarter. last continued this to Clinical our X% quarter reduction to of to U.S. digital revenue first revenue and the is total expenses costs QX a have in of percentage of Expenses a XXXX of the fall with come globe and This represents our across totality Care operations also X.X% from our our scaling as in This due efficiencies, and clinical Delivery for revenue which of should to XX.X% operational with cost significant not be just members. model. VBC clinical mistaken the our

settle In we make new more in our we to cross-pollinate continuously ever our addition, market, learnings as each operations efficient.

needed it our in clinician away States model is employ clinicians employing in to to able to appointments to For as initiatives licensed across customary take countries. learned States, as to licensed clinicians match the move United as example, have in have single demand we benefiting begun from across many other States, do State, this we from quarter multiple a

result, Unlike risen to to QX mission. a economy gig we who XX% are systems on our As other and this who continues our year QX skilled, committed focus trained some highly rise. clinician to from employed year on last and XX% fully fully over in on a digital our utilization has clinicians in clinicians health employ providers model, recruiting

have states to lessons shift UK more meeting pandemic, further, operating the system. the our in learned While we many been to United on in when years early ever efficient telehealth the as subsequently demand from able we move implement towards enormous an during will initially explain we focused entered were and XXXX, of Darshak

expect As first from across more cohorts we we few and quarters, to profitability. their care our all see deals deliver as cover further to scale mature members more progress early efficiently, our continue of our each to and towards

Moving I’m results, that delivered -$XX.X to we result consider to quarter EBITDA an expectations than of EBITDA happy our Adjusted $XX million, Adjusted this by consensus million. announce more beating

approach digital quarter, scale I allows efficiently. very As to last us first our mentioned

remain costs our and made and revenue, relatively Application take QX quarter, our lives XX%. and which overheads. In technology and expenses expenses, XXX% Research operational our Platform Development on whereas to were and and without Our last us scale, year, SG&A comprise up substantially increase more technology allowing revenue flat just of of as this we increasing costs, they

is do we efficient witnessed technology to priorities the a Furthermore, of of to remainder targets onwards, of a this time, to in quarter longer lower to of but of clear million low to to species survive, new in the By no increased change." fuel return the path dollar it from savings to efficacy capital We we reviewing members and we "It of scale responsive nor of expect of we from contract this the needed EBITDA costs, infrastructure scale, Adjusted one for EBITDA our wrote, the intelligent, new was when At at accelerate face decisive measures was in benefits recently path that accelerate capital markedly, regard most run providing profitability. this the ways. a $XXX see every the that and half case. up so series do Growing important cost. cost we every Darwin XXXX. We losses have services aims as the spent to investors reduction more implemented ever cost Today and the shift actions to continue the announced of leveraging therefore profitability. the the once further and thing available first most the is right at that however, it is strongest we record growth the improvement Adjusted our XXXX the XXXX, as of in decisively. Charles expect realities have on the operating to In profitability not rate program to to taken to as existing profitability. our our this

exceed above, our licensing financial of direct Going will value forward, flow improvement I of projections. new growth for that and operational software described meet be to or spite output been or their and In be on stock not value all deals will this margins, measured technology our positive the our our are strong based or cash contract services concentrated performance performing. care has

on of are, focused the We course, concerned issue. and

been Ironically, in have to XXXX sometimes to hurt market we through hockey shown markets public show out particularly $XXX SPAC the which projections. $XXX somewhat SPAC place chose reasons stick that we The process. go in Babylon hockey stick so fact has since companies SPAC the the that were a projected all to our XXXX a turned we million market by the was believe punished increasing could in as the chose first XXXX. collectively we and and we the of bring indiscriminately not one revenue showing overreact, have While projections revenues almost $XX many At in history million to million into that time public from markets can through. we has via to come

on but met few exceed stock We still we these as of suffered decline large have one track projections been the others. the and that to margin, companies a same by have remain

public are to one and during base and common SPAC taking We capital shareholder the some outcome improve of QX. private active exchanged negative warrants we equity remedy This of our to both for reasons this consequences the of the structure. steps was

its We do that these happen incrementally see to will of will steps, to the our Babylon stage while the market of development. company value stock important underlying the on true and start the changes while fast the is cannot response the the scrutinizes every internal at our company overnight, unfortunately continue take that matter, well were further performing think we year not Jeff business. plunge in plunging, When asked about and XXXX, $X constantly, metrics share business his the that they Bezos, it Amazon, described was per in in "The is could was $XXX was, He the one to not about operational improving. improving of be internal stock stock as are and almost a this recent interview period metrics founder of and as from expected of stock."

those above, We year we U.S. over serving percent year three XX% As care efforts quarters, will reduce to We few and well. a our market up margins time. been the new key our VBC on price approach the to I next almost we value that growing of disciplined and improvement not ER all quality we based XXX% due for us on half in times longest outlined last a and have are if our supply members corresponding progress the delivering closer stock shown look our maintaining serving the of from have continue sign times increase innovative Demand focus needs contract, who believe in the to solutions believe a over high our X.X to moving gone costs, to risk reflect as we metrics years. away. seven healthcare will while revenue to quarter, speed our conditions. will well including new to of in profitability, member seven up have QX performing continue promise, in positions and medical growing to The that to by avoidance that improvement our this the increasingly the

emerge of us to will conditions stronger. in remains and to are the most, stay who current well-placed service those task we need from the Our

for I for continued team commitment The handing have members know I resilience, and Babylonians. invested to us, thank to Before minded such promise day I’d our have they efficient are us. truly have their to thankful to care focus you our who but kind pass provide an shown way. clinical Babylon to conditions to able Babylon Darshak, to to have over I and every ever to mission, are more passion in entire like investors. the to and have who they brilliant call Darshak, single all stronger more relentless we been quality commitment returns work, company’s detail to do operations. Darshak? for and to quarter. that, we deliver determination provide hard I’ll exemplifies the that about assure to They With the this in those am high can the we fortunate have exhibit the we will not deserved the and our provide emerge market our ambition, over

Darshak Sanghavi

our I’m operations today. working to and why We Thank give excited for via secret. clinical love our and care. our and we’re cohorts. more thank people on the explain improve across more to it’s our call everyone, detail What’s secret? about our better accessible not Well, you, make members service a and margins such more how Ali, you joining healthier

into operations, Sanghavi, Darshak is I I’m Medical dive introduction. My and discussing name Chief our a Officer. Before quick Babylon’s clinical

held Medicaid Officer joining Obama Medicare Medicare at Innovation. the programs at roles, and was and Retirement for these and & UnitedHealthcare Center impacting oversaw during the In at for Chief Babylon, of senior Before to the I globally. Medical Administration and position tens I’m Babylon associate created OptumLabs, the cardiologist come I care School. pediatric access millions to change improve Medical of truly came incremental of and cannot the of rank also I’ve at I quality Americans. Massachusetts that practicing because and of hold professor believe University a a

what healthcare. doing We at have are to of That’s delivery Babylon. fundamentally rethink our model and we

focus we to high and costs. improving technology informed a innovative execute well investing are in broader technology addressing processes be However, value by poor healthcare. strategy care care cannot this of health alone a At on talent, heavily the they deep experience that Babylon, products and on drivers on must ingredients the solve rubric. by Rather, in and outcomes and focus

that driving what increasing our To care delivery for continuously look first begin, the excellence, operational focuses does clinical down our So efficiency on like? expense team and virtual model.

us the time their we’ve Simply right quarter they patients care for match to in moved model, get with multi-state doctors need a and our it we primary clinicians of For licensing example, patients this to XX/X our when utilization level and clinicians across model increased our put, nation national busyness. need. keep care in care our allowing the of at

a but in as Store. unlocking this this lower improvements We value, and them, and Apple in starts by patients will rating we further the in see healthier just to contracts have by delivered our percentage our not implemented initiatives App delighting revenue lies care The making in expense as efficient, X.X patients and once making star engaging more clinical based being happier. care evidenced our year. on care This value of key believe a through QX QX and again however, delivery quarter

accelerated and in programs. we’ve AI out our on patients also are high Over members models. patients at using We targeting demonstrated digital them cycle of risk onboarding our the by risk who onboarding shortened based time, our of to speed for increasingly cost high We’ve onto reaching platform. digital engaging times have most focused and learning

that improving have sure we health we make service can We to greatest costs. are impact the on able where reducing patients and

and app. first years, already rates workers well under households our market, we assigned active local as now risk signed in XX% X times Missouri. we most of based ones. we Mississippi enter. replicating region Over by at in XX% faster reached onboarded Babylon of them up up ones We onto year, four households example, risk each our a respectively utilizing high and signing to do value But each from health and strategies, as over more than learning outreach contracts Georgia and contract the this are For community we’ve in patient by initial two recent effective in in the attributed with newer care high and our X times patients patients,

We initial also to offer outreach our meet make which immediate they sure and particularly where calls. is are, engage at Medicaid members patients we important value

team the patient appointment, needed. lacked A primary them studies disclosed housing. seamlessly to comprehensive By they show, allowing our medical a social intake to contacted lowers into using further a to patient in the services as example, peer recently our For who care able with patient our their engage platform us Midwest able assess care reviewed were dramatically in for rural strategy was who them a connect provide worker costs. refer day and onboard needs housing, the them we to to that and any next also

example, subspeciality When care, After Through goes for specialty via areas a primary populations. resulted the example, eosinophilic assist in digital care our which of clinician complexity impact digital highest in target contained consultations management on provide to for Sitka peer complex to work of spending high to to point. digital Allowing, to having members key need at a fully and consults with digital consultation, focus chronic digital data have care. personalized complete successfully remain clinical Babylon’s outreaching patient onboards initiatives, our for episode by teams peer focus we our specific model to XX% half ecosystem. care partnership To patients. same esophagitis we take scale, with one who our all health, patients to behavioral clinical XX/X team a all first health access drivers, peer outreached a on model condition services, members care our integrated We Another virtual enabled behavioral appointment. first to them. primary six tech backed peer management, specialty engage day

example. Another

clinical within of over a it needs appointments And of our are XX% for digital we our This patients in near GAD-X DaytoDay ranges anxiety already using journeys discharge, Condition intake for care for their and care depression populations. initial Having delivered that in drivers and and programs we timely transitioning quality, patients. accessible are platform on health to that health the address outcomes we scores experience. in pain. that anxiety hypertension, costs. prevention, mild XX% dramatically of provide mental in menopause, digital to cost our we pre-natal covered reduces this of diabetes, platform, after technology give and care health whenever US, or screen integrated proven in hundreds year, tracked reduces graph model our our we’ve recent our enrolled And seamless, them has health and high back depression. shows health support sexual disorders mental including depression use substance and biggest health and first necessary target Our hospital for recently been mental repeatedly normal into post-natal program know to Management two care low cancer mental care, have Chronic from PHQ-X anxiety behavioral individuals release journeys X,XXX month the And on Therefore, to most deployed year. diagnosis health our

Our supported visit from end their mills. far typical in to our the contractors. as doctors embedded digital-first care, of stack, and service a patient-first transactional off model. desk by The fee work approach a technology clinician for provide complex end an now full extraordinary fully doctors virtual and for side time employed Babylon product Enabled and Babylon’s cry culture by not

in model, and providing training address Grand we national to including regular the Most for drug and more through Paxlovid for maintain the managing via clinicians, have done, our full in many digital illness develop that mental have time worth Since high invested and in can emphasizing pregnancy, together that simply to FaceTime. when a painstaking XXXX, and remotely. comprehensive been a over why situations. to instant It’s virtual performance. available we training care. effort and based prescribing. focusing some complexity UK, recently, preventing possible untrue became model. great first digital hand the in and peer this work old first Value actioned where in clinician allowed oral Charlie? meet protocols to in XX% conditions our digital retrofitting care data is we that, has care syphilis point. primary and in acute manner, recruiting By expertise time our via Charlie costs on clinicians many, COVID first with knowledge more U.S. protocols, doesn’t in reduction example, happen our primary the come effective believe That’s clinicians first standards give amongst suggests model associated reviewed care severe care asthma UK with collaborative develop and It’s work overnight. digital can school care With of work complex a developed to able U.S., share Rounds, from Our in national inception our we’ve messaging, to safe the themselves I’ll enormous achieved be simply financial Instead, doctors to Babylon a goal on care XX% detail the

Charlie Steel

margin, the call the review thank results. to discuss particularly in care contracts update comments the profitability Babylon. you, operating Thank full Darshak. interest our generated, in focusing results. are some everybody like financial we our as and seeing performance on towards key QX business on year I’ll leverage to joining We we expense medical we as the have I’d you XXXX an the providing KPIs Today, well seeing financial guidance appreciate the as overall trends on further our such for time XXXX your as value-based significant and trends our and in today. we’re share financial And

year. for this consensus $XX over As performance expectations Adjusted the We revenue places to revenue million, an of loss our of $XX.X this Ali track which on with we reported delivered achieve performance, financial happy quarter. Alongside EBITDA us guidance million. $XXX our by million, mentioned, we’re beating

million our or for we on track to margin -XX.X%, updated and QX was meet guidance year for EBITDA less. of Adjusted Our $XXX are the

macroeconomic by the dedicated comment organization. to I’d briefly which with planning the pleased are and entire commitment conditions. also We current the on are results, product like of these

pressures to monitor on inflationary such impact of our as external the factors continue business. We

However, of our we first the previously significantly such announced our reduction to expect the cost based to actions, digital any arrangements. care be nature value our model, due pricing mitigated impacts structure business of and

in Moving results to detail. more discuss our financial

and revenue in quarter at the revenue of generated $XXX XXXX. million XXXX. XXX,XXX related from earlier, increases revenue increased This by increasing second $XXX XXXX. revenue line mentioned to in our a revenue. base, XX% VBC to generated QX value X.X XX,XXX growth U.S. been the our $XXX.X in by quarter QX the quarter the in million is VBC the quarter total was for VBC X million, based again over As of has by of compared members just quarter total over representing of second increase driven quarter for memberships in in the accounted Top to segment, came a and revenue significant care which times VBC the with times driven VBC membership

XX,XXX Medicare X.X quarter. a In of cover Medicare focus our July to Since XX,XXX populations. QX proportion and Commercial approximately Medicare PMPM XXXX. mix additional Medicare Which with proactive of year, contributed a QX Advantage membership XXXX, our approximately member to members to Mexico. members increased new in contract XX,XXX taking New VBC have we our we by to population our over to an also launched continue to members from engage this total increasing this times, XX% VBC revenue in a on diversifying take VBC higher approach and easier We combined

Medicare in than account the revenue total XX% contract, more alone addition July. we for expect of from to this populations VBC With revenue of our

as $X.X largely second this we driven roughly of denominated flat populations was XXXX, percentage million to Commercial sterling, $X.X forwards, currency contracts during we a FX and and expect rise million on and decrease this the constant of from would in quarter This Looking XXXX. QX was licensing from XX% our look to been quarter Licensing to have XXXX revenue a basis. reduction by continue the in headwinds in pounds beyond.

as proportion We margin aim continue revenue a from our licensing no year, later revenue, XX% both XXXX. our and pipeline our fee well second onwards, in the the which to an be in XXXX, for business U.S. quarter UK our in the $XX.X and as was services increased achieving of to from the by which includes expect UK building of engage contributor increase the actively XXXX, key quarter Clinical XXXX U.S. virtual $XX.X of this clinical higher million was consultation we Rwanda second with increase licensing million delivered towards driven during which in of services than to volumes service profitability

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

we margin reduce term rapid members term costs. expensive revenue continued growth downstream impacts costs had associated associated in has which order short to Our the in engage prevent as proactively and upfront, healthcare with comes long crises

incurred by Claims Expense and our QX members’ the $XX.X in $XX broken delivery have differentiate at the Expense we components, on second in Babylon from between our claims quarter, our for in of and Care million Expense last quarter year, increased Clinical delivering discussed cost offering costs out of XXXX, service coming As care up expenses expenses. Delivery two year million into Delivery to Clinical Care XXXX.

across in initiatives as due XXXX, from to implementing million discussed and QX and earlier. efficiency was quarter was year. Ali Darshak Delivery second Clinical with with that quarter network the Care scalable, primarily be across an our total revenue Expense VBC to we’ve seen comes increase $XX of operational progress $XXX to our million, increase dropping and members scale last costs which due XXX,XXX for X% a We new quarter utilizing addition this XX% this quarter from of Claims Expense our highly to the leverage percentage expect of to in as organization clinical the XXXX the in

as percentage QX is quarter due XXXX, million five -X.X% Care quarter as over seen revenue year improving quarter, expense for move by However, a membership. QX, Delivery revenue $XX.X Delivery and operational to in in Medical percentage improvements to improving with Margin, an quarter from total from total expense on expense percentage over from as which X.X% of QX, four points million increase by well which million reduced over our both, on of revenue three Cost we’ve minus points Care Cost Cost XXX% quarter. increases in QX like quarter, our the XXXX. of costs. now our by to in basis, XXXX XXXX of as over Delivery Ali $XXX.X points, mentioned Combining percentage $XXX.X to decreasing of as to revenue, discuss year to percentage by total expense our Care $XX.X define in one claims of we of improved in million, from I’d Quarter XX% the came a

earlier, mentioned As quarter. pillar is both to revenue this percentage scalability we’re expenses of falling and operational a path and a profitability, technology SG&A see leverage key our and to pleased on as digital

technology of which expenses, $XX expenses and comprised of Research Development are QX XXXX. Application Platform and in $XX.X million expenses, increase second from were XXXX, was the quarter million Our and which an

of the XX.X% the a which this versus scalability reduced Research increased around this further XXXX as quarter. actually While to expenses, revenue XX.X% the our $XX.X compared versus quarter demonstrating by revenue. our costs to leverage in XXXX our Technology XXXX have of greater to also XX.X% this the of more quarter and million a revenue decreased operational Similarly, decreased total half, quarter of of to the our Development of in second increased due second quarter, quarter as expenses than technology, in result to a Technology million of of in percentage expenses just were SG&A XX.X% as operations. expenses second XXXX, QX $XX from of percentage SG&A

Adjusted Moving on to EBITDA. discuss

in $XX.X an EBITDA Adjusted For loss EBITDA QX increase of loss second million XXXX. XXXX, million, was of from quarter the Adjusted of our million $XX.X $XX.X our

million to savings continued cost in shedding a centralizing QX loss cost ramp activity delivering impact this to from an of our which Examples The our July profitability. the represents this improvement per initiatives These operating base, XX% and EBITDA percentage with In efficiencies have in working non-core Adjusted reduction streamlining compared during XXXX, this following annum of rate to cost being onwards, to efficiencies. new financial announced cost supporting supplier business XX a of trend we reduction we in Babylon rationalizing during and see to the $XXX areas. services of year, path run and headcount our point optimization XX% the and and year. margin also quarter margin include expect on majority XXXX. predominantly from office up QX actions come in XXXX are as implemented operations accelerate global QX US, Asia professional expected We pandemic, East to over of with our QX South embrace XXXX costs UK year practices to footprint our a improvement physical non-core basis XXXX,

XXXX, to implementation a to July in monthly of of relating employee loss result communication primarily the Due we restructuring benefits. to plans XXXX, the EBITDA run design, in million adjusted these our initiatives, XXXX. of December $XX expect the As less recognize a provision to Babylon by rate expects third of to or severance decrease and quarter a and

from impairment reconciliation XXXX We’ve quarter development the back assets. and add an share result restructuring price EBITDA. We our be this QX charge features discontinuation to our in of expect a to within considered decline as certain to of our net intangible a adjusted loss review performed costs also this an

As amount a net to the carrying been their Company loss assets by the from QX analysis, that impairment EBITDA. the charge back adjusted our of to values $XX.X exceeded of use identified XXXX reconciliation million. in This result has these added

XX, Moving dilutive to Babylon’s impact was and in July, potential of June May with of the June and the our as million, cash simplifying launched to transaction of we Exchange warrants. intention equivalents the XXXX. and XXXX reducing $XX Warrant the structure completed million sheet. XXXX also of balance capital June compared Cash $XXX In XX, as

Babylon our Last Acquisition greater, XXXX are be Corp. the billion that of in of the to by with our XXXX transactions, million result for X.X updated these over of for assumed and performance. as issued just all quarter, we on business were or combination guidance shares $X XX.X comprising over warrants year for giving guidance Class public year. in ordinary A our exchange that full and to Global an last a outstanding October private reiterating placement warrants, we As I’d end guidance just Alkuri today. million revenue part our like update

or XXXX as adjusted improved monthly earlier. less, per I early December actions EBITDA our less improvement a adjusted less of our due to or announced forecasted This million July, As loss year of we from $XXX a adjusted in guidance loss EBITDA million $XX we’ve in with $XXX or loss is be million guidance of cost mentioned. EBITDA reduction mentioned the

our whole again proud our continued EBITDA breakeven cash I’m on And we to now quality continue I’d and of best To expectations their work mission open hard operator, and possible work for this and them incredibly like to our for call commitment financial once for being deliver I’m confident in to quarter. to conclude, their alongside proud quarter reiterate the the to healthcare thank drive to Babylonians adjusted our forwards this delivered that positive that high will to are with flow we day make of strong and on by We every results are continue ready profitability questions. members. see our everybody we to XXXX. team of affordable Earth. accessible care the trends

Operator

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

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

from that In of slides and calculation take financial our for measures measures financial end believe financial measures on our IFRS be now like today’s in non-IFRS addition, discussing to these comparable the the reconciliation BTIG. call, most the Larsen presentation performance. important certain evaluating that the of which can release assemble moment be the to company we while non-IFRS explanation note [Operator measures certain a we non available found of they measures, IFRS please non-IFRS An are at of the first financial financial will historic company’s for Please floor question questions. and queue. website. press with Instructions] hold in We’ll both the of At time, David today would open this are

David Larsen

bit talk a your XX% care is? a lives. can what correctly? profile. for of that and that margin the that EBITDA driving margin say that maybe Medicare momentum beat heading be sense a half is overall Xst, give margin you assume you good the the your that? between into based heard on of and is little I hear about And would mix? I in year. Medicare increase the value you Did would expected the the I to And, second And very Congratulations Thanks. going lift have Medicaid what a is Hi. effective Can I that you Medicare July more think that difference

Charlie Steel

the you very much for Thank David. Hi, question.

So, yes, It’s here. exactly correct. Charlie

do contracts, mix will is The that Medicare to members revenues that also note new that will that blended provider a contract. be continue to the It’s you see Babylon, Medicare point with from Advantage contract overall in July. a Medicare which time. Xst new and is we of say, combined a the with thing of the with started margins It’s a have not margin after of is improve. commercial that that but as for and better system. exactly also We Commercial on client And XX%

David Larsen

to that with can led a And you existing client they talk an Was health plan win? of in about lives Or because the where other MA sort you performance that that areas? the client win? Okay. what brand awarded is new

Ali Parsa

This is health deals system interestingly, is Ali. an but And which it’s with doing client. new more a brand is answer existing into this payer, win. significant marks David, the it latter. from systems. The expansion our a It’s not not is from health from a

David Larsen

MA helpful. And then Medicare Okay, would Is margin and sense that’s Medicaid very XX% helpful. any for the very a margin? know, Just more profitable? between just be I color any don’t a there difference maybe, Medicare

Charlie Steel

Yes.

and a lower little then we’ve earlier the Medicare As this albeit on you’ve I year, had that think, showing XX% the on XX% the side bit the earliest cohorts we’ve on around within side. seen shown, on Medicaid on already David, Babylon the side, existing commercial

we a to see lower. As margin continue take become as and revenue we I over improving mentioned to percentage Medicare as time as starts of expect and blend earlier, more to contracts on Medicaid the commercial

David Larsen

long actually into my that expectations? And that Okay, pushed great. your that And timing positive it’s why? impact implement Medicaid period Is then, to the actually to business states of been What or relative on prior understanding time back have redetermination not? has a will process. that fairly have And XXXX. a redetermination

Charlie Steel

the sense that a think I continue we as is expected through. coming in that positive Yes, the we to get revenue

and now more we pushed For you out, that we as guidance is got around because the has we’ve reiterate why XXXX, that certainty know of reason the part can that say. been

the to during we we very of make And that get start out contracts. for working XXXX for of margin we’re various expect sure as continue to a hard those some reasons, of Medicaid So this well. to lot

David Larsen

Okay. then just one me. And last from one

a to a is sort you as you’re into little think I $XX in which that per about million million would through XXXX, we shouldn’t negative quarter assume bit heard XXXX, less improve basis, progress than imply, December an margins I that you head of on right? expecting XXXX. you quarter would I EBITDA say $XX quarter EBITDA know, that month of as and should -- loss a

Charlie Steel

Absolutely.

much downwards snapshot will XXXX expectations as our So million time. the very $XX through well. trajectory continue as just in That is And that’s well. one

you’ll for the So call know, $XXX it XXXX. better be, we’ll you million certainly year and for $XXX than

David Larsen

certainly for are and a better for $XXX for $XX be year should you XXXX. the better you year call $XXX So $XXX it than for that we XXXX. month be and would imply than

on hop I’ll much. queue. you. very Thank Thanks Okay. the back

Charlie Steel

that’s Yes, to assumption the David. make. And Thanks. Great.

Operator

Lutz Allen from ahead. Please with of next America. our question to move go Bank We’ll

Allen Lutz

of and questions. you about I XXXX into guess, the I know contracts should strategy thanks a how on focus pivot higher growth how of taking think Medicare think in should revenue that scene like just conceptually? or Advantage. get the cuts growth just the into that more to XXXX, about Good for XXXX? But cost we breakeven want afternoon here, path to and margin we with from to revenue our kind here, Thanks.

Charlie Steel

Thanks, sure. Yeah, Allen.

think cutting two rationalization sort I come into of measures cost buckets. So the and

think we that the is of how is one -- And look, strategy Asia. physical about Southeast company’s our in we how office first the think example I moving forward. one

sign we us. of about up as standpoint. people a though, finding now contracts more can is business on We VBC really -- be with that’s focusing of a And think we’re a on lot discerning that that to our are we all that. going is take I our What result wanting of the what from is commercial we contracts have pipeline massive effort where massive, sort I US and really would say, a

the and growing fastest that the being But around should to some keep -- care is put in sure industry we it of in the listing past. when be a make care We’ve back temper those. in of based course, that $X.X very growth in number for but And our will business committed value XXXX. will in the align top industry. over how the degree We’ve that view. the commitments made already our to growth did out exceeded have commitments, with Of some much just we ways we will businesses massively one about also the to past numbers revenue to those billion an to think continue and extent, last growth, actually. in that’s we them to we We line or based a will in value continue still growing year October will commit the fastest we

Allen Lutz

in quarters? Are any helpful. That’s made anything you patients able costs X.X% where couple more to and you’re needs that found to you Thanks. Can cut health you I then, the that over helping comment you members? the when margin proactively. onboarding stand improvement And more onboarding numbers of things manage to on you’re there specific Ali, think learnings quickly out one quickly past through any more talk of or contracts a

Ali Parsa

X.X% all Allen. and was not margins Thanks, just our across of in improvement over of contracts medical span three related quarters one. That the

So this that quarter, can you average. have so we Darshak, was the provide pass more But it on information. I, with because in Darshak he as to

Darshak Sanghavi

Medicaid, thanks compatible is our medical question. every business, we analyze really for the and data So almost line most by where What to have of we and found the we’ve that used conditions across really a of mean care. that Medicare in improvement critical at that digitally, we’re deploying are of and in services, and mental I finding driver skilled commercial, particularly engagement health which cost total were

disadvantaged cost care particular any first hours coupled total typically our I want care. digital focused of within of been so, to we we addition in health deeply through model care we And quite principally And provided. individuals we care the services. those been key, as I needing visit words, And improved. to, have and model, models alluded which think of mental again, found remote have volumes the engaged our is with others, actually with addressing to by being almost by care we half the that fact in our being model, on services, mental primary one a the strategies believe, or members care that historically In care particularly access also emphasize mental other or been in available can care populations rural get coupled of areas really virtual needs. of first health in that health has, not a collaborative That,

Just consider looks like. what that

COVID. about concerned You’re

You’re skin infection. concerned about a

type concerned between of That, we of the loop being driving part to it across exacerbation. is able asthma we Thanks. believe closing we’re having address value mix have. how that concern another payer You’re independent about significant and of the core and actual commercial

Allen Lutz

That’s great. Thank you.

Operator

from question next We’ll Citi. Grosslight with our take Daniel

Daniel Grosslight

Thanks guys. for my taking Hi, question.

this made quarter, yet pretty your relatively is least proportion clear you becoming the PMPM business, are Medicare of a at flat. call, greater sequentially, throughout As

And of X how for about you’re higher remainder know, are think should don’t quarter? more you the has times this that You the uplifts the to that typically think X PMPM Medicare Why PMPM cadence seeing we PMPM given year? than of Medicaid.

Charlie Steel

that. for you Thank

quarter, think July I note Xst. the the starts additional Medicaid, that quarter massive seen change but main Medicare to haven’t that, on in we is XX,XXX So thing in members a

that take well. PMPM. coming of an PMPM So these in through as you’ll forward in to see see QX And the more as on should going you expect we impact again, contracts, uptick

embedded note actually that’s script, the have think important alluded is inflation to to we that protection I this and other our also I within in earlier is my contracts. thing

on expect than as should basis the MLR because in see are uptick contracts based. well, rather to based So you some absolute that our PMPM dollar

Daniel Grosslight

yet how earnings the, to this all quarter, And, and managed uplift quarter is much you provider due normalizes? that as this non-COVID lower should you know, How has going if And normalize. you much, reports of to think clear do to utilization utilization about the forward of how care utilization, it’s non-COVID utilization? pretty MLR MLRs than listen normal think we

Charlie Steel

Yeah.

have rates we are, All rest lead rates model and untangle And a we impact COVID I’m time. untangle of able of time. like care we engagement So just and levels during just lack broadly in know the And greater impact if actually our high pandemic. this level of that model moving that health during fully even is opportunity the what can asking, seen and do the broader we’ve point the become utilization to from still And care an this the utilization? up forward? that not I the effects at to of gives utilization approach be overall their hospitalization the just industry, at you’re we difficult understanding predict question say our that at, care quite to the to how the of our sort how this Babylon is, think the that is think, to those of it’s I’ll on to

approach have model, have of onboard in So significant first organizations as we normalizes care introduced digital of they’ll care, our been have other reservoir believe when that a do as where that hope higher reengage they now value. going don’t in they it this individuals we in that where we digital And that that’s first is a the digital and to take. sort manner model, they to a have first we’re

Operator

question comes Dev with from next Berenberg. Weerasuriya Our

Dev Weerasuriya

models just a quarter to here. were Hey, was on economically are model. on compare Thank the for and the care that differences an Obviously, question. touch margin pricing to taking of that provide the you. about we a base you that beneficial business of leverage you difference in kind here I kind I good the these the kind in nice evening. I think OpEx leverage the of kind standpoint, Thank could think trust NHS noted can and US there’s think the US with And from and discontinued And want of relationships my but models, some puts takes how unviable. how that differs? more it UK profile? to

Ali Parsa

significant do the say is careful that we with our a are see distraction question. on cutting, exercise, therefore primary When cost our not path those rather I’ll to of we the announced one in our also to costs did refer three as Ali. they of This NHS of profit terminated is a contracts, significant for that margin. a will take we this or will those and contribution things the that be higher profitability, more two more small us, contracts our much revenue. of And contracts on could a to the contracts we capital that we that our all will small one our And where of spending focused contracts. care us, had And And significant those single not you marginal as we money. and on our to contracts, a result, where we not them of we contribution saw are contracts every are we be see on category Those contracts. terminate. profitability

you at we will profitability. And that on forward, we that going contracts try speed of is see our to more to. what contracts us them our get line require the do in avoid goal not will accelerating that focus think, are with our I

Dev Weerasuriya

margin, how that you the helpful. follow up I any from to on kind of of gross that would through to any again, sight question about to quarters mix? -- end, could How we over volume uplift Medicare. the just trying there That’s Just can next color you. think cadence Okay. procedure, this? there seasonality line from Great. gross to of margin helpful. is regards with on much cadence couple think think the kind of want the But in Thank And normalization -- year is on just of and expecting be of --

Charlie Steel

Yes.

a are couple of this. So there on things I think

I -- through last is example, expenses, as, the all, our that think seeing inpatient core such is first been And focus downwards we’re hospitalizations margin the indicators, of get therefore, we visits, few the on through claims come the when over And to expect for the medical leading months. claims. few we quite data potentially revenue. have what as the that a VBC trending of

than We’re indeed And first trending time year. quarter last were were in than as we significantly this well. the better better we actually

any trend the no that in think is going change is there that So to reason to way. to adverse

Dev Weerasuriya

you. Thank right. All

Operator

next Jefferies. [Operator Instructions] ahead. from question Glen go with take Please We’ll our Santangelo

Glen Santangelo

couple Thanks evening. the question. I for of taking good had questions. just a and Thanks Hi. financial

think get that bit run fiscal that’s EBITDA. fourth I the million about the press your coming we’re that talk want run in these $XXX you million December. you’d from? the in should to how Because rate? about color prepared then expenses and cost rate how around expected million I XXXX. start sort in up you earlier, Charlie, to where And show First, $XXX give at million release, $XX in think loss expected to to for of important in talking pretty EBITDA to a us start and that for that said maybe would remarks can more are $XXX an Could be you quarter. little we savings you obviously And savings about quickly

Charlie Steel

sure. Yeah,

the So the main buckets. into about two think splits way million we $XXX

is The first affect. people one

that why third second actually a result through is take reason that. fourth a From to during side quick people affect -- the sadly, quarter need The had you that people one and third can have one as we non-people business come pretty very things, of of charging the off pull the charge some we we affect. lever see quarter. that, actually, And is and depart

So the through quarter. you’ll in net coming actually benefit see fourth

itself said, as done basically to have weeks that, say actions process those as so been couple of off, process, UK is now, still of that has today. all I to a the Just which consultation finish the of done with exception

The which that. of second side part things is Amazon Services Web of is it the stack affect non-people involve of optimizing example one things, like our

a that Things that doing can the question be that. quickly. our bit in run portfolio rate December earlier, time time. in take I because of the Some the done mentioned little $XX for around, at is million snapshot But property with quite in lead as particular of that longer of point example, a

of continue We those expect things take of not December. effect measures the see XXXX, continue the to effect during by to all to because expecting trajectory downwards end the as some we’re take of reduction cost

Glen Santangelo

put if mean, a, we on monthly mean, a low you I to Charlie, in rate EBITDA loss Well, now, right? we’re kind where the math sort some just, $XXs run right. I basis. that, All of look are behind of on

is, savings. it’s cost a but $XX of know, the in So, million reflective you nice meaningfully way improvement, not it’s in any $XXX

Charlie Steel

because and that’s those cost in through XXXX. seeing you’re Yeah, some coming of savings

you of me example that. give let So, another

renegotiating of for insurance, at a the lot various example, we’re For reasons. like our moment

premium month comes upfront. already perspective Some that that’s month accrue that an that’s that paid way works the for materially, of the we down been from, accounting that that but that by is

cost. between and that of burn a cash So in timing there’s also recognition difference

cost albeit during, the taken initiatives already XXXX. start the So recognition XXXX, burn things, people seeing that some effect the also and through cash have these of you’re coming for at of the

Glen Santangelo

I balance calls have started Perfect. you additional that That’s right, that before, a and cash look we’ve on mean, this at half one. started need needs to Maybe of got compare first mean, business. year if uses the you We capital on cash the last one helpful. at I sort to of just the in the And sort for the the questions lot of to talked Ali, for I formulate think like? plan? of the you could mean, have about capital. it that? a ultimately these maybe X/XX, what seems, about And look

Charlie Steel

time, minds, we’ve massive requirements is delivered quarter, and, at our originally as revenue the increase same capital beyond we year. this of increase year of there course, projections Of absolutely but right, amount and this which the forefront time you’ve out revenue though, that put well seen, last is X.Xx for on a year

timing that to want raise what that think same exactly those projections. I then right So show at capital we think could about do time. to is deliver the we the on And

for We of three mind course have exactly have Babylon. how been it to market and of making is the shareholders give about of very that supportive extremely sure do some And we supportive They, around largest we our always shareholders. certainty that. us front

Operator

go take We’ll with our Close Please next question Canaccord ahead. Genuity. from Richard

Richard Close

commercial, was bit also opportunity that there. the and a then, what seeing could from the be commercial as, just into because curious Yes, we would on business, if for little licensing obviously more perspective, a dive And I beneficial. in thanks you’re the pretty revenue questions.

points, of one either So both if dive would be could those or those you great. that into

Charlie Steel

Yes.

So, forward. as see revenue licensing a for us going being look, opportunity we massive

there parts are two this. to I think

product dollar contract. around same do At the issue though, making you containerized each then need a past, our There’s the significant think to that the that. in in I of you other that technology we’ve out use, and this cost with done There’s our as overnight. license element product. know, successfully own the an build that Telus people. can Prudential likes of we first you can with to [indiscernible] something doing for of is all, And of as time, kind not what we multimillion

our in a assumptions is very is have of obvious reasons. ability that again XXXX. time, base form a have on same Telus, contract We into licensing for, But want contracts or which licensing predicated to a don’t the something like for prioritization for during doing the we that, to which case at though, large the deliver we our unless put Prudential

software. we’re going to be in license same want But time, ability optimistic summary, at our don’t coming the very I to the in contract there’s licensing huge we saying short-term. about think our very be that a though, So to

Richard Close

What lives? commercial about

Charlie Steel

moment on is things. commercial the the for we’ve And nascent our A But So we’ve have in on focus come again, this lives we’ve overnight. at of the same got got that at the lot of the get time, Look, business got can’t to that a us. IPA out. to business. lives building through you side though, very results

it’s in our hasn’t that it very long of again, States a We bearing out. is time based It’s, worth just been XX around little months around a the old. business prove think, care that to literally bit value in I United mind time. need for

I that. think that we have done

Just you’re the that level customer the care business that, seeing based US. around in look around our of value at satisfaction

clients I why pipeline seeing to reason and well. continue customer amazing contracts. deliver gives We the And the to more of And we’ve ability levels are in think Medicare quality contracts elsewhere clinical the us as And and that. of a we have new massive our done as satisfaction shift such world. this commercial that’s towards got potential create

Operator

go Please next We’ll with Ward take Pareto from ahead. question Securities. our Stefan

Stefan Ward

again, details on but Thank on questions in you. have pipeline. an answered, of strong the I my the update the revenue And thanks the the would line. for And on, congratulations also, the report. been quarter Most accounting improved like strong,

gross As you number there’s margin guess at basically if has margin I’m VBC expanded perhaps if given of on you if potential that. is just Charlie, maturity. sort the size on guided in, changes I interested business. you for, that could on And also, describe been the of gross the that since last, any it

start you. that. Thank with Just

Charlie Steel

Stefan. thanks, Yeah,

we how time the we the that So frankly did was to the to reason are that could able before listing and growth show across pipeline support we disclosed wanted the pipeline. this industry unparalleled be showing we is Look, we on a revenue the year. last And that. for

quarter it here. is continues that frankly shown can that to the a I hugely. that basis will most by we’ve now which to Our the that quarter numbers think deliver What can We that revenue though, we and, don’t thing the for pipeline up grow. pipeline really way, just belief growth want disclosing crucial revenue say, being exceed is because distraction end we is the actually in by overall be

go on is We us continue pipeline. that to, team helping have to deliver a market that great

seeing new at same that coming through with time. contracts the the You’re

pipeline, mentioned, is very think So healthy. overall, think as I I the I

got We’re quickly. that, that the better order Commercial towards from get-go. in margins out much more and time And sure to at more Medicare the mix can moving looking able to contracts bit to have same to make the great be also we pipeline more on we’ve a selective eke be

mentioned is indicators earlier, that results to the faster engagement in get released evolution of well. are direction, I are the levels how I around as as you’ll what to see was seeing presentation going question margin, the of A, think getting working margins that but the, your medical the terms the our In the other in we’re faster continue through, from, particular also right and attached much that

been what coming for found continue. our great that’s margins leading to So us see And through. we ability we on a indicator that expect those to

Stefan Ward

I in we now XXXX? to how get you until I’m help losses year understanding any break year, but financing? of -- And aggregate how of improve get, if follow [indiscernible] of sure is could sort even you this, EBITDA existing from if -- can figure will is you want mean, need sort will that answer your ballpark the us much the an way it up, just not but there of would, to versus by

Charlie Steel

Sure.

as So in the earlier, mentioned guidance million we loss we’ve December. of out put $XX EBITDA

EBITDA but the guidance adjusted both update continue we’ll that expect quarter actually downward, for to third results also XXXX -- the revenues in and We loss.

Stefan Ward

much. Okay. very Thank you

Operator

questions today’s your This conclude appear at thank We for conference. be time. There no participation. you to further does this

You your great and time have may disconnect this lines at a day.

Babylon Holdings Limited (BBLNF) 13 Aug 222022 Q2 Earnings call transcript