NASDAQ:ASTH Astrana Health Q4 2023 Earnings Report $30.74 +0.14 (+0.46%) Closing price 04:00 PM EasternExtended Trading$30.71 -0.03 (-0.10%) As of 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Astrana Health EPS ResultsActual EPS$0.26Consensus EPS $0.17Beat/MissBeat by +$0.09One Year Ago EPS$0.02Astrana Health Revenue ResultsActual Revenue$353.00 millionExpected Revenue$341.17 millionBeat/MissBeat by +$11.83 millionYoY Revenue Growth+20.00%Astrana Health Announcement DetailsQuarterQ4 2023Date2/27/2024TimeAfter Market ClosesConference Call DateTuesday, February 27, 2024Conference Call Time5:30PM ETUpcoming EarningsAstrana Health's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 5:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Astrana Health Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 27, 2024 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day, everyone, and welcome to today's AstraZeneca Health 4th Quarter and Full Year 2023 Earnings Call. At this time, all participants are on a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. Today's speakers will be Brandon Sim, President and Chief Executive Officer of AstraZeneca Health and Chan Basso, Chief Operating and Financial Officer. The press release announcing AstraZeneca's health results for the full and fourth quarter ended December 31, 2023 is available at the Investors section of the company's website at www.astronahalf.com. Operator00:00:51To provide some additional background on its results, the company has made supplemental deck available on its website. A replay of this broadcast will also be made available at AstraZeneca's Health website after the conclusion of the call. Before we get started, I would like to remind everyone that this conference and any accompanying information discussed herein contains certain forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook and will and include, among other things, statements regarding the company's guidance for the year ending December 31, 2023 continued growth, acquisition strategy, ability to deliver sustainable long term value, ability to respond to the changing environment, operational focus, strategic growth plans and merger integration efforts. Although the company believes that the expectations reflected in these forward looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. Operator00:02:11There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in AstraZeneca's health is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligations to update any forward looking statements as a result of new information, future events and changes in marketing condition or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer to you to Slide 2 of the conference call presentation for further information. With that, I'll turn the call over to Astrana's Health President and Chief Executive Officer, Brandon Sim. Operator00:02:59Please go ahead, Brandon. Speaker 100:03:02Good evening, and thank you all for joining us today. We are proud to announce another year marked by rapid scaling of our unique care model to empower providers and improve healthcare for local communities at AstraZeneca Health. We coupled that with robust financial achievements, ensuring that our growth efforts are sustainable and maintaining a focus on profitability. We continue to execute against our multi dimensional strategic roadmap. 1, focusing on expanding our membership base across existing and new geographies. Speaker 100:03:362, increasing the level of accountability and risk we are responsible for in our value based care contracts 3, empowering our providers to achieve superior patient outcomes and 4, executing strategic acquisitions to further accelerate our growth trajectory for the foreseeable future. We are confident that the infrastructure we have built and the momentum we have in our value based care platform will continue to accelerate the country towards our vision, one in which every American has access to high quality, high value healthcare. I'll begin by highlighting our financial accomplishments for the Q4 of 2023. We recorded total revenue of $353,000,000 an increase of 20% and adjusted EBITDA of $29,000,000 an increase of 22.7% from the Q4 of 2022. For the full year of 2023, Astrana Health achieved total revenues of $1,390,000,000 an increase of 21.2 percent year over year and adjusted EBITDA of $146,600,000 up 4.7% year over year, yielding an adjusted EBITDA margin of 11%, which is within our short term target EBITDA range of 10% to 15%. Speaker 100:04:56This was despite headwinds in terms of Medicaid redetermination, increased utilization and costs due to our investments in growth, infrastructure and new market entry. Turning now to business updates for the year. Since our last earnings call, we have formed a new partnership with Bass Medical Group. A key pillar of Astrana's unique care model is the deep integration between primary care providers and specialist networks. And our long term strategic partnership with BaaS is in our view an expression of this thesis. Speaker 100:05:31This relationship is set to enhance the value based care framework and operational capabilities for Bass Medical Group, which boasts over 400 providers across key Northern California Counties. Our collaborative efforts aim to deliver top tier care through value based models to a diverse patient base across all lines of business throughout Northern California. Operationally, our collaboration with BaaS involves establishing a premier high quality independent provider network or IPA in Northern California, which we expect to fully transition to full risk in 2025 beyond by leveraging our restricted Noxxene license to foster new aligned care models. Our primary care provider networks will have wider access to an aligned high quality specialist network, which will enable care coordination and will help manage cost effectiveness. Asset providers will also be supported by our technology platform as they join AstraZeneca's care enablement platform in 2024. Speaker 100:06:36This will extend our value based care footprint in the Greater San Francisco Bay Area, while enriching our network with more primary care physicians and specialists. Next, I'd like to highlight our ability to replicate success in Southern California and new markets having recently entered several new states. Our approach to market expansion is flexible, rooted in our history of building partnerships with physician practices and adapting to local market dynamics. Whether through partnerships, de novo builds, acquisitions, or technology offerings, our ability to flexibly utilize our care partners, care delivery and care enablement offerings to adapt to the needs of local providers and communities allows us to remain adaptive and nimble as we enter these new markets. In Nevada, the notable presence of both the payer and the health system partner has guided our expansion into Clark County where we have established over a year of operational experience. Speaker 100:07:37In addition to our initial entry via chain of own primary care clinics and our care delivery segment, we have now augmented that footprint by building a care partners network of over 300 high quality, high value primary care providers and specialists. We continue to focus on building density in each new market we enter and we expect our Nevada market to be run rate breakeven by the end of the year. Following our acquisition of Texas Independent Providers, an independent provider association into our Care Partner segment in September of 2023, we have achieved significant advancements within the state of Texas as well. Our efforts have successfully expanded our network of exclusive primary care providers and our membership base. As we strategically continue to add specialty coverage in Harris County, we have made notable strides in securing incremental Medicare Advantage contracts with health plans. Speaker 100:08:36We are committed to further enlarging our clinical footprint within the region and thereby enhancing our delivery of value based care. We continue to view our pipeline of partnerships and expansion opportunities as very robust and we'll provide further updates as they occur. As previously communicated, we plan to enter at least 1 to 2 new markets per year and invest $5,000,000 to $10,000,000 per market to do so. The 2024 guidance that John will discuss later on this call will include the costs of planned new market entry. Next, we have significantly advanced our capability to engage and manage our patients in full risk arrangements. Speaker 100:09:20Since announcing our acquisition of Community Family Care or CFC in November of 2023. We're excited to share that on January 31, 2024, we seamlessly onboarded CFC's IPA as an AstraZeneca care partner, which manages the healthcare of over 200,000 members in the Los Angeles, California area across Medicare, Medicaid and commercial payers. The acquisition of the CFC Health Plan and MSO entities are still on track to close by the end of the Q1 2024. We are also excited to announce our rebranding to AstraZeneca Health, NASDAQ ticker ASTH as of February 26, 2024. This new brand identity reflects our expanding national presence and commitment to delivering quality care nationwide as we support forward thinking providers and care teams in creating a constellation of high quality care. Speaker 100:10:21Additionally, we've made several key leadership changes to continue to support that growth, including new roles for Doctor. Thomas Lam, myself and Sean Basho, while also warmly welcoming Doctor. Dinesh Kumar as Chief Medical Officer. Our commitment to accessible, high quality, value based care and our proven track record in managing care costs and patient outcomes give us confidence in our ongoing profitability and growth. The momentum we are experiencing a testament to our team's dedication and the innovative strategies we are employing to enhance healthcare delivery. Speaker 100:10:59In closing, I extend my deepest gratitude to our team, our providers and our partners for their unwavering support and shared vision of transforming healthcare in communities across the nation. I will now pass the discussion to John Boscho, Chief Financial and Operating Officer for a detailed review of our financial results. Speaker 200:11:22Thank you, Brandon. We continue to deliver strong results, reporting total revenue of 1,390,000,000 for 2023, an increase of 21 percent from $1,140,000,000 in 2022. Our top line growth was driven by growth in all three of our core segments. In aggregate, adjusted EBITDA was $146,600,000 up 4.7% from $140,000,000 in the prior year. Net income attributable to Strana Health was $60,700,000 an increase of 34.3 percent from $45,200,000 in 2022. Speaker 200:12:08Earnings per share on a diluted basis were 1 $0.29 up 30.3% from $0.99 in the prior year. Now turning over to the balance sheet. We remain well capitalized and well positioned to execute on our growth initiatives. We ended the 4th quarter with $293,800,000 in cash and cash equivalents compared to $288,000,000 at the end of 2022. Total debt at the end of the 4th quarter was $282,000,000 Our substantial liquidity continues to support our strategy around sustained growth. Speaker 200:12:51I'd like to formally announce the spin off of the real estate portion of the APC Excluded Assets as we have discussed in prior quarters. As a reminder for all, the real estate portion of EPC Excluded Assets are the consolidated real estate assets held by APC common shareholders. As we've described in the past, they are solely for the benefit of our affiliate APC and its shareholders. On December 26, 2023, APC, a consolidated affiliate of Astrana Health completed a restructuring transaction to separate APC's real estate business. As a result of this strategic spin off, we are now able to consolidate our tax filing status into a single entity. Speaker 200:13:44This will avoid our historical tax implications related to intercompany dividends. Due to this change, our tax rate in 2023 was 35.6% versus our tax rate of 47.2% in 2022. Moving forward, 2024 full year effective tax rate is expected to be approximately 34%. As a note, as you review our 2023 financials, our balance sheet as of December 31, 2023 no longer reflects the real estate business assets and liabilities. However, our income statement reflects the results of operations of such businesses through December 26, 2023. Speaker 200:14:32I want to highlight a nuance in Q4 associated with bonuses paid out by APC Excluded Assets to their provider shareholders. This one time bonus in Q4 2023 of 14,000,000 ran through COGS and will skew medical costs if one is using COGS as the numerator and capitated revenue as the denominator. Going forward post spin off, our financial statements will no longer need to be separated between Astrauma Health assets and Excluded assets. As we wrap up 2023 and think about 2024, I'd like to touch on 4 key areas, ACO, utilization management, HCC model changes and our movement to full risk. Speaker 100:15:23We now Speaker 200:15:23have over 37,000 members in a Medicare advanced payment program. In 2024, we launched a new MSSP for providers in our Astrana Health family who are at an earlier stage in their value based care journey for their fee for service Medicare patients. The cornerstone of our strategy is empowering these providers with actionable data to ensure exceptional patient outcomes. Across both our MSSP and our full risk ACO reach, we continue to invest in our care management and technology infrastructure to ensure both programs' continued success. In regards to utilization management, we continue to monitor utilization trends with the latest data indicating a very slight uptick in Medicare Advantage utilization as seen across the industry. Speaker 200:16:19However, due to our diverse pair mix, our overall utilization is in line with historical trends. Our 2024 forecast includes these assumptions moving forward. Around the HCC model changes to V28, we see a nominal change within our managed care population in 2024 and a less than 1% change in our ACO population in 2024 versus 2023. Our 2024 forecast also includes the projected impact from these changes moving forward. Now, when we look at our financials today, the majority of our managed care financials are on a partial risk basis. Speaker 200:17:07What that means is today we are recording the professional risk of our overall care model. Over the next 24 months, we expect to move more and more from a professional risk basis to a full basis. We will capture a higher portion of the premium dollar, improving our ability to coordinate care across the healthcare spectrum for patients and improving our financial unit economics. Speaker 100:17:34Last quarter, Speaker 200:17:35our full risk book of business made up percent of total capitation revenue. As of January 1, our full risk business makes up 49% of total capitation revenue. We expect our full risk business to continue to grow this year. In summary, we have the capacity today to manage full risk members and to perform delegated payer life functions such as utilization management, care management and claims processing. With this change, we are now moving further up the risk continuum while continuing to deliver high quality care for our members. Speaker 200:18:17Turning now to our 2024 guidance. We expect to be between $1,650,000,000 $1,850,000,000 of revenue. We remain confident in our growth due to the execution of our organic and inorganic growth plans as well as our transition to full risk. We anticipate that our adjusted EBITDA will range from $165,000,000 to $185,000,000 Our expectations are based on the stability of utilization trends across our at risk portfolio and a conservative approach to projections. As we shift towards accommodating a greater number of full risk patients, we foresee enhancements in our operational efficiencies and institutional risk management. Speaker 200:19:07This strategic shift is expected to positively impact our unit economics. In regards to GAAP earnings per diluted share, we expect to be between $1.28 a share and $1.52 per share. While we are providing guidance on a full year basis, we recognize the importance of understanding the nuances that each quarter may present. With the closing of CFC IPA and the future planned closing of CFC Health Plan, we anticipate a notable uplift in our revenue from Q4 2023 to Q1 2024 and even further in Q2 2024 when we will experience a full quarter of impact from CFC in our financials. Historically, our business has experienced seasonal trends in line with industry norms. Speaker 200:20:07Our margin typically is normalized for Q1 while expanding in the second and third quarters as one time settlements are recognized before returning to a normalized level in the Q4. It's important to note that while we strive for operational excellence and margin improvements, our strategic investments in market expansion and transition to full risk are timed to optimize long term growth, which may result in quarter to quarter margin variability. We believe this context is crucial for our investors as it provides a lens to which to view our quarterly performance within the framework of our annual guidance. Finally, I want to reiterate the bright future ahead for our strong business development pipeline coupled with the strength of our model as we look ahead to 2025, 2026 and beyond. With that, I'm going to hand it back over to Brandon. Speaker 100:21:08In conclusion, we are proud of the positive impact we've had on the communities we serve, our growth partnerships, our financial achievements and our capital deployment strategy over the past year, showcasing our platform's capacity to consistently achieve 3 main operational objectives. 1, expanding our member base in both existing and new geographies 2, supporting our care delivery and care partners providers in their transition to value based care and 3, empowering our providers to achieve outstanding patient outcomes for full risk. The recent partnership with Bass Medical Group, the acquisition of CSC IPA and TFC Health Plan and the continued move towards full risk further diversify our membership mix and provide us with pathways to expand our value based care exposure. The Astrana Health platform provides a highly differentiated pure play value based care company that is not only growing rapidly, but also yields profitable and sustainable growth. We have made strong progress across all three objectives and have established a solid foundation for a bright future of continued growth and impact in 2024. Speaker 100:22:25And we're excited to further accelerate our mission to provide every American with access to high quality, high value healthcare. Thank you all for your time today. With that operator, let's open it up for Q and A. Operator00:22:44Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Ryan Daniels with William Blair. Please proceed with your question. Speaker 300:23:29Hey, guys. This is Jack Zenc on for Ryan Daniels. Thanks for taking the questions. In terms of EBITDA margins, you ended 2023 with EBITDA margins of about 11%. And if we take the midpoint of the 2024 guide, adjusted EBITDA margin is right at about 10%, which is still impressive. Speaker 300:23:45But I know the integration of the RKK license is supposed to bring some margin improvement. And know that you're focused on operational efficiency. So is the flat margin outlook just more conservatism? Is it that the RKK won't have too much of an impact yet in 2024? Or is it maybe just like the new market entry costs causing it? Speaker 300:24:03Can you just kind of walk us through the puts and takes for the EBITDA margin for 2024? Thanks. Speaker 100:24:10Hey, Jack. Thank you for joining the call and thanks for the question. You're right, the midpoint of revenue and adjusted EBITDA applies around a 10% margin and there are a couple of puts and takes there. We'd first note that we've historically been conservative in our first attempt out at a guidance set of ranges numbers for the year. We'd also point out that there are a couple of headwinds in the industry, obviously around Medicare Advantage, around the risk model, why we think we are relatively insulated from some of the changes that others may be experiencing. Speaker 100:24:47Again, due to an abundance of caution, we've that does put a slight headwind towards versus historical margins. I would also note that impacts of Medicaid redetermination as well as or any lingering effects of that as well as continued investment in our platform and new market entry are all baked into our guidance as currently contemplated. I'll turn it over to John to add anything else. Speaker 400:25:16Yes. No, I think you covered everything, Brandon. Speaker 300:25:20Okay, great. Thanks guys. I appreciate that. Just a quick follow-up then too. So just kind of focusing on the growth outside of California, I'm just kind of curious how we should think about that. Speaker 300:25:29I know a lot of the commentary lately has been focused on the California market, just given the RKK for Medicare and Medicaid. So and I think too in your prepared remarks, you mentioned that Nevada will be run rate breakeven by year end. So just kind of given the success that you are seeing outside of California, are you beginning to possibly look at additional geographies as well or just kind of what is your mindset with respect to furthering penetration outside of the California market? Speaker 100:25:57Yes, definitely. So as previously guided, we will continue to to expand into 1 or 2 new markets per year. Those market entry costs, which we've typically run at the low end of the $5,000,000 to $10,000,000 range that I got Speaker 500:26:12to you Speaker 100:26:13on the call have been baked into our guidance ranges for the year as well on the adjusted EBITDA line. We typically look at markets in terms of building depths rather than trying to fill every single state on the map. So I think there is a certain level of deliberation when we enter a new market. But when we do, we want to ensure that the care model, the technology infrastructure is deployed in a systematic way that allows us to continue breaking even within that 2 year time period as we had guided to before as well. So that's kind of the intent. Speaker 100:26:52With Nevada and Texas ramping up and Nevada expected to be run rate profitable this year, We are certainly looking towards additional markets. Speaker 300:27:04Okay, great. Thanks. And then if I can just sneak one final one in here. So PP and E decreased pretty substantially this quarter. Just wanted to double click, is this all because of the APC real estate spin off or was there something else that just caused that impact? Speaker 400:27:23Yes. I think you're correct in terms of with our changes in terms of the real estate spin off, you will see those appropriate changes on the balance sheet. Operator00:27:45Thank you. Our next question comes from the line of Brooks O'Neil with Lake Street Capital Markets. Please proceed with your question. Speaker 600:27:55Thank you very much. Good afternoon. Just following up on Jack's last question, I just want to be 100% clear that you guys are including this $5,000,000 to $10,000,000 per new market entry, but you haven't included any assumption about the impact of whatever you do to enter these new markets in terms of affiliations, partnerships, etcetera? Speaker 400:28:26Hey Brooks, how are you? Great to hear you. So our 20 four-four task includes our the investments we will be making for these 1 to 2 markets. So it is built into the numbers today. Speaker 600:28:46The investments are, but not the impact of a new group or new partnership or whatever in these new markets. Speaker 100:28:59You know what I'm asking? Both the investment into business development, marketing, etcetera, as well as potential ongoing operating costs of operating the group are baked into the guidance. Okay. Speaker 600:29:14I think I got that. Obviously, there's been a lot of talk about elevated medical costs from some of the payers, in particular United, Aetna, Humana. I'm curious, do you have any sense that providers in your core markets saw elevated medical costs? And do you have a sense that it was your approaches to medical management and value based care that enabled you to do a good job of controlling those medical costs? Or do you have any comments? Speaker 600:29:56You see what I'm asking? Speaker 100:29:59Yes. Let me give it a try, Brooks. Thank you for the question. I think I would say that it's difficult for us to comment on regional performance of any of our payer partners. But given the level of interest that we are seeing from our payer partners in terms of aligning members to our value based care platform. Speaker 100:30:22We think that what we can speak about is that the strength of our care model and the durability and management of costs, medical costs associated with the patients that we are financially and clinically responsible for has been a value add to our payer partners. We continue to see strong interest in partnership and expanding our already successful partnerships into new regions into growing the book of business that we have with our payer partners. And we look forward to continue serving them and helping them decrease any fluctuations that they may be facing as well for our patient panels? Speaker 600:31:03Sure. All that makes sense. That's very helpful. Thank you. So let me just ask one last one. Speaker 600:31:10And I'm just trying to get my arms around the whole the notion of you guys taking full risk, which I believe is a great development and something you're more than capable of handling. I'm assuming that the big opportunity in the marketplace is to reduce inpatient hospital costs. Can you just talk a little bit about that and how the hospitals are viewing the transition that's going on out there in the world, not that you asked the deer how he feels about the hunter being in the field, but just tell me what you see in the marketplace and what the conversations are like out there? Speaker 100:31:58Thanks for the question. I think there are there is a bit of a divergence in the health systems and hospitals we work with. Those that have a plan in place as there are changes in Medicare Advantage and as there are changes in utilization trends, we've seen been successful, especially when they're working with us to keep the lower acuity and lower dollar per bed day patients out of the hospital and ensuring that the appropriate place of care is being used for a given procedure or for a given patient. While we think there's greater and greater awareness among hospitals and health systems around the benefits of doing that. And we continue to be in conversations with a lot of large health systems and hospitals to bring that model to the geographies that we serve. Speaker 100:32:56Brooks, I may have missed one of your earlier questions. I apologize around what was baked into our 2024 estimates as well. So maybe I'll answer that quickly. All the costs of new market entry are baked into the bottom line guidance, but our revenues are pretty minimal, 0 to minimal baked in on the top line for new groups that we may partner with this year. So that's the impact on top and the bottom line for new partnerships and new markets for 2024. Speaker 600:33:30Thank you for clarifying that. I was thinking that was the answer, but I didn't actually hear you say it. So hearing you say it is very helpful. Thank you again. Speaker 100:33:40Thank you, Brooks. Operator00:33:45Thank you. Our next question comes from the line of David Larsen with BTIG. Please proceed with your question. Speaker 500:33:55Can you please talk a little bit more about the data files, churn, how current they are? Like Agilent talked about getting more data higher utilization claims. Privia talked about getting sort of more accurate forecast with data and higher utilization. Do you basically have all the 23 data now? Are we through that? Speaker 500:34:15And we have high conviction that we're there. Sorry for the background noise. Thank you. Speaker 100:34:24Hey, David. Thank you for the question. Good to hear from you. Around our visibility into data, I think we have as good of visibility as could be had. As we had mentioned before, we operate in a delegated environment where we are responsible for authorizing prior authorization requests, managing the referrals in our network, as well as paying the claims associated or the cost of the claims associated with the claims and authorizations that we process. Speaker 100:35:02That combined with our proprietary data infrastructure and our team's ability to predict based on historical usage and the trends that we are seeing give us a good amount of visibility into where utilization might trend, call it, a quarter or 2 ahead of time. That's not to say, of course, that something couldn't happen. We're talking about elective procedures here. But in terms of our data visibility, we think we are fairly we're pretty confident in our ability to see how trends are evolving over time. As far as 2023, I think John can answer how much of that is baked in today. Speaker 500:35:43Yes. Thanks, Brandon. Okay. That's great. Speaker 400:35:49Yes. Go ahead, please. Yes, sure, David. Our unique delegated model really allows us to have close to real time authorization data. At this time, in terms of our authorization, say, it's in the 98%, 99% range in terms of claims that we expect in the future. Speaker 400:36:12So we feel quite comfortable around our managed book of business. Speaker 500:36:19Okay, that's great. And can you talk a little bit about BaaS please? Privia mentioned them. From what they said, it sounds like their relationship with BaaS isn't going to change. Can you just talk about how that's going to fit into your entire network? Speaker 500:36:30It seems like it makes a lot of sense to me, like they have specialty services, your primary care groups can refer there. You can basically keep the care in your network and perhaps improve cost trend as well. A little more description there would be helpful. Thank you. Sure thing. Speaker 100:36:47I haven't heard the exact comments, but I think based on your portrayal, I would agree. There are different services that are being provided to Beth Medical Group. And at the end of the day, our goal is to help those providers, multi specialty as well as some primary care in Beth medical group to be as successful as possible and to deliver a high quality of care to their patient population in a differentiated way. What we are going to provide to them is that we are going to provide our risk ecosystem, including contracts, value based care infrastructure, the full suite of delegated services as we talked about before, contracting credentialing, utilization management, care management, claims payments, etcetera, 2 best in addition to performing some of the care management and clinical programs necessary in order to succeed in a value based care contract over time. That's something we're beginning to do this year. Speaker 100:37:39I think in my prepared remarks, we talked about creating a network, an IPA as well as moving that as appropriate into the restricted Noxicating full risk upside downside construct as time goes on probably in 2025. We think that this will lead to better accountable care results for the patients that BaaS serves. And I think that is a separate business than the one that BaaS may be currently using another company for. Again, at the end of the day, we think there's room for everyone and we look forward to helping BaaS and its providers execute and provide really good care to the San Francisco Bay Area community. Speaker 500:38:24Okay. It's very helpful. Thank you. And then just one last quick one. For CFC, I think that they bring an incremental $20,000,000 or more of EBITDA. Speaker 500:38:31Is that included in your guidance? Thanks very much. And then I'll hop back in the queue. Speaker 400:38:40Yes. In terms of CFC, CFC is baked into our guidance. We did close in terms of a 2 step acquisition, the IPA in January. And we're still on track to close the second part, which is the full risk bearing restricted box scheme license at the end of Q1. Speaker 500:39:06Okay, great. Thanks. Congrats on a good quarter. Thank you. Speaker 400:39:09Thanks. Operator00:39:13Thank you. Our next question comes from the line of Adam Raun with Bank of America. Please proceed with your question. Speaker 700:39:22I have a question about how this RKK license flows in over the 24 months as you mentioned. I was a little surprised to hear that you said full risk as a percentage of total capitation went from like 46 to 49. I would have expected to bigger swing given it was January and that if you were going to renegotiate a contract with an insurer, I would assume most of it would happen in January. So when you mentioned 24 months, did you really mean like 12 months from now and then 12 months after that when those things take effect or can you renegotiate throughout the year? Speaker 400:40:01Hey, Adam. Thanks for the question. So first, it's less about the contract negotiation and it's more about the regulatory approvals. So even if the contract is negotiated, there's a joint filing and then there's a process with the DMHC for us to be able to move these numbers to full risk. So as you're thinking about the Medicare Advantage, FYB membership, if that will continue to happen throughout this year in terms of the CFC and Medicaid related members, you won't see that change until the CFC RKK closes. Speaker 700:40:50Okay. So what would cause it to be evenly distributed then across 24 months if it's waiting on a regulatory license? Like is it something that's going to be lumpy where 1 quarter is finally approved and you get most of the benefit there or just how Speaker 400:41:09Yes, it is going to be lumpy. It's not going to be evenly distributed. And so as we have a contract that the DMHC approves, you will see that step up in membership. Speaker 700:41:26Okay. And when you say contract, is that so with each individual payer for each individual product line, you have to get a separate approval and separate Speaker 400:41:35That's correct. Yes. For every county for each line of business and contract, there's a separate approval. Speaker 700:41:42Okay. And are you specifically trying to do this in a more like are you trying to measure the pacing of it or is it just you're applying basically as fast as you can and you just expect that it would take 12 to 24 months? Speaker 400:42:01We are going as fast as we can through the process. It does take time. Speaker 100:42:08Yeah. Yes. Speaker 700:42:10Okay. And then on the MSSP, it was interesting. So can you give us like how many members are in versus ACO REACH in 2024? And then kind of recap maybe what happened with ACO REACH in 2023? And then you mentioned the V28 might be 50 basis points, 100 basis points of revenue of ACO REACH in 2024. Speaker 700:42:35And I think there is an increase in the discount rate of another 1%. So would you expect 2023 performance to repeat or would there be a degradation in ACO reach and that's why you're moving into MSSP. And so just understanding more of some of the original Medicare programs would be really helpful. Speaker 100:42:53Sure thing. I don't think we have officially disclosed MSSP numbers. I would say it's between certainly more than 5,000 numbers since it has to be, and then I would say probably less than 10,000 numbers. So it's in that range. The rest of the accountable care organization numbers are in our ACO reach program. Speaker 100:43:15In terms of V-twenty eight impact, John will take that part of the question. Speaker 400:43:22So in terms of our impact on the ACO reach, we're expecting a 1% impact due to V28 in 2024. Those numbers are baked into our full year guidance. Is that helpful or Yes. Okay. Speaker 700:43:48But is there any way to think about how guess, maybe just so we have the ACO REACH numbers in 2022 from the government. And so did 2020 was 2023 an improvement? And do you expect further improvement Speaker 400:44:01in 'twenty four? Yes. We expect our performance in 2024 to be a little bit better than 2023, so about overall 2% to 3% Speaker 200:44:24margin in 2024. Speaker 700:44:27Okay. That's super helpful. Speaker 100:44:29Just to be clear, the 3% margin John's discussing is post, Speaker 300:44:37I would say, that's Speaker 100:44:38care platform contribution, post distributions to providers, post incentives, post bonuses, quality, etcetera. Speaker 700:44:46Interesting. Okay. And then, so just to understand your comment about the quarterly cadence earlier, it sounds like the quarters are going to be somewhat variances in terms of earnings contribution. And so is the seasonality going to be similar to 'twenty three or 'twenty two? Or is there a way we could think about first half, second half just so we don't have to be surprised in Q1? Speaker 700:45:13Maybe that's going to be the highest contributor, just more of a finer point around that would be helpful. Speaker 400:45:22Yes, you'll see some you will see similarity to 2023. Q3, as we've seen historically, is the highest quarter followed by Q2, then Q1, and lastly, Speaker 700:45:41That's helpful. And on the MA utilization comment, that was a new comment. I thought that the previous commentary or the way you were kind of talking about it was that you weren't seeing really MA utilization pressure and that maybe you thought that regionally it was more of a problem elsewhere, but it sounds like in Q4 you were kind of surprised by that. And so you do have like delegated claims more visibility into it, but why wouldn't that have been picked up kind of in like the Q3 call? Speaker 400:46:16Yes. I think what we're trying to say is in Q4, November, December, we saw a slight uptick as we have seen in historical years and that is captured in our guidance. Speaker 700:46:33Okay. So slight uptick similar to like sequentially you're saying and that's a similar sequential increase to historical or you're saying you're starting to see some of the pressure that the outsized pressure that other payers are talking about? Speaker 100:46:47Yes, it's correct, Adam. I think we had commented before that we are seeing slight increases in certain pockets, inpatient senior utilization, for example, certain elective surgeries. I think we had discussed that on previous earnings calls, but nothing that we couldn't manage through and nothing that would have changed our guidance. I don't want to say that there is literally zero impact that we are feeling. It is something that we have managed through and is included in our guidance for 2024. Speaker 700:47:21Okay. And then I heard if I heard you just want to clarify last thing, if I heard you correctly, you're saying that what is the $14,000,000 bonus you were mentioning that was in cost of services? Speaker 400:47:34So pre the spin off of the APC Excluded Assets, if APC Excluded Assets does a bonus distribution as they did in Q4 to their shareholders, that ends up running through the consolidated P and L. So oftentimes there's a question around, well, why did implied MCR go up? So I just want to be very clear in terms of what that bonus was the amount and when it happened. Yes, going forward, you won't see this happen. Speaker 700:48:17Okay. I guess last one, if I could squeeze it in. The cost of service ratio, if we just divide and maybe take out the $14,000,000 payment in 2023, would you think it'd be higher or lower in 2024? And what would be the drivers around that? That would be my last question. Speaker 700:48:32Thanks. Speaker 400:48:36I would say it's going to be pretty consistent. If you look at the partners segment specifically and the cost of care ratio for 23 in partners, we expect it to be pretty consistent in 24. Speaker 700:48:51Perfect. Thanks so much. Operator00:48:56Thank you. Our next question comes from the line of Jack Sullivan with Jefferies. Please proceed with your question. Speaker 800:49:06Hey, guys. Congrats on the quarter and thanks for taking the question. Happy to be jumping on here. Speaker 600:49:12A lot Speaker 800:49:12of them already asked for me. I guess, looking forward, right, it's been a couple of months since we've seen announcements of new partnerships, whether it be enablement or some others, right, since 3Q call. How's the pipeline shaping up when you think about the enablement business, both in California and then maybe filling out some of the other geographies? Any color you can get there would be really great. Speaker 100:49:36Hey, Jack. Thank you for joining the call. So I think overall, the new business development pipeline remains very strong, probably strong as we've ever seen it. With the turmoil in the market and some of the headwinds facing some of our other companies in the space, we think where we are one of the few differentiated players who can take risk, who are not shying away from taking risk in a prudent fashion, in a data driven and analytics driven fashion, and are able to succeed in those constructs. That means that when we go talk to provider groups, when we look for partnerships, even when we're selling our care enablement solutions into the market, and remember it's a flexible model for a given geography dependent on what the providers' preferences are in that market. Speaker 100:50:33We have a variety of tools to address those preferences. When we are selling those suite of products across enablement delivery and partners, Speaker 200:50:42we're seeing Speaker 100:50:42a tremendous response. I think over the past couple of years there have been noise, there has been a lot of capital, a very low cost of capital that has shielded or hidden, kept hidden actual performance or lack thereof. And as that environment has changed, as we're all aware on this call, our model continues to stand out as a differentiated model and that's helping us win and participate in a large number of business development opportunities, some of which we have already shared with the public. So it's very strong and we're excited to continue growing our impact across the country. Speaker 800:51:26Got it. Really, really helpful. One more for me. Just thinking about the commentary on continued 25% growth in the medium term and beyond in the presentation, when you look at that revenue growth has been really strong. I guess the sense that the rest of the industry has that 24% is sort of the bottom when it comes to margins and profitability in risk based businesses. Speaker 800:51:52Do you get the sense that you've scaled through it and weathered some of it and there's opportunity for an acceleration in sort of core economics as you look to 2025 and 2026? Or let me know, I guess, how you're thinking about that sustainable growth outlook and where we sort of sit as far as your financials from a utilization perspective in 2024? Speaker 500:52:15Sure. Speaker 100:52:16No, thanks for the question. I want to start off quickly by remembering what the company looks like in 2019 when I joined this organization. We had done $561,000,000 of revenue, dollars 54,200,000 of adjusted EBITDA. Midpoint of guidance for this year is $1,750,000,000 of revenue and $175,000,000 of adjusted EBITDA. That is we have grown the business at a 26% CAGR clip on both the top and the bottom lines for 5 years in a row and that's not going to change going forward. Speaker 100:52:50That's something that we have the proven ability to manage through whether a cycle comes, a cycle goes, companies come, peers come, peers go. Our model has been durable. It is diversified across lines of business. It is now becoming increasingly diversified across geography and it is backed by a world class data engineering team and software engineering platform that allows us to have visibility into the future that we think will serve us well as we take on more risk. Given the immediate levers that China discussed, for example, some of the movement into forward contracts in California, we believe that already has that already gives us strong visibility into that continued near term revenue and EBITDA growth. Speaker 100:53:41And frankly, any geographies continuing to succeed Speaker 500:53:45are Speaker 100:53:45almost a cherry on top. But it is part of our growth algorithm to continue growing 1 or 2 markets a year. We are seeing new markets so far ramp as expected. And we're very optimistic, especially given the business development pipeline, as I mentioned earlier, around where we can go for the next 3 to 5 years at least. Really helpful color, Brandon. Speaker 800:54:08Appreciate it. Congrats again on the quarter and all the recent developments. Operator00:54:16Thank you. Our next question comes from the line of Dayalandra Singh with Truist Securities. Speaker 900:54:25Thank you and thanks for taking my questions. First one, I want to go back to a Bass Medical Group partnership topic. Was this a competitive process or more of an exclusive discussion? And there was some confusion on the loan that was offered to BaaS as part of partnership. Maybe you can help clarify that as well? Speaker 100:54:46Hi, Jalendra. Thank you for joining the call. It's great to hear from you. Yes, happy to answer those questions. Without saying too much, I would say that the process was a competitive one. Speaker 100:55:00We were not the only bidder in the process and we are glad that we were chosen. And I think the durability of the model that we've proven the growth good consistent growth of that model, both on the revenue and adjusted EBITDA lines were proof points for that group among others, including our demonstration of our technology, the demonstration of our care models, alignment mechanisms that we use, etcetera, to help win that process. But to answer your question, to our knowledge, it was a competitive process. Around the loan, I think we disclosed more information around the loan in our press release associated with our full year earnings. So happy to answer any other questions around the loan if that has not been answered, but the intent is for them to invest those dollars alongside us to continue to expand the footprint of both primary and multi specialty care across the San Francisco Bay Area. Speaker 900:56:08Okay. And then my follow-up here is that, I know you gave some color around revenue and EBITDA growth on a consolidated basis. I was just wondering if you can provide a little bit more color around expectations across the 3 business segments like Care Enablement, Partners and Delivery either directionally or qualitatively in terms of revenue growth and EBITDA trends in 'twenty four versus last year? Speaker 400:56:35Hey, Jalendra. Thanks for the question. The majority of our growth will be based in our partners division since it is the majority of our revenue today. With our continued growth in relationships as well as our rich BD pipeline, you will see a large portion of that growth come through partners. Enablement will grow equivalently to partners. Speaker 400:57:09And in terms of delivery, I would not if delivery will grow as it's grown historically. It won't scale at the level of partners. Speaker 900:57:25Okay. And then my last one around this Community Family Group acquisition. I believe when you announced the deal, it was expected to generate like around $190,000,000 revenue $25,000,000 EBITDA. But based on some filings in California, it looks like perhaps it's generating a higher run rate of revenue. Is that driven by moving some of these lives to full risk with the RKK license that is being acquired here? Speaker 100:57:53Yes, exactly, Jehangra. Thank you for doing the research there. That's great. I think, we had previously noted that in the middle of 2023, when CFC was still a care enablement client of ours that we had helped them successfully move from a partial risk to a full risk construct. And the 190 number was a trailing 12 month number as of the reported date. Speaker 100:58:26We had exactly the date, but it was not including the full year impact of that change from partial risk to forest. That's also part of why we had previously noted in previous calls that there was infrastructure we had invested in technology, people, services, etcetera, operations in 2022 2023 in order to fully enable that shift of our care enablement clients close to 200,000 maybe 190,000 members into a 4 risk construct. That's also why we guided to us being confident that we can redo this or continue to do this rather across both our own restricted NOXAKIN license that we had already had as well as the one that we hope to close on that John mentioned earlier sometime by the end of Q1. So to answer your question, yes, that was part of the impact was the movement into the restricted NOXANE full risk construct for the 190,000 or so members. Speaker 900:59:27Great. Thanks guys. Speaker 100:59:29Thank you so much, Sundar. Operator00:59:33Thank you. Our next question comes from the line of Gary Taylor with TD Cowen. Please proceed with your question. Speaker 1000:59:43Hi, good evening. Most of my questions answer. Just wanted to ask a couple. You talked about just a little bit elevated trend in MA and obviously you're moving increasingly to full risk. How are you guys tackling supplemental benefits, particularly around OTC and Flex that really seem to catch a lot of capitated groups off guard because 1, they haven't card those out and 2, they haven't been able to find much ability to impact that benefit consumption? Speaker 401:00:20Hey, Gary. Good to hear from you. So it is a continuous focus within the California market, especially Los Angeles County being one of the most competitive in terms of OTC and supplemental benefits. Over time, we've worked with the plans to get to the appropriate contract type that allows us to make sure we are getting the appropriate dollars that we need to take care of the members. And we're not impacted by potential changes around OTC benefits and other supplementary benefits. Speaker 101:01:09Also note real quick that there's good payer diversity in terms of the percentage of our revenue that comes from any One Health plan. And so there is there is a bit of a hedge across our business, across both line of business, Medicaid and Medicare commercial as well as in terms of which plan that we are talking about in terms of the specific supplemental benefits involved. Speaker 1001:01:36Got it. So, well, apparently some pretty good foresight there then versus peers. My last one would just be, my understanding is California DHCF Speaker 101:01:46is going Speaker 1001:01:46to hold restricted NOXKINE and other risk bearing groups to 85% MLR in 25%. But the actual formula for how that will be calculated hasn't been finalized in the regs or at least I haven't seen it. Do you know if those regs are finalized? And then how do you think about that minimum MLR impacting your shift to full risk in California in the next couple of years? Speaker 401:02:17Yes, it's a great question, Gary. First part of your question, the regs have not yet been finalized and we're working closely with other providers in a coalition to better understand the regulations as they're coming together. In terms of the second part of your question, you are right. There is this DHCS requirement associated with the Medi Cal book of business and the MLR associated with it. Now, just want to remind you, we have multiple lines of business and we believe we will be able to work through this as we have done with other regulatory changes within the state. Speaker 1001:03:08Okay, got it. Thank you. Operator01:03:14Thank you. There are no further questions at this time. Speaker 101:03:22Thank you all for joining our earnings call today and for discussing some of the results from our 2023 full year as well as some of our guidance for 2024. We greatly appreciate the time you spent this evening and please reach out to us at investorsastronahalf.com Speaker 501:03:38if you Speaker 101:03:38have any further questions. Thank you again and good evening. Operator01:03:45Thank you. That concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAstrana Health Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Astrana Health Earnings HeadlinesTSS (NASDAQ:TSSI) and Astrana Health (NASDAQ:ASTH) Head to Head ComparisonApril 27 at 1:55 AM | americanbankingnews.comImplied Volatility Surging for Astrana (ASTH) Stock OptionsApril 26 at 11:25 AM | msn.comGold Alert: The Truth About Fort Knox Is ComingOwning physical gold isn’t the best way to profit. I’ve found a better way to invest in gold—one that’s already performing nearly twice as well as gold this year and looks ready to go much higher. If you wait for the news to hit, you’ll already be too late.April 28, 2025 | Golden Portfolio (Ad)Astrana Health, Inc. to Participate in Upcoming Investor ConferenceApril 24, 2025 | prnewswire.comJefferies Keeps Their Buy Rating on Astrana Health (ASTH)April 24, 2025 | markets.businessinsider.comAstrana Health, Inc. (NASDAQ:ASTH) Receives Consensus Rating of "Moderate Buy" from AnalystsApril 21, 2025 | americanbankingnews.comSee More Astrana Health Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Astrana Health? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Astrana Health and other key companies, straight to your email. Email Address About Astrana HealthAstrana Health (NASDAQ:ASTH), Inc., a physician-centric technology-powered healthcare management company, provides medical care services in the United States. It operates through three segments: Care Partners, Care Delivery, and Care Enablement. The company is leveraging its proprietary population health management and healthcare delivery platform, operates an integrated, value-based healthcare model which empowers the providers in its network to deliver care to its patients. It offers care coordination services to patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans. The company's physician network consists of primary care physicians, specialist physicians and extenders, and hospitalists. It serves patients, primarily covered by private or public insurance, such as Medicare, Medicaid, and health maintenance organization plans; and non-insured patients. The company was formerly known as Apollo Medical Holdings, Inc. and changed its name to Astrana Health, Inc. in February 2024. 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There are 11 speakers on the call. Operator00:00:00Good day, everyone, and welcome to today's AstraZeneca Health 4th Quarter and Full Year 2023 Earnings Call. At this time, all participants are on a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. Today's speakers will be Brandon Sim, President and Chief Executive Officer of AstraZeneca Health and Chan Basso, Chief Operating and Financial Officer. The press release announcing AstraZeneca's health results for the full and fourth quarter ended December 31, 2023 is available at the Investors section of the company's website at www.astronahalf.com. Operator00:00:51To provide some additional background on its results, the company has made supplemental deck available on its website. A replay of this broadcast will also be made available at AstraZeneca's Health website after the conclusion of the call. Before we get started, I would like to remind everyone that this conference and any accompanying information discussed herein contains certain forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook and will and include, among other things, statements regarding the company's guidance for the year ending December 31, 2023 continued growth, acquisition strategy, ability to deliver sustainable long term value, ability to respond to the changing environment, operational focus, strategic growth plans and merger integration efforts. Although the company believes that the expectations reflected in these forward looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. Operator00:02:11There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in AstraZeneca's health is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligations to update any forward looking statements as a result of new information, future events and changes in marketing condition or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer to you to Slide 2 of the conference call presentation for further information. With that, I'll turn the call over to Astrana's Health President and Chief Executive Officer, Brandon Sim. Operator00:02:59Please go ahead, Brandon. Speaker 100:03:02Good evening, and thank you all for joining us today. We are proud to announce another year marked by rapid scaling of our unique care model to empower providers and improve healthcare for local communities at AstraZeneca Health. We coupled that with robust financial achievements, ensuring that our growth efforts are sustainable and maintaining a focus on profitability. We continue to execute against our multi dimensional strategic roadmap. 1, focusing on expanding our membership base across existing and new geographies. Speaker 100:03:362, increasing the level of accountability and risk we are responsible for in our value based care contracts 3, empowering our providers to achieve superior patient outcomes and 4, executing strategic acquisitions to further accelerate our growth trajectory for the foreseeable future. We are confident that the infrastructure we have built and the momentum we have in our value based care platform will continue to accelerate the country towards our vision, one in which every American has access to high quality, high value healthcare. I'll begin by highlighting our financial accomplishments for the Q4 of 2023. We recorded total revenue of $353,000,000 an increase of 20% and adjusted EBITDA of $29,000,000 an increase of 22.7% from the Q4 of 2022. For the full year of 2023, Astrana Health achieved total revenues of $1,390,000,000 an increase of 21.2 percent year over year and adjusted EBITDA of $146,600,000 up 4.7% year over year, yielding an adjusted EBITDA margin of 11%, which is within our short term target EBITDA range of 10% to 15%. Speaker 100:04:56This was despite headwinds in terms of Medicaid redetermination, increased utilization and costs due to our investments in growth, infrastructure and new market entry. Turning now to business updates for the year. Since our last earnings call, we have formed a new partnership with Bass Medical Group. A key pillar of Astrana's unique care model is the deep integration between primary care providers and specialist networks. And our long term strategic partnership with BaaS is in our view an expression of this thesis. Speaker 100:05:31This relationship is set to enhance the value based care framework and operational capabilities for Bass Medical Group, which boasts over 400 providers across key Northern California Counties. Our collaborative efforts aim to deliver top tier care through value based models to a diverse patient base across all lines of business throughout Northern California. Operationally, our collaboration with BaaS involves establishing a premier high quality independent provider network or IPA in Northern California, which we expect to fully transition to full risk in 2025 beyond by leveraging our restricted Noxxene license to foster new aligned care models. Our primary care provider networks will have wider access to an aligned high quality specialist network, which will enable care coordination and will help manage cost effectiveness. Asset providers will also be supported by our technology platform as they join AstraZeneca's care enablement platform in 2024. Speaker 100:06:36This will extend our value based care footprint in the Greater San Francisco Bay Area, while enriching our network with more primary care physicians and specialists. Next, I'd like to highlight our ability to replicate success in Southern California and new markets having recently entered several new states. Our approach to market expansion is flexible, rooted in our history of building partnerships with physician practices and adapting to local market dynamics. Whether through partnerships, de novo builds, acquisitions, or technology offerings, our ability to flexibly utilize our care partners, care delivery and care enablement offerings to adapt to the needs of local providers and communities allows us to remain adaptive and nimble as we enter these new markets. In Nevada, the notable presence of both the payer and the health system partner has guided our expansion into Clark County where we have established over a year of operational experience. Speaker 100:07:37In addition to our initial entry via chain of own primary care clinics and our care delivery segment, we have now augmented that footprint by building a care partners network of over 300 high quality, high value primary care providers and specialists. We continue to focus on building density in each new market we enter and we expect our Nevada market to be run rate breakeven by the end of the year. Following our acquisition of Texas Independent Providers, an independent provider association into our Care Partner segment in September of 2023, we have achieved significant advancements within the state of Texas as well. Our efforts have successfully expanded our network of exclusive primary care providers and our membership base. As we strategically continue to add specialty coverage in Harris County, we have made notable strides in securing incremental Medicare Advantage contracts with health plans. Speaker 100:08:36We are committed to further enlarging our clinical footprint within the region and thereby enhancing our delivery of value based care. We continue to view our pipeline of partnerships and expansion opportunities as very robust and we'll provide further updates as they occur. As previously communicated, we plan to enter at least 1 to 2 new markets per year and invest $5,000,000 to $10,000,000 per market to do so. The 2024 guidance that John will discuss later on this call will include the costs of planned new market entry. Next, we have significantly advanced our capability to engage and manage our patients in full risk arrangements. Speaker 100:09:20Since announcing our acquisition of Community Family Care or CFC in November of 2023. We're excited to share that on January 31, 2024, we seamlessly onboarded CFC's IPA as an AstraZeneca care partner, which manages the healthcare of over 200,000 members in the Los Angeles, California area across Medicare, Medicaid and commercial payers. The acquisition of the CFC Health Plan and MSO entities are still on track to close by the end of the Q1 2024. We are also excited to announce our rebranding to AstraZeneca Health, NASDAQ ticker ASTH as of February 26, 2024. This new brand identity reflects our expanding national presence and commitment to delivering quality care nationwide as we support forward thinking providers and care teams in creating a constellation of high quality care. Speaker 100:10:21Additionally, we've made several key leadership changes to continue to support that growth, including new roles for Doctor. Thomas Lam, myself and Sean Basho, while also warmly welcoming Doctor. Dinesh Kumar as Chief Medical Officer. Our commitment to accessible, high quality, value based care and our proven track record in managing care costs and patient outcomes give us confidence in our ongoing profitability and growth. The momentum we are experiencing a testament to our team's dedication and the innovative strategies we are employing to enhance healthcare delivery. Speaker 100:10:59In closing, I extend my deepest gratitude to our team, our providers and our partners for their unwavering support and shared vision of transforming healthcare in communities across the nation. I will now pass the discussion to John Boscho, Chief Financial and Operating Officer for a detailed review of our financial results. Speaker 200:11:22Thank you, Brandon. We continue to deliver strong results, reporting total revenue of 1,390,000,000 for 2023, an increase of 21 percent from $1,140,000,000 in 2022. Our top line growth was driven by growth in all three of our core segments. In aggregate, adjusted EBITDA was $146,600,000 up 4.7% from $140,000,000 in the prior year. Net income attributable to Strana Health was $60,700,000 an increase of 34.3 percent from $45,200,000 in 2022. Speaker 200:12:08Earnings per share on a diluted basis were 1 $0.29 up 30.3% from $0.99 in the prior year. Now turning over to the balance sheet. We remain well capitalized and well positioned to execute on our growth initiatives. We ended the 4th quarter with $293,800,000 in cash and cash equivalents compared to $288,000,000 at the end of 2022. Total debt at the end of the 4th quarter was $282,000,000 Our substantial liquidity continues to support our strategy around sustained growth. Speaker 200:12:51I'd like to formally announce the spin off of the real estate portion of the APC Excluded Assets as we have discussed in prior quarters. As a reminder for all, the real estate portion of EPC Excluded Assets are the consolidated real estate assets held by APC common shareholders. As we've described in the past, they are solely for the benefit of our affiliate APC and its shareholders. On December 26, 2023, APC, a consolidated affiliate of Astrana Health completed a restructuring transaction to separate APC's real estate business. As a result of this strategic spin off, we are now able to consolidate our tax filing status into a single entity. Speaker 200:13:44This will avoid our historical tax implications related to intercompany dividends. Due to this change, our tax rate in 2023 was 35.6% versus our tax rate of 47.2% in 2022. Moving forward, 2024 full year effective tax rate is expected to be approximately 34%. As a note, as you review our 2023 financials, our balance sheet as of December 31, 2023 no longer reflects the real estate business assets and liabilities. However, our income statement reflects the results of operations of such businesses through December 26, 2023. Speaker 200:14:32I want to highlight a nuance in Q4 associated with bonuses paid out by APC Excluded Assets to their provider shareholders. This one time bonus in Q4 2023 of 14,000,000 ran through COGS and will skew medical costs if one is using COGS as the numerator and capitated revenue as the denominator. Going forward post spin off, our financial statements will no longer need to be separated between Astrauma Health assets and Excluded assets. As we wrap up 2023 and think about 2024, I'd like to touch on 4 key areas, ACO, utilization management, HCC model changes and our movement to full risk. Speaker 100:15:23We now Speaker 200:15:23have over 37,000 members in a Medicare advanced payment program. In 2024, we launched a new MSSP for providers in our Astrana Health family who are at an earlier stage in their value based care journey for their fee for service Medicare patients. The cornerstone of our strategy is empowering these providers with actionable data to ensure exceptional patient outcomes. Across both our MSSP and our full risk ACO reach, we continue to invest in our care management and technology infrastructure to ensure both programs' continued success. In regards to utilization management, we continue to monitor utilization trends with the latest data indicating a very slight uptick in Medicare Advantage utilization as seen across the industry. Speaker 200:16:19However, due to our diverse pair mix, our overall utilization is in line with historical trends. Our 2024 forecast includes these assumptions moving forward. Around the HCC model changes to V28, we see a nominal change within our managed care population in 2024 and a less than 1% change in our ACO population in 2024 versus 2023. Our 2024 forecast also includes the projected impact from these changes moving forward. Now, when we look at our financials today, the majority of our managed care financials are on a partial risk basis. Speaker 200:17:07What that means is today we are recording the professional risk of our overall care model. Over the next 24 months, we expect to move more and more from a professional risk basis to a full basis. We will capture a higher portion of the premium dollar, improving our ability to coordinate care across the healthcare spectrum for patients and improving our financial unit economics. Speaker 100:17:34Last quarter, Speaker 200:17:35our full risk book of business made up percent of total capitation revenue. As of January 1, our full risk business makes up 49% of total capitation revenue. We expect our full risk business to continue to grow this year. In summary, we have the capacity today to manage full risk members and to perform delegated payer life functions such as utilization management, care management and claims processing. With this change, we are now moving further up the risk continuum while continuing to deliver high quality care for our members. Speaker 200:18:17Turning now to our 2024 guidance. We expect to be between $1,650,000,000 $1,850,000,000 of revenue. We remain confident in our growth due to the execution of our organic and inorganic growth plans as well as our transition to full risk. We anticipate that our adjusted EBITDA will range from $165,000,000 to $185,000,000 Our expectations are based on the stability of utilization trends across our at risk portfolio and a conservative approach to projections. As we shift towards accommodating a greater number of full risk patients, we foresee enhancements in our operational efficiencies and institutional risk management. Speaker 200:19:07This strategic shift is expected to positively impact our unit economics. In regards to GAAP earnings per diluted share, we expect to be between $1.28 a share and $1.52 per share. While we are providing guidance on a full year basis, we recognize the importance of understanding the nuances that each quarter may present. With the closing of CFC IPA and the future planned closing of CFC Health Plan, we anticipate a notable uplift in our revenue from Q4 2023 to Q1 2024 and even further in Q2 2024 when we will experience a full quarter of impact from CFC in our financials. Historically, our business has experienced seasonal trends in line with industry norms. Speaker 200:20:07Our margin typically is normalized for Q1 while expanding in the second and third quarters as one time settlements are recognized before returning to a normalized level in the Q4. It's important to note that while we strive for operational excellence and margin improvements, our strategic investments in market expansion and transition to full risk are timed to optimize long term growth, which may result in quarter to quarter margin variability. We believe this context is crucial for our investors as it provides a lens to which to view our quarterly performance within the framework of our annual guidance. Finally, I want to reiterate the bright future ahead for our strong business development pipeline coupled with the strength of our model as we look ahead to 2025, 2026 and beyond. With that, I'm going to hand it back over to Brandon. Speaker 100:21:08In conclusion, we are proud of the positive impact we've had on the communities we serve, our growth partnerships, our financial achievements and our capital deployment strategy over the past year, showcasing our platform's capacity to consistently achieve 3 main operational objectives. 1, expanding our member base in both existing and new geographies 2, supporting our care delivery and care partners providers in their transition to value based care and 3, empowering our providers to achieve outstanding patient outcomes for full risk. The recent partnership with Bass Medical Group, the acquisition of CSC IPA and TFC Health Plan and the continued move towards full risk further diversify our membership mix and provide us with pathways to expand our value based care exposure. The Astrana Health platform provides a highly differentiated pure play value based care company that is not only growing rapidly, but also yields profitable and sustainable growth. We have made strong progress across all three objectives and have established a solid foundation for a bright future of continued growth and impact in 2024. Speaker 100:22:25And we're excited to further accelerate our mission to provide every American with access to high quality, high value healthcare. Thank you all for your time today. With that operator, let's open it up for Q and A. Operator00:22:44Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Ryan Daniels with William Blair. Please proceed with your question. Speaker 300:23:29Hey, guys. This is Jack Zenc on for Ryan Daniels. Thanks for taking the questions. In terms of EBITDA margins, you ended 2023 with EBITDA margins of about 11%. And if we take the midpoint of the 2024 guide, adjusted EBITDA margin is right at about 10%, which is still impressive. Speaker 300:23:45But I know the integration of the RKK license is supposed to bring some margin improvement. And know that you're focused on operational efficiency. So is the flat margin outlook just more conservatism? Is it that the RKK won't have too much of an impact yet in 2024? Or is it maybe just like the new market entry costs causing it? Speaker 300:24:03Can you just kind of walk us through the puts and takes for the EBITDA margin for 2024? Thanks. Speaker 100:24:10Hey, Jack. Thank you for joining the call and thanks for the question. You're right, the midpoint of revenue and adjusted EBITDA applies around a 10% margin and there are a couple of puts and takes there. We'd first note that we've historically been conservative in our first attempt out at a guidance set of ranges numbers for the year. We'd also point out that there are a couple of headwinds in the industry, obviously around Medicare Advantage, around the risk model, why we think we are relatively insulated from some of the changes that others may be experiencing. Speaker 100:24:47Again, due to an abundance of caution, we've that does put a slight headwind towards versus historical margins. I would also note that impacts of Medicaid redetermination as well as or any lingering effects of that as well as continued investment in our platform and new market entry are all baked into our guidance as currently contemplated. I'll turn it over to John to add anything else. Speaker 400:25:16Yes. No, I think you covered everything, Brandon. Speaker 300:25:20Okay, great. Thanks guys. I appreciate that. Just a quick follow-up then too. So just kind of focusing on the growth outside of California, I'm just kind of curious how we should think about that. Speaker 300:25:29I know a lot of the commentary lately has been focused on the California market, just given the RKK for Medicare and Medicaid. So and I think too in your prepared remarks, you mentioned that Nevada will be run rate breakeven by year end. So just kind of given the success that you are seeing outside of California, are you beginning to possibly look at additional geographies as well or just kind of what is your mindset with respect to furthering penetration outside of the California market? Speaker 100:25:57Yes, definitely. So as previously guided, we will continue to to expand into 1 or 2 new markets per year. Those market entry costs, which we've typically run at the low end of the $5,000,000 to $10,000,000 range that I got Speaker 500:26:12to you Speaker 100:26:13on the call have been baked into our guidance ranges for the year as well on the adjusted EBITDA line. We typically look at markets in terms of building depths rather than trying to fill every single state on the map. So I think there is a certain level of deliberation when we enter a new market. But when we do, we want to ensure that the care model, the technology infrastructure is deployed in a systematic way that allows us to continue breaking even within that 2 year time period as we had guided to before as well. So that's kind of the intent. Speaker 100:26:52With Nevada and Texas ramping up and Nevada expected to be run rate profitable this year, We are certainly looking towards additional markets. Speaker 300:27:04Okay, great. Thanks. And then if I can just sneak one final one in here. So PP and E decreased pretty substantially this quarter. Just wanted to double click, is this all because of the APC real estate spin off or was there something else that just caused that impact? Speaker 400:27:23Yes. I think you're correct in terms of with our changes in terms of the real estate spin off, you will see those appropriate changes on the balance sheet. Operator00:27:45Thank you. Our next question comes from the line of Brooks O'Neil with Lake Street Capital Markets. Please proceed with your question. Speaker 600:27:55Thank you very much. Good afternoon. Just following up on Jack's last question, I just want to be 100% clear that you guys are including this $5,000,000 to $10,000,000 per new market entry, but you haven't included any assumption about the impact of whatever you do to enter these new markets in terms of affiliations, partnerships, etcetera? Speaker 400:28:26Hey Brooks, how are you? Great to hear you. So our 20 four-four task includes our the investments we will be making for these 1 to 2 markets. So it is built into the numbers today. Speaker 600:28:46The investments are, but not the impact of a new group or new partnership or whatever in these new markets. Speaker 100:28:59You know what I'm asking? Both the investment into business development, marketing, etcetera, as well as potential ongoing operating costs of operating the group are baked into the guidance. Okay. Speaker 600:29:14I think I got that. Obviously, there's been a lot of talk about elevated medical costs from some of the payers, in particular United, Aetna, Humana. I'm curious, do you have any sense that providers in your core markets saw elevated medical costs? And do you have a sense that it was your approaches to medical management and value based care that enabled you to do a good job of controlling those medical costs? Or do you have any comments? Speaker 600:29:56You see what I'm asking? Speaker 100:29:59Yes. Let me give it a try, Brooks. Thank you for the question. I think I would say that it's difficult for us to comment on regional performance of any of our payer partners. But given the level of interest that we are seeing from our payer partners in terms of aligning members to our value based care platform. Speaker 100:30:22We think that what we can speak about is that the strength of our care model and the durability and management of costs, medical costs associated with the patients that we are financially and clinically responsible for has been a value add to our payer partners. We continue to see strong interest in partnership and expanding our already successful partnerships into new regions into growing the book of business that we have with our payer partners. And we look forward to continue serving them and helping them decrease any fluctuations that they may be facing as well for our patient panels? Speaker 600:31:03Sure. All that makes sense. That's very helpful. Thank you. So let me just ask one last one. Speaker 600:31:10And I'm just trying to get my arms around the whole the notion of you guys taking full risk, which I believe is a great development and something you're more than capable of handling. I'm assuming that the big opportunity in the marketplace is to reduce inpatient hospital costs. Can you just talk a little bit about that and how the hospitals are viewing the transition that's going on out there in the world, not that you asked the deer how he feels about the hunter being in the field, but just tell me what you see in the marketplace and what the conversations are like out there? Speaker 100:31:58Thanks for the question. I think there are there is a bit of a divergence in the health systems and hospitals we work with. Those that have a plan in place as there are changes in Medicare Advantage and as there are changes in utilization trends, we've seen been successful, especially when they're working with us to keep the lower acuity and lower dollar per bed day patients out of the hospital and ensuring that the appropriate place of care is being used for a given procedure or for a given patient. While we think there's greater and greater awareness among hospitals and health systems around the benefits of doing that. And we continue to be in conversations with a lot of large health systems and hospitals to bring that model to the geographies that we serve. Speaker 100:32:56Brooks, I may have missed one of your earlier questions. I apologize around what was baked into our 2024 estimates as well. So maybe I'll answer that quickly. All the costs of new market entry are baked into the bottom line guidance, but our revenues are pretty minimal, 0 to minimal baked in on the top line for new groups that we may partner with this year. So that's the impact on top and the bottom line for new partnerships and new markets for 2024. Speaker 600:33:30Thank you for clarifying that. I was thinking that was the answer, but I didn't actually hear you say it. So hearing you say it is very helpful. Thank you again. Speaker 100:33:40Thank you, Brooks. Operator00:33:45Thank you. Our next question comes from the line of David Larsen with BTIG. Please proceed with your question. Speaker 500:33:55Can you please talk a little bit more about the data files, churn, how current they are? Like Agilent talked about getting more data higher utilization claims. Privia talked about getting sort of more accurate forecast with data and higher utilization. Do you basically have all the 23 data now? Are we through that? Speaker 500:34:15And we have high conviction that we're there. Sorry for the background noise. Thank you. Speaker 100:34:24Hey, David. Thank you for the question. Good to hear from you. Around our visibility into data, I think we have as good of visibility as could be had. As we had mentioned before, we operate in a delegated environment where we are responsible for authorizing prior authorization requests, managing the referrals in our network, as well as paying the claims associated or the cost of the claims associated with the claims and authorizations that we process. Speaker 100:35:02That combined with our proprietary data infrastructure and our team's ability to predict based on historical usage and the trends that we are seeing give us a good amount of visibility into where utilization might trend, call it, a quarter or 2 ahead of time. That's not to say, of course, that something couldn't happen. We're talking about elective procedures here. But in terms of our data visibility, we think we are fairly we're pretty confident in our ability to see how trends are evolving over time. As far as 2023, I think John can answer how much of that is baked in today. Speaker 500:35:43Yes. Thanks, Brandon. Okay. That's great. Speaker 400:35:49Yes. Go ahead, please. Yes, sure, David. Our unique delegated model really allows us to have close to real time authorization data. At this time, in terms of our authorization, say, it's in the 98%, 99% range in terms of claims that we expect in the future. Speaker 400:36:12So we feel quite comfortable around our managed book of business. Speaker 500:36:19Okay, that's great. And can you talk a little bit about BaaS please? Privia mentioned them. From what they said, it sounds like their relationship with BaaS isn't going to change. Can you just talk about how that's going to fit into your entire network? Speaker 500:36:30It seems like it makes a lot of sense to me, like they have specialty services, your primary care groups can refer there. You can basically keep the care in your network and perhaps improve cost trend as well. A little more description there would be helpful. Thank you. Sure thing. Speaker 100:36:47I haven't heard the exact comments, but I think based on your portrayal, I would agree. There are different services that are being provided to Beth Medical Group. And at the end of the day, our goal is to help those providers, multi specialty as well as some primary care in Beth medical group to be as successful as possible and to deliver a high quality of care to their patient population in a differentiated way. What we are going to provide to them is that we are going to provide our risk ecosystem, including contracts, value based care infrastructure, the full suite of delegated services as we talked about before, contracting credentialing, utilization management, care management, claims payments, etcetera, 2 best in addition to performing some of the care management and clinical programs necessary in order to succeed in a value based care contract over time. That's something we're beginning to do this year. Speaker 100:37:39I think in my prepared remarks, we talked about creating a network, an IPA as well as moving that as appropriate into the restricted Noxicating full risk upside downside construct as time goes on probably in 2025. We think that this will lead to better accountable care results for the patients that BaaS serves. And I think that is a separate business than the one that BaaS may be currently using another company for. Again, at the end of the day, we think there's room for everyone and we look forward to helping BaaS and its providers execute and provide really good care to the San Francisco Bay Area community. Speaker 500:38:24Okay. It's very helpful. Thank you. And then just one last quick one. For CFC, I think that they bring an incremental $20,000,000 or more of EBITDA. Speaker 500:38:31Is that included in your guidance? Thanks very much. And then I'll hop back in the queue. Speaker 400:38:40Yes. In terms of CFC, CFC is baked into our guidance. We did close in terms of a 2 step acquisition, the IPA in January. And we're still on track to close the second part, which is the full risk bearing restricted box scheme license at the end of Q1. Speaker 500:39:06Okay, great. Thanks. Congrats on a good quarter. Thank you. Speaker 400:39:09Thanks. Operator00:39:13Thank you. Our next question comes from the line of Adam Raun with Bank of America. Please proceed with your question. Speaker 700:39:22I have a question about how this RKK license flows in over the 24 months as you mentioned. I was a little surprised to hear that you said full risk as a percentage of total capitation went from like 46 to 49. I would have expected to bigger swing given it was January and that if you were going to renegotiate a contract with an insurer, I would assume most of it would happen in January. So when you mentioned 24 months, did you really mean like 12 months from now and then 12 months after that when those things take effect or can you renegotiate throughout the year? Speaker 400:40:01Hey, Adam. Thanks for the question. So first, it's less about the contract negotiation and it's more about the regulatory approvals. So even if the contract is negotiated, there's a joint filing and then there's a process with the DMHC for us to be able to move these numbers to full risk. So as you're thinking about the Medicare Advantage, FYB membership, if that will continue to happen throughout this year in terms of the CFC and Medicaid related members, you won't see that change until the CFC RKK closes. Speaker 700:40:50Okay. So what would cause it to be evenly distributed then across 24 months if it's waiting on a regulatory license? Like is it something that's going to be lumpy where 1 quarter is finally approved and you get most of the benefit there or just how Speaker 400:41:09Yes, it is going to be lumpy. It's not going to be evenly distributed. And so as we have a contract that the DMHC approves, you will see that step up in membership. Speaker 700:41:26Okay. And when you say contract, is that so with each individual payer for each individual product line, you have to get a separate approval and separate Speaker 400:41:35That's correct. Yes. For every county for each line of business and contract, there's a separate approval. Speaker 700:41:42Okay. And are you specifically trying to do this in a more like are you trying to measure the pacing of it or is it just you're applying basically as fast as you can and you just expect that it would take 12 to 24 months? Speaker 400:42:01We are going as fast as we can through the process. It does take time. Speaker 100:42:08Yeah. Yes. Speaker 700:42:10Okay. And then on the MSSP, it was interesting. So can you give us like how many members are in versus ACO REACH in 2024? And then kind of recap maybe what happened with ACO REACH in 2023? And then you mentioned the V28 might be 50 basis points, 100 basis points of revenue of ACO REACH in 2024. Speaker 700:42:35And I think there is an increase in the discount rate of another 1%. So would you expect 2023 performance to repeat or would there be a degradation in ACO reach and that's why you're moving into MSSP. And so just understanding more of some of the original Medicare programs would be really helpful. Speaker 100:42:53Sure thing. I don't think we have officially disclosed MSSP numbers. I would say it's between certainly more than 5,000 numbers since it has to be, and then I would say probably less than 10,000 numbers. So it's in that range. The rest of the accountable care organization numbers are in our ACO reach program. Speaker 100:43:15In terms of V-twenty eight impact, John will take that part of the question. Speaker 400:43:22So in terms of our impact on the ACO reach, we're expecting a 1% impact due to V28 in 2024. Those numbers are baked into our full year guidance. Is that helpful or Yes. Okay. Speaker 700:43:48But is there any way to think about how guess, maybe just so we have the ACO REACH numbers in 2022 from the government. And so did 2020 was 2023 an improvement? And do you expect further improvement Speaker 400:44:01in 'twenty four? Yes. We expect our performance in 2024 to be a little bit better than 2023, so about overall 2% to 3% Speaker 200:44:24margin in 2024. Speaker 700:44:27Okay. That's super helpful. Speaker 100:44:29Just to be clear, the 3% margin John's discussing is post, Speaker 300:44:37I would say, that's Speaker 100:44:38care platform contribution, post distributions to providers, post incentives, post bonuses, quality, etcetera. Speaker 700:44:46Interesting. Okay. And then, so just to understand your comment about the quarterly cadence earlier, it sounds like the quarters are going to be somewhat variances in terms of earnings contribution. And so is the seasonality going to be similar to 'twenty three or 'twenty two? Or is there a way we could think about first half, second half just so we don't have to be surprised in Q1? Speaker 700:45:13Maybe that's going to be the highest contributor, just more of a finer point around that would be helpful. Speaker 400:45:22Yes, you'll see some you will see similarity to 2023. Q3, as we've seen historically, is the highest quarter followed by Q2, then Q1, and lastly, Speaker 700:45:41That's helpful. And on the MA utilization comment, that was a new comment. I thought that the previous commentary or the way you were kind of talking about it was that you weren't seeing really MA utilization pressure and that maybe you thought that regionally it was more of a problem elsewhere, but it sounds like in Q4 you were kind of surprised by that. And so you do have like delegated claims more visibility into it, but why wouldn't that have been picked up kind of in like the Q3 call? Speaker 400:46:16Yes. I think what we're trying to say is in Q4, November, December, we saw a slight uptick as we have seen in historical years and that is captured in our guidance. Speaker 700:46:33Okay. So slight uptick similar to like sequentially you're saying and that's a similar sequential increase to historical or you're saying you're starting to see some of the pressure that the outsized pressure that other payers are talking about? Speaker 100:46:47Yes, it's correct, Adam. I think we had commented before that we are seeing slight increases in certain pockets, inpatient senior utilization, for example, certain elective surgeries. I think we had discussed that on previous earnings calls, but nothing that we couldn't manage through and nothing that would have changed our guidance. I don't want to say that there is literally zero impact that we are feeling. It is something that we have managed through and is included in our guidance for 2024. Speaker 700:47:21Okay. And then I heard if I heard you just want to clarify last thing, if I heard you correctly, you're saying that what is the $14,000,000 bonus you were mentioning that was in cost of services? Speaker 400:47:34So pre the spin off of the APC Excluded Assets, if APC Excluded Assets does a bonus distribution as they did in Q4 to their shareholders, that ends up running through the consolidated P and L. So oftentimes there's a question around, well, why did implied MCR go up? So I just want to be very clear in terms of what that bonus was the amount and when it happened. Yes, going forward, you won't see this happen. Speaker 700:48:17Okay. I guess last one, if I could squeeze it in. The cost of service ratio, if we just divide and maybe take out the $14,000,000 payment in 2023, would you think it'd be higher or lower in 2024? And what would be the drivers around that? That would be my last question. Speaker 700:48:32Thanks. Speaker 400:48:36I would say it's going to be pretty consistent. If you look at the partners segment specifically and the cost of care ratio for 23 in partners, we expect it to be pretty consistent in 24. Speaker 700:48:51Perfect. Thanks so much. Operator00:48:56Thank you. Our next question comes from the line of Jack Sullivan with Jefferies. Please proceed with your question. Speaker 800:49:06Hey, guys. Congrats on the quarter and thanks for taking the question. Happy to be jumping on here. Speaker 600:49:12A lot Speaker 800:49:12of them already asked for me. I guess, looking forward, right, it's been a couple of months since we've seen announcements of new partnerships, whether it be enablement or some others, right, since 3Q call. How's the pipeline shaping up when you think about the enablement business, both in California and then maybe filling out some of the other geographies? Any color you can get there would be really great. Speaker 100:49:36Hey, Jack. Thank you for joining the call. So I think overall, the new business development pipeline remains very strong, probably strong as we've ever seen it. With the turmoil in the market and some of the headwinds facing some of our other companies in the space, we think where we are one of the few differentiated players who can take risk, who are not shying away from taking risk in a prudent fashion, in a data driven and analytics driven fashion, and are able to succeed in those constructs. That means that when we go talk to provider groups, when we look for partnerships, even when we're selling our care enablement solutions into the market, and remember it's a flexible model for a given geography dependent on what the providers' preferences are in that market. Speaker 100:50:33We have a variety of tools to address those preferences. When we are selling those suite of products across enablement delivery and partners, Speaker 200:50:42we're seeing Speaker 100:50:42a tremendous response. I think over the past couple of years there have been noise, there has been a lot of capital, a very low cost of capital that has shielded or hidden, kept hidden actual performance or lack thereof. And as that environment has changed, as we're all aware on this call, our model continues to stand out as a differentiated model and that's helping us win and participate in a large number of business development opportunities, some of which we have already shared with the public. So it's very strong and we're excited to continue growing our impact across the country. Speaker 800:51:26Got it. Really, really helpful. One more for me. Just thinking about the commentary on continued 25% growth in the medium term and beyond in the presentation, when you look at that revenue growth has been really strong. I guess the sense that the rest of the industry has that 24% is sort of the bottom when it comes to margins and profitability in risk based businesses. Speaker 800:51:52Do you get the sense that you've scaled through it and weathered some of it and there's opportunity for an acceleration in sort of core economics as you look to 2025 and 2026? Or let me know, I guess, how you're thinking about that sustainable growth outlook and where we sort of sit as far as your financials from a utilization perspective in 2024? Speaker 500:52:15Sure. Speaker 100:52:16No, thanks for the question. I want to start off quickly by remembering what the company looks like in 2019 when I joined this organization. We had done $561,000,000 of revenue, dollars 54,200,000 of adjusted EBITDA. Midpoint of guidance for this year is $1,750,000,000 of revenue and $175,000,000 of adjusted EBITDA. That is we have grown the business at a 26% CAGR clip on both the top and the bottom lines for 5 years in a row and that's not going to change going forward. Speaker 100:52:50That's something that we have the proven ability to manage through whether a cycle comes, a cycle goes, companies come, peers come, peers go. Our model has been durable. It is diversified across lines of business. It is now becoming increasingly diversified across geography and it is backed by a world class data engineering team and software engineering platform that allows us to have visibility into the future that we think will serve us well as we take on more risk. Given the immediate levers that China discussed, for example, some of the movement into forward contracts in California, we believe that already has that already gives us strong visibility into that continued near term revenue and EBITDA growth. Speaker 100:53:41And frankly, any geographies continuing to succeed Speaker 500:53:45are Speaker 100:53:45almost a cherry on top. But it is part of our growth algorithm to continue growing 1 or 2 markets a year. We are seeing new markets so far ramp as expected. And we're very optimistic, especially given the business development pipeline, as I mentioned earlier, around where we can go for the next 3 to 5 years at least. Really helpful color, Brandon. Speaker 800:54:08Appreciate it. Congrats again on the quarter and all the recent developments. Operator00:54:16Thank you. Our next question comes from the line of Dayalandra Singh with Truist Securities. Speaker 900:54:25Thank you and thanks for taking my questions. First one, I want to go back to a Bass Medical Group partnership topic. Was this a competitive process or more of an exclusive discussion? And there was some confusion on the loan that was offered to BaaS as part of partnership. Maybe you can help clarify that as well? Speaker 100:54:46Hi, Jalendra. Thank you for joining the call. It's great to hear from you. Yes, happy to answer those questions. Without saying too much, I would say that the process was a competitive one. Speaker 100:55:00We were not the only bidder in the process and we are glad that we were chosen. And I think the durability of the model that we've proven the growth good consistent growth of that model, both on the revenue and adjusted EBITDA lines were proof points for that group among others, including our demonstration of our technology, the demonstration of our care models, alignment mechanisms that we use, etcetera, to help win that process. But to answer your question, to our knowledge, it was a competitive process. Around the loan, I think we disclosed more information around the loan in our press release associated with our full year earnings. So happy to answer any other questions around the loan if that has not been answered, but the intent is for them to invest those dollars alongside us to continue to expand the footprint of both primary and multi specialty care across the San Francisco Bay Area. Speaker 900:56:08Okay. And then my follow-up here is that, I know you gave some color around revenue and EBITDA growth on a consolidated basis. I was just wondering if you can provide a little bit more color around expectations across the 3 business segments like Care Enablement, Partners and Delivery either directionally or qualitatively in terms of revenue growth and EBITDA trends in 'twenty four versus last year? Speaker 400:56:35Hey, Jalendra. Thanks for the question. The majority of our growth will be based in our partners division since it is the majority of our revenue today. With our continued growth in relationships as well as our rich BD pipeline, you will see a large portion of that growth come through partners. Enablement will grow equivalently to partners. Speaker 400:57:09And in terms of delivery, I would not if delivery will grow as it's grown historically. It won't scale at the level of partners. Speaker 900:57:25Okay. And then my last one around this Community Family Group acquisition. I believe when you announced the deal, it was expected to generate like around $190,000,000 revenue $25,000,000 EBITDA. But based on some filings in California, it looks like perhaps it's generating a higher run rate of revenue. Is that driven by moving some of these lives to full risk with the RKK license that is being acquired here? Speaker 100:57:53Yes, exactly, Jehangra. Thank you for doing the research there. That's great. I think, we had previously noted that in the middle of 2023, when CFC was still a care enablement client of ours that we had helped them successfully move from a partial risk to a full risk construct. And the 190 number was a trailing 12 month number as of the reported date. Speaker 100:58:26We had exactly the date, but it was not including the full year impact of that change from partial risk to forest. That's also part of why we had previously noted in previous calls that there was infrastructure we had invested in technology, people, services, etcetera, operations in 2022 2023 in order to fully enable that shift of our care enablement clients close to 200,000 maybe 190,000 members into a 4 risk construct. That's also why we guided to us being confident that we can redo this or continue to do this rather across both our own restricted NOXAKIN license that we had already had as well as the one that we hope to close on that John mentioned earlier sometime by the end of Q1. So to answer your question, yes, that was part of the impact was the movement into the restricted NOXANE full risk construct for the 190,000 or so members. Speaker 900:59:27Great. Thanks guys. Speaker 100:59:29Thank you so much, Sundar. Operator00:59:33Thank you. Our next question comes from the line of Gary Taylor with TD Cowen. Please proceed with your question. Speaker 1000:59:43Hi, good evening. Most of my questions answer. Just wanted to ask a couple. You talked about just a little bit elevated trend in MA and obviously you're moving increasingly to full risk. How are you guys tackling supplemental benefits, particularly around OTC and Flex that really seem to catch a lot of capitated groups off guard because 1, they haven't card those out and 2, they haven't been able to find much ability to impact that benefit consumption? Speaker 401:00:20Hey, Gary. Good to hear from you. So it is a continuous focus within the California market, especially Los Angeles County being one of the most competitive in terms of OTC and supplemental benefits. Over time, we've worked with the plans to get to the appropriate contract type that allows us to make sure we are getting the appropriate dollars that we need to take care of the members. And we're not impacted by potential changes around OTC benefits and other supplementary benefits. Speaker 101:01:09Also note real quick that there's good payer diversity in terms of the percentage of our revenue that comes from any One Health plan. And so there is there is a bit of a hedge across our business, across both line of business, Medicaid and Medicare commercial as well as in terms of which plan that we are talking about in terms of the specific supplemental benefits involved. Speaker 1001:01:36Got it. So, well, apparently some pretty good foresight there then versus peers. My last one would just be, my understanding is California DHCF Speaker 101:01:46is going Speaker 1001:01:46to hold restricted NOXKINE and other risk bearing groups to 85% MLR in 25%. But the actual formula for how that will be calculated hasn't been finalized in the regs or at least I haven't seen it. Do you know if those regs are finalized? And then how do you think about that minimum MLR impacting your shift to full risk in California in the next couple of years? Speaker 401:02:17Yes, it's a great question, Gary. First part of your question, the regs have not yet been finalized and we're working closely with other providers in a coalition to better understand the regulations as they're coming together. In terms of the second part of your question, you are right. There is this DHCS requirement associated with the Medi Cal book of business and the MLR associated with it. Now, just want to remind you, we have multiple lines of business and we believe we will be able to work through this as we have done with other regulatory changes within the state. Speaker 1001:03:08Okay, got it. Thank you. Operator01:03:14Thank you. There are no further questions at this time. Speaker 101:03:22Thank you all for joining our earnings call today and for discussing some of the results from our 2023 full year as well as some of our guidance for 2024. We greatly appreciate the time you spent this evening and please reach out to us at investorsastronahalf.com Speaker 501:03:38if you Speaker 101:03:38have any further questions. Thank you again and good evening. Operator01:03:45Thank you. That concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by