P3 Health Partners Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2024

There are 12 speakers on the call.

Operator

Hello, and welcome to the P3 Health Partners First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note this event is being recorded. I would like now to turn the conference over to your host, Mr.

Operator

Ryan Halstead. You may begin.

Speaker 1

Thank you, operator, and thank you for joining us today. Before we proceed with the call, I would like to remind everyone that certain statements being made during this call are forward looking statements under the U. S. Federal securities laws, including statements regarding our financial outlook and long term target. These forward looking statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.

Speaker 1

These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward looking statements. We will refer to certain non GAAP financial measures on this call, including adjusted operating expense, adjusted EBITDA, adjusted EBITDA per member per month, medical margin, medical margin per member per month, medical margin per member per month for persistent lives and cash use. These non GAAP financial measures are in addition to and not a substitute or superior to the of these non GAAP financial measures.

Speaker 1

For example, other companies may calculate similarly titled non GAAP financial measures differently. Please refer to the appendix of our earnings release for a reconciliation of these non GAAP financial measures to the most directly comparable GAAP measures. Information presented on this call is contained in the press release that we issued today and in our SEC filings, which may be accessed from the Investors page of the P3 Health Partners website. I will now turn the call over to Doctor. Abdu, CEO and Co Founder of P3 Health.

Speaker 2

Thank you, Ryan. Good afternoon and welcome everyone to our Q1 2024 earnings conference call. I am joined today by Eric, Amir, Bill and Atul. We would like to begin by providing an update on the tremendous progress made in the Q1. We just reported a strong Q1, which exceeded our internal expectation on the top line, but fell short on our adjusted EBITDA target.

Speaker 2

Overall, we are quite pleased with the start of the year and therefore we're reaffirming our previous full year guidance of positive 20,000,000 to positive 40,000,000 of adjusted EBITDA for the year. Starting with the top line, our revenue for the Q1 of 2024 grew approximately 29% year over year, supported by a strong pipeline. As we previously indicated, our per member per month funding was up approximately 8% year over year despite the headwinds of substantial membership growth along with the V2824 changes and the benchmark reduction. Our Medicare lives have grown to approximately 120 6,800 lives or 23% growth year over year, which already exceeds the low end of our guidance range for the full year. This includes approximately 11,000 ACO reach lives up from 7,400 at the end of last year.

Speaker 2

As we said before, our percentage of persistent lives is a key driver of our pathway to profitability in 2024. I'm pleased to report on the success of our member renewal in the New Year. Approximately 90% are now persistent as defined by lives from December 2023 that remained with us in January 2024, up from 86% last year. To date, we have launched in 6 new counties adding 8000 to 10000 new lives with an existing payer partner, expanding our total number of counties served to 27. Operating expenses improved to $26,200,000 versus 35.6 1,000,000 during the Q1 of 2023, representing a 26% year over year decrease and robust operational efficiencies.

Speaker 2

Our medical expense in the quarter were approximately 12% lower sequentially, which reflects our view of a normalizing utilization trend, consistent with the commentary we made in our last quarter call. While we agree with the principle of conservatism in the current environment, we also believe that we are over conservative to the tune between $20 to $30 PMPM based on the actual claims run out we've experienced year to date for 2023 data service. Atul will go into much more detail, but we will continue to work with our actuary and auditor to align our reserve with actual paid claims. With that as a context, our adjusted EBITDA was a loss of $19,800,000 roughly flat to the Q1 of 2023. On a PMPM basis, we were approximately $86 better than Q4 of last year and approximately $11 better than the Q1 of 2023.

Speaker 2

Lastly, we are thrilled to announce our strategic partnership with Innovaccer to leverage their advanced AI platform. Through this partnership, we would advance P3 in the areas of predictive modeling, accelerate quality, gap closure and provide our clinician with actionable data at the point of care. With that, I'd like to turn it over to our CFO, Atul Kevskar.

Speaker 3

Thanks, Sharief. I will start today by discussing our recent quarter and how we are progressing towards our full year guidance. Then I'll provide updates on our liquidity position at the end of the quarter. Top line results for the Q1 were in line with our expectations, with capitated revenue of 384,000,000 dollars and total revenue of $388,000,000 both representing growth of 29% compared to the prior year. In the Q1, our medical margin was $36,600,000 or $96 on a PMPM basis.

Speaker 3

There are 2 noteworthy factors that impacted our medical margin in the quarter. The first is the general approach of claims from that period to with the benefit of having time for the claims from that period to present themselves, we have confirmed what we suggested at that time and now estimate that we had a cushion at that time of between $20 to $30 on a PMPM basis. We will continue to work with our actuaries over the next few quarters to observe the actual paid claims experience in 2024. Specifically, we will work to reevaluate our reserve estimates in light of the easing of utilization over the Q1 of 2024, around which Doctor. Bachus will provide further details.

Speaker 3

Over the next few quarters, depending on our data collected, it may be appropriate to favorably adjust our reserve. The second item worth mentioning is the impact of a timing difference related to our Part D exposure. Essentially, we recognize the full expense in the quarter, but we do not recognize any credit for the rebates until subsequent quarters when these amounts are typically provided by the health plan. The impact of this in the quarter is approximately $8,000,000 As it relates to operating expense trends, our corporate, general and administrative expenses decreased from over 12% of revenue in the Q1 of 2023 down to just below 7% in the current quarter. This is a sequential improvement from 8 percent of revenue from the Q4 of last year and consistent with our guidance for high single digits.

Speaker 3

We remain committed to continually improving our operating efficiency and continue to monitor spending. Adjusted EBITDA for the quarter was a loss of $19,800,000 compared to a loss of $19,100,000 in the Q1 of 2023. On a per member per month basis, adjusted EBITDA was a loss of $52 an improvement of $11 PMPM compared to the Q1 of 2023 as we successfully improved margins and lowered costs on a per member basis. We anticipate showing improvements as benefits from medical cost reductions, operational efficiencies and potential positive true ups flow throughout the year. These will create a contour rather than a straight line spread of results.

Speaker 3

Our net loss in the 1st corporate and general expenses. For the remainder of the year, we expect these expenses to continue to taper. As for liquidity, we ended the quarter with approximately $32,000,000 in cash. Additionally, at the start of the second quarter, we received approximately $15,000,000 in regular cash capitated premiums and an additional $15,000,000 of capital on our new note. To that end, we are reaffirming our full year 20 24 guidance.

Speaker 3

We still expect MA members to be between 125,000 135,000 and remain confident that our 2024 revenue will be between $1,450,000,000 $1,550,000,000 dollars Medical margin will range between $230,000,000 $250,000,000 representing $165,000,000 175 dollars on a PMPM basis. And finally, adjusted EBITDA ranging from plus $20,000,000 to plus 40,000,000 We're confident in our ability to achieve our EBITDA guidance for multiple reasons. First, we have the potential of a significant reserve release with our 2023 actual claims almost complete and showing strong improvement from previously booked expenses. 2nd, we started the year with strong membership growth, increased persistency and overall increased funding. 3rd, we expect an increase in our accrual of sweeps this year.

Speaker 3

And finally, our daily key indicators point to utilization being more on par and even below what we saw in 2023. And with that, I'll turn it over to Doctor. Bachus.

Speaker 4

Thanks, Atul. In our last earnings call, I stated that we had early indications of decreased medical expenses from December 'twenty three to January 'twenty four. Now that that data is more mature, I can indeed report that December of 2023 to quarter 1, 2024 continues to show a downward trend in utilization. For emits per 1,000 we saw a decrease of 2%. For emergency department visits per 1,000 they decreased by 6%.

Speaker 4

In addition, despite the 2 midnight rule change, we continue to see improvement in our observation of 1,000 rate to the tune of a decrease of 10%. During the Q1, medical expense was $9.18 PMPM, improving from $10.42 sequentially, a 12% decrease. In addition, P3 has continued to bend the cost curve for high risk members by accurately projecting and implementing appropriate care plans without incurring additional costs. We continue to proactively manage utilization for cost avoidance as well as conduct concurrent claims reviews for recoveries where we are delegated. Our effectiveness in high risk populations has been a key driver in P3's ability to effectively manage medical cost trends.

Speaker 4

Our care model continues to be effective in reducing cost, working in tandem with our high risk population to bring improved focus on dilutive and hospice care, increased enrollment into the COPD program and continued provider and patient engagement. We remain focused on improving utilization management to reduce unnecessary utilization and wasteful spending while improving the patient experience. Lastly, as Sherif mentioned, we're excited to have partnered with Innovaccer to ignite our AI and data capabilities. We will use Innnote Innovaccer's EHR agnostic physician engagement solution to seamlessly close coding and care gaps and use the company's population health analytics fleet to achieve quality and cost goals. And we will use Innovaccer's patient engagement solution to drive omnichannel patient outreach to improve the patient experience.

Speaker 4

Thank you. And with that, back to you, Sherif.

Speaker 2

Operator, let me make some closing comments and then I'll turn it over to Eric. Today, we reaffirm our 2024 guidance across all our metrics and shared with you that our membership was up 23%, our revenue was up 29%, our OpEx was down 26% and our funding per member per month was up 8%. And despite that the EBITDA is lower than expectations, we shared with you information to affirm and give confidence to myself and the team that we will achieve the targeted EBITDA positive for 2024. With that, I would like to reiterate that now is the right time for P3 to transition to our new CEO, Eric Kaufmann. I believe he is a perfect fit to guide P3 through the exciting new chapter.

Speaker 2

As I reflect on how far our company has come since inception, I am thrilled to welcome Eric to the team. I am filled with a deep sense of confidence that P3 is on a sound footing and poised for continuous success. So let me answer 3 questions is why now, why Eric and how we're going to do the transition. As I mentioned to you, as myself and the company mature from founding to operating to growing, it's time to for a fresh leadership. It's well known that transition of founder into new CEOs and operator is a great important step in any growing organization.

Speaker 2

And I believe it is important for us to bring in fresh blood and fresh set of eyes and skill set to continue to lead P3 under the same mission, vision and value that we've build it on. 2nd is why Eric. So I believe for me, I know Eric over 10 years, 2014, I think, or 2013, the first time we met and we worked together in healthcare partners with DaVita and I continued to stay in touch with them through the last 10, 12 years. And 2 years ago, Eric and I met, had lunch in the Seattle area and I introduced the idea to him to become the successor to myself in P3. And since then, we've been working on them, finally came to the conclusion yesterday to make that decision.

Speaker 2

So I believe that Eric is the right leader for the next phase and chapter for PA3. And like I said, check all the box doctors, great leader, great brand and great experience and value base. Finally is how we're going to do this transition. I'm going to be stayed on as an advisor. I'm going to work very closely with Eric throughout the transition period.

Speaker 2

And I'll be always available for any question or any support that anybody needed throughout that transition period. And I'm going to remain on the Board to work with a Board Director as well to continue to enhance the value creation in P3. With that, I'm going to turn it over to Eric.

Speaker 5

Thanks, Sharief. Let me start by saying how excited I am to join P3 and how impressed I am with the capabilities and trajectory. As was mentioned, I met both Sharif and Amir many years ago while serving as a Medical Director and a practicing surgeon at a predecessor company to Health Care Partners. They were early pioneers of value based care and we spent time together while at HealthCare Partners. I've learned a lot from them and will continue to do so as the CEO of P3.

Speaker 5

Following my initial time at Healthcare Partners as we transition to DaVita Medical Group, I then served as CEO of the Everett Clinic and Northwest Physicians Network in Washington State. While there, I work closely the acquisition by Optum. These experiences, along with my most recent role as CEO of Honest Medical Group, helped me develop the necessary skills in transforming significant pressures. We have an aging population, a shortage of PCPs and high rates of physician burnout. We need scalable solutions that engage clinicians and patients to bend the cost curve while providing high quality care.

Speaker 5

The P3 model of physician led, scalable, capital light, value based care platform is a clear advantage along the delegated functions, including claims and utilization management. P3 has demonstrated the ability to lower health care costs through physician and patient engagement in a growing market with significant white space. We will create depth in our existing practices by adding Medicare Advantage and Medicare ACO Reach membership to capture more mind share of the providers we serve. P3 is also at an inflection point of achieving profitability, which will fuel our future growth. We look forward to expanding our footprint healthcare system, our patients as well as for our stakeholders.

Speaker 5

I look forward to the opportunity to engage with many of the participants on this call over the coming months. It will be a pleasure to connect with our talented employees and associates across the organization as well. Thank you. So with that, operator, we're ready for Q and A.

Operator

At this time, we will conduct the question and answer Our first question comes from Brooks O'Neil of Lake Street Capital Markets. Please go ahead.

Speaker 6

Thank you very much. Good afternoon, everyone, and welcome, Eric. It's an interesting time to join P3. Let me start by just asking you, obviously, the company took more or less the last year, a slowed growth, although 29% revenue growth is not exactly slow, but focused on existing counties, existing provider relationships, existing members. As you think about the future, is now the time to resume growing in new markets?

Speaker 6

Or do you think you need the company needs more time to strengthen its base before beginning to look to a more aggressive growth posture again?

Speaker 5

Hey, Brooks. This is Eric Kaufman. Thanks so much for the question. What I think is we have to have measured growth as we move through the rest of this year and do that in a way where our underwriting is solid and we're clear on how we're adding those lives into the portfolio.

Speaker 6

That makes sense to me. Let me ask you this. The just listening to commentary around the industry, particularly towards the end of 2023, it was clear that many MA plans had seen significant utilization pressure that put a lot of pressure on the underlying economics of their business model. And my sense is companies like 33 organizations like P3 have the deep experience in value based care that's so in demand in the Medicare marketplace today. Is that your sense?

Speaker 6

Are you getting significant outreach from MA plans with which you guys work to suggest that there's a huge opportunity for you to expand and bring the knowledge and experience you have to markets beyond where you currently serve?

Speaker 4

Yes, Brooks. Hey, this is Amir. How are you? Absolutely. From what we see, the MCOs and Medicare Advantage Plans, etcetera, continue to look for that solution in multiple different areas.

Speaker 4

And as Eric said, we want to make sure we're growing smartly, right? And we will continue to do that. But the interest is very, very high in multiple areas and multiple states. So as we continue to prove the model that the model really truly works and create the EBITDA that we want to create that we've said we will obtain this year. Not only driving more and deeper into the practices we are in because of also ACO reach, then we'll be more apt instead of just going deeper into the counties we're in, but to look and spread to potentially other counties outside of the states that we're in today.

Speaker 6

Great. That makes total sense. Let me just ask one final one for Atul. I'm not sure, Atul, that I understood exactly what you were saying with regard to the $8,000,000 credit. Would you mind helping me understand helping us understand that just a little bit better?

Speaker 3

Yes. Brooks, thanks for the question. The it's really pretty straightforward. We expense the costs associated with the drugs in the current quarter as they're incurred. The revenue that offsets that, I.

Speaker 3

E, the rebates are given to us and administered at the end of the year when we receive all that information from the health plans. So it's similar to last year, as you recall, there was a little bit more of a timing difference in the way we recognize sweeps, and we changed that. That hasn't happened yet for the rebates. And that's something we'll work on over the course of the year, but it's really as simple as that.

Operator

The next question comes from Josh Raskin of Nephron Research. Please go ahead.

Speaker 7

Thanks. I'll start with the congrats to Sherif on all of the success so far and building of the company and founding really, really impressive. And I'll welcome Eric as well. Good to hear your voice as well. My question is on the revenues.

Speaker 7

I think you said PMPMs were up sort of 8%. I'm calculating something a couple of basis points lower than that. So I'm just curious if that was sort of in line with expectations. And then I know you've talked about sort of having less risk than others around the impact of V-twenty eight. But do you have a view on what the impact was this early in the year?

Speaker 7

Do you have to wait for the MA plans to kind of give you data or better sense on your membership risk?

Speaker 3

Well, it will evolve over the year, as you know. But I think, look, it's generally in line with what we expected, potentially a little bit better than what we expected. So we're very pleased to see that it came out that way, at least that's certainly what the documentation and the files are saying now. But we'll monitor it. And as far as any kind of if you're going up with a different calculation, we can certainly work that offline and get you where we are.

Speaker 2

Yes. And Josh, this is Sharief. Thank you very much for your kind words. And we expected, if you remember last time, we said that in the middle single digits. And if you look at the wrap accrual, it's about the middle single digit.

Speaker 2

The rest of it is benchmark improvement. So it came right or a little bit better than we expected. The entire is 8%, some of it is benchmark, but their accruals is about half to 5% from the 8%. And we still like we said, our overall RASP is still about 1.046. So we still have a cushion and a runway to continue to improve before we see a real impact of the B-twenty 8.

Speaker 7

Got you. And then second question just on discussions with your MA plan partners as you think about 2025. Your MLR in the Q1 is still over 100%. I know it will get down by the end of the year. But what sort of changes are you looking for, for 2025?

Speaker 7

Is there are you guys looking for a higher percentage of premium? Are there certain benefits that you're looking to carve out? I'm just curious sort of as you go into those negotiations in front of bids due next month, how are you thinking about what you're looking for?

Speaker 2

Yes. So absolutely, it's a great point, Josh. We've been serious conversation by modifying our exposure to the ancillary services or the benefits in excess of the medical benefits and also talking about the renegotiating or eliminating the pass through from the health plans. And we find actually receptivity definitely in considering moderating the benefits or flattening or even decreasing it to the point where the exposure on the medical cost becomes better. But you said that the MCR is over 100, we looked at

Speaker 8

you.

Speaker 7

Got you. Just the last one, if I can sneak one in, just the reserve methodology. I heard you talk about sort of this conservatism that may play out as you sort of pay final claim for 2023. And once you're done with the run out, there's a chance that reserves developed favorably. Are you reserving 1Q reserves in sort of the same methodology?

Speaker 7

Are we getting sort of conservatism on conservatism is your view that you've got the same level of wiggle room, the same methodology in your 2024 accrual?

Speaker 3

Yes, that's a great I'm sorry.

Speaker 2

Yes. So let me just address the methodology change and then I'll pass it on to Atul. Up until the Q2 of last year, we had calculated IBNR according to a triangle period. There was no additional cushion. And after that, we started adding 9% to 7.5%.

Speaker 2

So we take the claims paid, we calculate the triangle, then we add 9%. And that is what we're that 9% or 7 0.5% is what we call cushion, Josh.

Speaker 3

Yes. Josh, I guess, the punch line of this is that we suspected there may be some cushion that was larger than is necessary. We had the opportunity to go back and actually study the numbers now that they have the run out. And that's indeed what we are finding with the data. So the process now is really and again, just to remind you and everyone else, we don't necessarily set these amounts and book the amounts and determine the amounts to book.

Speaker 3

We have a 3rd party actuary does that. And so right now, we've begun to corroborate all that analysis with that 3rd party actuary. And then part of that is going to be agreeing on what is a reasonable and appropriate amount of cushion to be entering into. And so that's something we'll work on over the next hopefully, the next quarter, but certainly over the next two quarters.

Operator

The next question comes from David Larsen of BTIG. Please go ahead.

Speaker 9

Hi, this is Jenny Shen on for Dave Larson. I'll just echo my peers and say my congrats to both Sharif and Eric. So on the first question, EBITDA came in below our model. I was just wanted to ask what gives you guys the confidence to reaffirm the full year guidance? And can you talk about a little more about your visibility into that EBITDA?

Speaker 9

And how should we expect EBITDA to trend throughout the year?

Speaker 3

Yes. Jenny, that's a great question. So let me this is Atul. Let me just hit on a couple of things. I think when we think when we talked about the rebate recognition, that is strictly a timing issue.

Speaker 3

We had anticipated that that was going to be recognized in the quarter and it's just not going to be recognized until later in the year. So we're not questioning it. It's just an issue of, as I said, of timing. But the other components that I think are really the key drivers here is really around the cost reduction and the efficiencies of the business and the utilization as it relates to medical expense management. Many, many initiatives are in place.

Speaker 3

A lot of them are gaining traction, and we haven't even seen the full effect of those yet. We will over the remainder of the year. And then as I mentioned, we talked about the sweeps. We had a initial opportunity to start recognizing them because we were able to predict them. I think we will continue to develop that further and work with our auditors.

Speaker 3

But those are all fundamental things that give us confidence in the outlook. And this is all outside of any potential adjustment with regards to the reserve. Hope that answers your question.

Speaker 9

Yeah, that's very helpful. And just a quick follow-up. I appreciate the detail on the 90% persistent lives. Just can you remind us again what kind of greater visibility that gives you guys their margin profile? Any additional color there would be helpful.

Speaker 9

Thanks.

Speaker 4

Hi, Jenny. This is Amir. So yes, obviously the more persistent the life is, the more we can help to manage the chronic care of that patient, right. So if indeed we see patients coming in at 1 year, okay, that's fine. But when they start to go into the 2 years 3 years, then with greater persistency, we have much better opportunity, not only to have gained their trust, but to help them manage the significant chronic diseases that we see every day, whether being COPD, congestive heart failure, diabetes, renal disease, etcetera.

Speaker 4

So it's building that relationship that takes time with our care management teams, especially on those high risk, rising risk patient populations to work directly with our clinicians to maximize their care and or their outcomes. So that's why that persistency is always so important to us. I'm sure you've seen data as we've looked at it before. And those cohort analysis as we look at patients who've been with us for a certain period of time, we see significant reductions in the overall medical expense.

Speaker 9

Got it. That's helpful. Thank you.

Operator

Our next question comes from Gary Taylor of TD Cowen. Please go ahead.

Speaker 8

Hi, good afternoon. I wanted to make sure I understood a couple of the numbers. First on the Part D, the $8,000,000 rebate you expected, it doesn't sound like that was typically recognized in the Q1. Was that would you recognize those rebates in the Q1 historically?

Speaker 3

We did not historically recognize them in the quarter. We sort of followed the same pattern that we had. Our anticipation was that they were going to be recognized in the Q1. That's something we're going to work on with the auditors going forward around policy and documentation. This is a tool by the way.

Speaker 8

Got it. So had you recognized those and EBITDA would have been like negative 12 that would have been more in line with what you thought the quarter would look like?

Speaker 3

Correct. That is correct.

Speaker 8

And then on the reserve release, is that $25 to $30 per member per month, are we multiplying that by 3 for mostly coming out of the 4Q, we're multiplying that by 12 when we think about what could get released, I know in the Q4, I think you said there was a $23,000,000 reserve addition. So 3 or 12 kind of put us like $10,000,000 to $30,000,000 range almost maybe suggesting almost all that could come back to you. I just wondered how we should think about the per member per month?

Speaker 3

We're thinking about that on sort of a 12 month basis on a full year basis. So but again, before we and that's and again, we're not speculating on what amount of that is actually going to be recovered because there is certainly an appropriate amount of conservatism to have in the business. But that's something we're going to determine alongside and led by the analysis that the actuaries are going to do. So there's a process of corroboration. But our position is that we've had a chance to look at the hard numbers and this is what we're seeing over the course of the year.

Speaker 8

That's helpful. Last one for me on the increased sweep revenue expected. At this point, that's still a 4Q 'twenty four expectation and could you quantify it all?

Speaker 3

This is Atul again. I'm not sure we're in a position to quantify it, but I think the way we are thinking about it this year versus last year, there's 2 aspects to it. And I'll talk about the timing in a minute. One is that the business is simply bigger. And therefore, we believe that the sweeps, the percentage and the amount that we expect as far as the final sweeps go should grow as well versus last year.

Speaker 3

The second component of that is, as you recall last year, that was a relatively new thing for us, just to accrue sweeps that won't actually be known until the future. And that is something that we've gotten not only better at, but also greater buy in with our auditors who have carefully reviewed it with their own actuaries. So I think there's 2 aspects to why that ought to be bigger this year than next. And it is our expectation that we will, at least to some degree, accrue that smoothly over the 4 quarters. But there will still be a component of this without getting too much into the weeds, Gary, there will still be a component of this that will be specifically recognized in the Q4 as we get much closer and much more refined data later in the year.

Speaker 8

Great. Appreciate it. Thank you.

Speaker 3

Thank you.

Operator

The next question comes from Ryan Daniels of William Blair. Please go ahead.

Speaker 10

Yes. Hey, guys. This is Jack Zundich on for Ryan Daniels. Thanks for taking the questions. First off, in your 10 Q filing and I believe you said in the prepared remarks as well, you noted that you borrowed the remaining $15,000,000 from the promissory note, but and your cash burn this quarter was still about $20,000,000 So I guess just with all that, how should we think about your liquidity position going forward?

Speaker 10

And just your general comfort level around the cash balance for the next few quarters? Thanks.

Speaker 3

Yes. Look, I think a couple of things. One is, as I mentioned, right after the quarter started, we received, for example, a fairly substantial premium payment. It had that happened literally 24 hours earlier, you would have seen a $15,000,000 better cash flow from operations. So I think there's some timing sensitivity.

Speaker 3

So I wouldn't read too much into any one quarter with regards to cash flow from operations. We feel that we are in a good position from a capital standpoint, as we've said in the past. But I think as we've also said in the past, we are positioning ourselves for more rapid growth and more rapid growth in this business simply requires more capital. And so that's something that we do think about. So we would always consider that as an opportunity for purposeful growth.

Speaker 10

Okay, perfect. Understood. And then also in your prepared remarks, you mentioned the partnership with Innovaccer. Can you just talk a little bit more about the reason for going with the partnership route versus in house? And then just as a second part to this, can you just remind us what you were doing previously before the partnership for the capabilities they're bringing in?

Speaker 10

I thought you're doing the predictive modeling, etcetera. So is this just a more efficient route that you're deciding to go? Thanks.

Speaker 2

Yes. So this is Sherif. So what we've done before, we had an algorithm for the predictive modeling and we had a tech stack that is up to date that was doing the job. What we are mainly going to shift in Innovaccer or what attracted for the strategic partnership with Innovaccer is the AI platform and having that tools to enhance our ability to do the model link, to enhance our ability by putting that notification. It's an EHR agnostic tool that can communicate with the providers at the point of care.

Speaker 2

So that's what we're dealing with. It's accelerating closure, improving the predictive modeling and the communication at the point of care. And it's going to take 12 to 18 months to implement the full partnership to be in effect and it will be cost neutral for us as well. So enhancing the AI, all the benefits that I mentioned and cost neutral, that is what attracted us to Innovaccer.

Speaker 10

Okay, perfect. That makes sense. Thanks. And if I can just sneak up one final one in. In terms of the ACO Reach contribution, can you just talk about your longer term vision for the program and how I guess or if ACO REACH will eventually contribute more to your results?

Speaker 10

Just kind of curious if you can just double click on what your long term vision is here.

Speaker 11

Yes. Thanks so much. This is Bill. So as you've heard in prior calls with us, the ACO REACH program is something that we're getting in, not just a toehold, but we're going all in this past year. And we've grown substantially from 23 to 24 in all of our markets.

Speaker 11

With that being said, as Doctor. Kaufman alluded to in the beginning, we're very going to be approaching this very carefully using our data analytics to look at where we're having success, where we have opportunities to continue to grow in this particular platform. But we're excited about where we're at. We've had some nice successes last year and into this year. Doctor.

Speaker 11

Bachus, anything you want to add?

Speaker 3

The only thing I would add is,

Speaker 4

and Jack, as you've heard us talk about before, with our providers that we have about 2,700 or so providers,

Speaker 3

and the MA lives that

Speaker 4

we have with them. The ACO reach just gives us a much bigger and bigger deeper opportunity to go into each of those mind share with those clinicians. So as those clinicians, instead of having 100, 200 with us, now we can have 300, 400 or so with us. It just creates an overall better mousetrap to drive better performance for their understanding of value based care overall.

Powered by Quartr
Earnings Conference Call
P3 Health Partners Q1 2024
00:00 / 00:00