Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details on the repricing of 40% of your Book of Business and the improvement in renewal percentages and incentives for 2025? A: Steven Sell, CEO: We feel good about the progress with payers. The 40% repricing pertains to the membership up for renewal, showing improved economic terms and quality performance incentives. Additionally, we are negotiating part D risk mitigation for over 50% of our membership. We also see opportunities for year-one alternative economic arrangements for new partners, offering a glide path into risk arrangements.
Q: Can you clarify the trend numbers for the third and fourth quarters? A: Jeffrey Schwaneke, CFO: Initially, we assumed a 6% trend for Q3, which is now over 9.1%. For Q4, we expect a 5.2% trend, based on historical seasonality, with Q4 being the highest quarter of the year. The PMPM for Q4 is roughly 7% higher than Q1 and 3% higher than Q3.
Q: What is the expected cash position at the end of 2024, and what is the projected cash burn for 2025? A: Jeffrey Schwaneke, CFO: We expect to end 2024 with approximately $365 million in cash, including $35 million from ACO cash. For 2025, we anticipate a cash usage of $110 million, reflecting this year's performance.
Q: Regarding the $325 million medical margin step-off point for 2025, what are the underlying assumptions? A: Jeffrey Schwaneke, CFO: The $325 million is the run rate exiting 2024, excluding $100 million of prior period development. This is before the impact of strategic actions like exiting partnerships and renegotiating contracts. Key factors for 2025 include payer activities, part D risk mitigation, and utilization assumptions.
Q: Can you explain the mid-year risk adjustment impact and how you plan to address it? A: Steven Sell, CEO: The mid-year risk adjustment impact was $100 million, due to lower adoption and capture of conditions than expected. We see this as an execution opportunity and are working to close gaps with partners and payers. We expect improvement in 2025, with a larger opportunity in 2026.
Q: What is the rationale for exiting two partnerships while keeping three unprofitable ones? A: Steven Sell, CEO: The two partnerships being exited have significant losses and a longer timeline to profitability. The remaining three are closer to profitability, with some expected to break even in 2025. The decision is based on mutual dialogue and payer dynamics.
Q: How are you addressing the challenges with part D risk? A: Steven Sell, CEO: Part D risk is a negative impact, and we are working to mitigate exposure through carve-outs, corridors, or other mechanisms. This is crucial as we step into IRA, and we aim to forecast part D cautiously.
Q: Is there a potential pathway to full claims delegation to address data lag issues? A: Steven Sell, CEO: Full claims delegation is not feasible in most markets. Instead, we focus on improving our financial data pipeline for detailed member and claims information. We rely on leading indicator data for inpatient utilization, and if we can't get necessary data from payers, we won't work with them.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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