Alignment Healthcare, Inc.

Q1 2021 Earnings Conference Call

5/17/2021

spk02: And welcome to Alignment Healthcare First Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question on the phone line, you will need to press the Start and the 1 key on your touchtone telephone. Please note, this event is being recorded. Leading today's call are Mr. John Cahill, Founder and CEO of and Thomas Freeman, Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Security Litigation Reform Act. These forward-looking statements are subject to various truths and authenticity and reflect our current expectations based on our beliefs, assumptions, and information currently available to us Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the risk factors section of the prospectus for our initial public offerings filed with the SEC on March 29, 2021, in our Form 10-Q for the quarter ended March 31, 2021. In addition, please note that the company will be discussing certain non-GAAP financial measures that they believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconsultation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website and in our Form 10-Q for the quarter ended March 31st, 2021. I would now like to hand the conference over to your speaker, Mr. John Carroll. Please go ahead, sir.
spk05: Thank you, operator, and thank you all for joining our first earnings call as a public company. I'm proud to report that we exceeded our expectations across all of our key performance metrics for the quarter, including our health plan membership, revenue, adjusted gross profit, and adjusted EBITDA. We increased health plan membership by 32% year-over-year from 62,900 members to over 83,000 members at the end of the first quarter. Our strong growth over the last year reflects how seniors recognize the unique value of our rich offerings. Our revenue of $267 million increased 19% year-over-year on a consolidated basis. More importantly, we described to you in the roadshow, our health plan premium revenue saw very strong growth at 30% year-over-year. Our adjusted gross profit came in at $23 million, and our adjusted EBITDA came in at a loss of $14 million. Taking a step back, Thomas and I had a chance to meet with many of you on our recent IPO Roadshow. But for those of you who are new to our story, I'd like to spend a couple of minutes sharing what I believe are key differentiators and what truly makes Alignment Healthcare unlike any other company out there today. We founded Alignment Healthcare in 2013 with a singular mission, improving healthcare one senior at a time. We are a next generation, consumer-centric platform revolutionizing the healthcare experience for seniors. The foundation of this company is based on the simple belief that we should treat all of our members like we would want our parents to be treated. With decades of experience and lessons learned through my work in health plan, provider, and healthcare IT businesses, I got firsthand experience with how the traditional healthcare system consistently falls short. I realized there has got to be a better way. We purpose-built this company to create a better overall experience for our seniors and in doing so have established ourselves as the leader in this space combining high touch and high tech. Alignment's business model is different than traditional legacy health insurance companies and unique compared to anything else in the market today. Our model combines best-in-class health plan capabilities with the culture, competencies, and compassion of a provider organization, all built around a unified data and technology platform we call AVA. We like to think of ourselves as a tech-enabled payvider. All of this results in a distinct ability to consistently deliver a high-quality, better care experience for members at a low cost. In turn, we take the sustainable competitive advantage and create higher value next generation coverage and benefits for our members. In order to show you how we do this, I need to first talk about our care model. It is based on three key principles that we have developed over 30 years of serving seniors. First, 20% of the population accounts for 80% of the spend in the MA space. We therefore need to know who is in the 20% of the high-risk population. We use AI and ML in our AVA platform to help us stratify the member data by acuity to personalize a care plan for each member. The type and level of care is based on each member's personal needs. The delivery of this personalized care leads to the next two lessons learned principles. Second, we strongly believe in aligning with community doctors and nurses and give them the data, the tools, expertise, and aligned incentives to enable them to thrive in value-based care. The alignment we have with the doctors has been foundational to the company's success. We don't want to compete with them. We want to enable them and support them. And third, to further support our provider partners, our Care Anywhere program utilizes our own dedicated clinical teams and a combination of high-tech and high-touch care for our highest-risk, most complex members. These cross-disciplinary care teams, which include employed physicians, advanced practice clinicians, case managers, social workers, and behavioral health coaches, work closely together to establish customized care plans and to engage our high-risk seniors. Our high-risk chronic and complex care management capabilities allow us to effectively manage risk, provide better clinical outcomes, and improve our seniors' experience across the board. This combination of working with both community-based doctors and our own Care Anywhere team in an aligned model represent lessons learned from over 30-plus years of experience. If the heart of the company is rooted in our clinical model, the brain relies on our AVA platform. AVA is our modular, componentized tech platform that everything is built upon. AVA was designed specifically for senior care and provides end-to-end coordination of the healthcare ecosystem. AVA is unique, proprietary, and the key to our successful growth in new markets. Even more so, AVA is critical to why our model works and how we intend to replicate and scale alignment across the country. Ultimately, our model is based on a flywheel concept, which we refer to as our virtuous cycle. We use AVA to identify the 20% high-risk members. We partner with providers and use the Care Anywhere program to improve healthcare outcomes. For example, by reducing unnecessary hospital admissions and in turn bring down overall costs. Our unique ability to manage healthcare expenditures allows us to reinvest our savings into richer coverage and benefits for all of our members, such as our black card or grandkids on demand. This, in turn, propels our growth in revenue and membership due to the enhanced consumer value proposition. Bottom line, it's high-quality, low-cost healthcare with a better senior experience. We believe that by bringing together our experienced, mission-driven team with our purpose-built technology, we have found a way to address the unmet needs of our senior consumers and ultimately do well by doing good. What's really important is how this all translates into results. During our IPO Roadshow, we told many of you that we saw three key avenues for growth in the short term. I want to provide you an update on how each of these has progressed in the quarter. While there are numerous other growth avenues over the medium term, our most immediate priorities are, number one, grow our membership in our existing markets. Number two, grow into new contiguous markets in our existing states. And number three, establish a new beachhead markets in new states, either organically or through M&A. In terms of our existing markets, our health plan business was in 16 counties in 2020. As of the end of the first quarter, our 16 same-store health plan markets grew from approximately 63,000 to 78,000 health plan members, which represents a 25% year-over-year growth rate. All of our markets grew year over year and 15 out of 16 same store markets increased their market share year over year as a result of our expanding provider relationships and our strong positioning of our diverse array of products. For example, we introduced an ethnically diverse product for the Asian community. We introduced several provider sponsored products that deepened our relationships with these provider partners and further differentiated ourselves from our competitors. We launched products that helped the socially and economically vulnerable. This product innovation combined with our expansion of provider partnerships was instrumental to our same store growth. In terms of expanding into new markets in our existing states, we added two new contiguous counties in central California for 2021. We added approximately 2,300 new members in our first three months in these two counties. Additionally, these two new counties expanded our total addressable market by approximately 200,000 eligible members. Also, in the first quarter of 2021, we launched health plans in four new markets across two new states, North Carolina and Nevada. While early, these markets are progressing well, and we expect them to expand our total addressable market from approximately $4.9 million to 5.5 million eligibles. I think these can be really significant markets for us over the next five years. As we've discussed, finding like-minded provider partners is a key component of our expansion strategy. An example of how we continue to grow and develop more integrated and empowered provider relationships can be seen in our North Carolina market. In that state, we partnered with a group of local provider organizations to participate in Medicare's direct contracting program, launching our joint venture on April 1st under the name Acceleron. Combined, our two DCEs have contracted with 16 primary care practices consisting of 56 clinicians. The initial population of approximately 5,800 members exceeded our expectations and was meaningfully higher than the 1,500 to 2,000 members we had indicated in our S-1. While still early, we believe the DCE partnership in North Carolina is indicative of the value alignment can potentially deliver to a broader set of seniors in traditional Medicare over time. Leveraging historical investments in our data-driven AVA technology platform and our comprehensive care anywhere clinical model will result in a distinct ability to deliver better care at a lower cost for chronically ill seniors. We remain mindful with respect to the long-term unit economics of the program, given that we are only a couple of weeks in, but we feel the program's intent is consistent with our model and in line with our area of expertise. As we think about new markets in the future, I can only tell you now that we are making very good progress engaging with like-minded providers in our targeted expansion markets. While we've made significant progress on our growth avenues in the first quarter, our top priority has been the continued safety and well-being of our members through the ongoing COVID-19 pandemic. We did see higher COVID-related utilization from Q4 continue into January. But as the quarter progressed, we saw that trend towards a more normalized level. Outside of the financial impact, we have sought to keep our members engaged and informed. In the first quarter, we hosted seven virtual town halls with roughly 18,000 members participating, sent an additional 5,000 masks to our seniors, the continuation of an effort we started last spring, and we've seen our members use their black cards in Q1 to purchase over-the-counter necessities like Tylenol, toothpaste, and miscellaneous grocery items. Additionally, telehealth and virtual care still represent 73% of our Care Anywhere visits in the first quarter. We've embarked on a number of other efforts to put our seniors first during these challenging times, including waiving home delivery fees for prescriptions from retail pharmacies and establishing an expedited process to ensure a smooth customer experience if a member choose to move their prescriptions from retail pickup to home delivery. offering zero cost sharing for telemedicine visits to all members for any reason, while strongly encouraging the utilization of these telehealth solutions, and partnering with a third-party vendor to increase access to telepsychiatry behavioral health support, given the impact that ongoing isolation can have on our seniors' well-being. I hope it's apparent to you all that Alignment Healthcare is truly a unique company with a differentiated position in the markets. We built this company on an incredibly solid clinical and technological foundation, and we made it even more powerful by bringing together a deep experience team. We're really well positioned for growth, and I look forward to updating you as we capitalize on the opportunities ahead of us. Finally, I want to recognize each and every one of our team members who work diligently every day to provide extraordinary care to our seniors. Achieving our mission wouldn't be possible without you. With that, I'll turn the call over to Thomas to review our financial results and our outlook for the rest of the year in more detail. Thomas?
spk06: Great. Thanks, John. I'd also like to thank everyone for joining today's call and for their interest in Lyman Healthcare. From a financial perspective, we were pleased with our first quarter results and the momentum we are seeing across the business. In my prepared remarks today, I'll briefly cover our recent IPO, review our first quarter results, and conclude by providing our initial outlook for the second quarter and full year 2021. I'll start with our IPO, which was successfully completed on March 26th. Including the green shoe, we sold approximately 30.5 million shares at $18 per share, resulting in gross proceeds of approximately $550 million. On a pro forma basis, we have approximately 187.3 million shares outstanding, including approximately 10.5 million restricted shares that are subject to ongoing vesting restrictions. Turning to our first quarter results. In spite of the broad COVID-related challenges to engage with the senior community during our primary selling season, we were able to generate strong net new enrollment year-over-year and ended the quarter with 83,000 health plan members. Our 32% health plan membership year-over-year growth rate continues to demonstrate our broad value proposition to our senior consumers in addition to the significant growth opportunity embedded in our 22 markets. Our health plan membership growth further translated to strong top-line performance. Total revenue in the first quarter of $267.1 million increased 19% year-over-year. Normalizing for the termination of one of our third-party payer capitation contracts in North Carolina, our health plan premium revenue growth was quite strong at 30% year-over-year, exceeding our initial expectations. Our revenue per member per month was consistent with our internal expectations for the first quarter. For our returning members, which we define as a member who was with Alignment in 2020, our efforts to engage our seniors and document their underlying acuity in the second half of 2020 have made a positive impact on our full-year visibility to the Revenue PMPM of those members in 2021. However, our new members to alignment have come in at lower Revenue PMPMs in 2021 than our prior experience would suggest is typical, which we believe is due to the COVID-19 pandemic. Given the fact that close to 25% to 30% of our health plan members will be new to alignment in 2021, we don't expect to have full visibility on our overall revenue PMPM until we receive the mid-year sweep from CMS. Accordingly, while we remain cautiously optimistic about the consolidated revenue PMPM for 2021, we have taken a conservative approach in our projections for the rest of the year. Moving on to non-GAAP measures. In order to provide a more representative view of our operations, when discussing the following QM metrics, we are adding back equity-based compensation expense of $31.8 million to of which $25.2 million was charged to SG&A and $6.6 million was charged to medical expense. Note that the vast majority of the equity-based compensation expense in the quarter was related to our IPO. Adjusted gross profit was $22.6 million for the quarter, as we continued to put our seniors first during the COVID-19 pandemic. Consistent with the broader state of California, we first began to experience a material increase in COVID-related hospitalizations in the fourth quarter of 2020, which carried over through the first half of Q1 2021. However, as we continued to deploy our clinical resources, we saw a reduction in COVID-related hospitalizations in the second half of the first quarter of 2021. This resulted in a net favorable mix of COVID versus non-COVID admissions for the quarter versus our internal expectations, which has a favorable impact on our overall claims per member per month. We also experienced some temporary favorability in some of our internal clinical model as well as our Part D gross profit relative to our internal expectations, both of which we would anticipate to reverse over the course of the year. While we exceeded our internal expectations, and in spite of some of the favorable utilization trends in the second half of the quarter, our overall medical benefits ratio was 91.5% in the first quarter. Seasonality in a normal year would typically reflect Q1 as a higher MBR quarter, given the impact that flu season can have on our results. Q4 is similarly often a higher MBR quarter. However, our 2021 Q1 MBR was higher than we would typically anticipate in a normal calendar year, given the impact of COVID on our consolidated revenue PMPM, as well as our overall claims trends. We believe that there will likely continue to be some abnormal seasonality in our MBR for 2021. However, we project that we will ultimately land in a high 80s for the full year. Our SG&A in the first quarter was $64.9 million. However, excluding equity-based compensation expense of $25.2 million in SG&A, our SG&A in the first quarter was $39.7 million, which increased 21% year over year. The increase was a combination of higher expenses to support our growth and incremental expenses related to being a public company. This quarter's SG&A was slightly lower than we initially anticipated due to the timing of certain expenses and investments contemplated in 2021. We expect these expenses will be incurred in future quarters. All of these factors resulted in an adjusted EBITDA loss of $14 million. We also finished the first quarter with a strong balance sheet and liquidity position. Following our successful IPO, we ended the quarter with approximately $377 million of net cash on the balance sheet. I'll wrap up my comments today by discussing our initial financial outlook for the second quarter and full year. We continue to see improved visibility to full year 2021 performance as we have concluded our primary selling season, which lends itself to our predictable recurring revenue model. For the second quarter of 2021, we expect health plan membership to be between 83,300 and 83,700 members, revenue to be in the range of $265 million to $270 million, adjusted gross profit to be between $32 and $34 million, and adjusted EBITDA to be in the range of a loss of $9 million to a loss of $10 million. For the full year 2021 outlook, we expect health plan membership to be between 83,500 and 84,500 members, revenue to be in the range of $1 billion, $40 million to $1 billion and $55 million, adjusted gross profit to be between $116 and $122 million, and adjusted EBITDA to be in the range of a loss of $56 million to a loss of $51 million. I'd like to provide a little more color on some of our underlying assumptions that were used to frame our guidance. For membership, we expect continued sales and disenrollment throughout the remainder of the year based on our prior experience. As a reminder, a majority of our net membership growth occurs by 4-1 of a given calendar year due to the timing of the annual enrollment period, or AEP, and open enrollment period, or OEP. We therefore expect more modest membership growth from March of 2021 to December of 2021, and would then expect a step-up in membership effective January 2022 after our upcoming AEP this fall. In terms of revenue per member per month, we anticipate seeing continued improvement in our visibility to our revenue PMPM for 2021, returning members over the next several months. For new members, however, we will not have complete visibility until the mid-year sweep, which generally occurs sometime in the second quarter of a typical calendar year. Until we receive that information, we believe it is prudent to remain appropriately conservative in our consolidated revenue PMPM outlook. As I noted earlier, our medical benefits ratio in the first quarter benefited from some reduced COVID-related utilization relative to expectations, which led to some outperformance. That said, we remain cautious on full-year trends for 2 to 4Q. Our full-year outlook reflects a natural rebound in system-wide utilization as our members continue to ramp up their vaccination rates and seek deferred care. It also reflects a reversal of some of the temporary favorability we experienced in Q1 related to our internal clinical model spend as well as our Part D benefits. Finally, for adjusted EBITDA, we expect to see a reversal of a few million of early in the year SG&A favorability. In particular, we have continued to gain visibility to several expenses related to being a public company, such as our director and officer liability insurance, which we anticipate will cost approximately $4 million more in 2021 than we previously anticipated. We otherwise believe we are on track with our internal expectations for SG&A. that we will continue to look for ways to reinvest our outperformance towards further growth initiatives for 2022 and 2023. In summary, we were very pleased with our first quarter results and think it's a solid start to the year. Our team is executing on our strategic initiatives in all markets, and I want to thank each of them for all of their hard work. I believe we are well positioned to capitalize on the meaningful growth opportunity ahead of us, and I look forward to keeping you all updated on our progress throughout the year. At this point, I'd like to open the call to questions. Operator?
spk02: Thank you. Ladies and gentlemen, to ask a question, you will need to press the star, then the one key on your touch-tone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. And our first question coming from the lineup, Ricky Goldwins from Morgan Stanley, your line is open.
spk03: Yeah, hi, good morning, and congrats on the first quarter. So first of all, thank you for all the details. I wanted just to dig a little bit deeper into what you're seeing in terms of member utilization and acuity levels, how they're progressing versus how you're kind of like shaping your reuse for the remainder of the year. And then how is sort of risk scoring activity going on with both new and the older cohorts?
spk05: Thanks, Ricky. Thomas, do you want to take that one?
spk06: Sure, sure. I can kick it off. And, John, why don't you chime in as well? So, Ricky, nice to chat with you this evening. Maybe I'll start on the utilization side, and then we can turn towards risk adjustment here. So, as we mentioned, you know, and I think we spoke a little bit on our roadshow, we did see higher utilization, particularly in the inpatient setting, in the beginning of the quarter, which is really a carryover from the fourth quarter of 2020. And then as the quarter progressed and as vaccination rates continued to improve, we did begin to see a decline in utilization that trended back towards what we would kind of refer to as a more normalized baseline or trend line. Right now, however, as we think about the outlook for the year, we are seeing continued utilization through the first part of the second quarter, consistent with that more normalized trend. And that is obviously reflected in the guidance that we put forth today. I think we feel good about it. We've not seen anything in terms of surprises related to, you know, acuity increases outside what we would typically expect for a population like ours. And so I think we feel confident, but that's probably all we can say in terms of outlook at the moment. And in terms of risk adjustment, you know, I can maybe comment a little on 21 and also maybe on 2022. And so in terms of 2021, you know, we are seeing continued visibility on our returning members, which are those we had in 2020. And that's really a result of a lot of the engagement and activity we did in the second half of last year in order to try to get our clinicians in front of our members, either through virtual means or through face-to-face means. And as a result, I think we're feeling pretty comfortable with how our full-year outlook on revenue per member per month will trend for those returning members. That being said, our new members, which have joined us over the first four, now five months of the year, you know, we will not really have full visibility on those until we receive the mid-year sweep. And so right now the way we contemplated our outlook in terms of guidance is we're essentially reflecting that our payments for the second half of the year remain consistent with what we've received in the first half of the year. So we're not really assuming they increase or decrease significantly. And so I think once we get that information from CMS, hopefully during the second quarter we'll have more fulsome kind of views that we can share on our second quarter earnings call. And then lastly, in terms of the outlook for 2022, obviously we're early in the year, but what I can say is that a lot of our efforts and engagement activities for our seniors in the back half of 2020 have absolutely carried forward into the first now, you know, four and a half, five months of 2021. And I think we're feeling good about how that may translate into 2022 results. But obviously we got, you know, another six and a half months to go this year, and we got to continue to pursue all those outbound engagement efforts.
spk03: Great. Thank you.
spk02: Our next question coming from the lineup, Ryan Daniels with William Blair. Your line is open.
spk01: Yeah, thanks for taking the questions. John, very helpful introductory comments, and I'm hoping you can go into a little bit more detail perhaps on some of the key investments that you're making in AVA as we look out through 2021 and into 2022. That's obviously key to the platform and to virtuous growth model. So be curious what you're doing there, number one. And then number two, perhaps you can tie into that some of the novel offerings like the industry's first virtual plan that I think you've launched. Curious what the member reaction was to that and what kind of traction you're seeing there and with some of the novel PPO products as well. Thanks.
spk05: Hey, Ryan. Thanks a lot. Yeah, we're continuing to invest in AVA, not only on the kind of algorithm side so that we get more and more personalized medicine for all the members. So you'll see more refined stratification algorithms, but also more streamlined workflows associated with our case management and patient management platforms. And so I'm really excited about that. We Everything is designed to allow us to have this notion of predictable, repeatable, and then scalable outcomes. And I'm really happy with Q1. I'm happy with the investments in AVA. I will say that we're continuing to make, I would call it back office systems investments that enable us to scale. And I'm happy with the progress we're making along that front. I think the degree of provider engagement you're seeing in AVA will continue to get more streamlined also. Better dashboards, more specific, faster ingestion of data so we can get information back out to the provider organizations that we partner with faster. All of that is in the works. With respect to your second question, the product innovation, I'm really proud of the team. We're going to have some exciting products coming out in 2022. We have piloted the AVA product, which is really a virtual product. It's getting very good outcomes, very good engagement. And we'll see more of that in 2022. And then I think from a provider-sponsored, co-branded perspective, as well as I call it ethnically diverse products, you're going to see more coming from us. And all of that, I think, is going to kind of fold into what I would refer to as just more personalized care for the seniors. And you'll see just more and more refinement so that we can customize and custom tailor the care plan, the products, et cetera, for individual consumers.
spk01: Okay, perfect. Thank you so much for that. I'll hop back in the queue.
spk05: Thanks, Ryan.
spk02: And our next question coming from the line of Kevin Fishbeck with Bank of America. Your line is open.
spk08: Great, thanks. I guess one of the things that we've been tracking for all the companies has been how you guys are thinking about the impact of COVID this year on your results and how we should think about that as we think about future earnings. Is there a headwind kind of embedded in here that we should expect to be a lift either to rate or MLR in future years, or is that something that's kind of embedded and you're just going to work through it?
spk06: Yeah, maybe I can jump off on that one.
spk05: Go ahead, Thomas.
spk06: Yeah, so in terms of how COVID has impacted kind of our full-year outlook, I would say that we believe it has had a several sort of percentage point impact in terms of both the revenue side and the cost side. And as a reminder on the cost side, it's not just the utilization rate, but it's the the actual sort of cost of an average hospitalization or our average case rate associated with COVID cases. So that has had an impact on 2021. But in terms of 2022, you know, we're obviously not going to comment specifically on how that may flow through in the future, but what I would probably remind everyone is the way we think about our business and how we balance sort of consolidated MBR performance and this notion of growth versus profitability is You know, we're really trying to track our metrics over time along those individual kind of cohorts. And so to the extent that we continue to invest in growth and we continue to see our cohorts mature, we would expect those returning otherwise known as loyal populations to continue to see MBR performance improvement over time, which is typically offset by those newer members that come on with typically higher MBRs. So as we think about our outlook for future years, the consolidated NBR performance won't just be a function of how does COVID sort of dissipate and transition into future years, but also how does our rate of growth, both within our existing markets and new markets, also impact that consolidated NBR. So just some of the variables to kind of keep in mind in the future, and we'll look forward to speaking to you guys in more specificity as those evolve.
spk08: All right, that's helpful. And then just remind me, the stock comp related to the MLR, what is that related to? Is that related to the IPO? Is that anniversary at some point next three quarters, or is that something that we should kind of expect to persist longer term?
spk06: Yeah, so the equity expense that sits inside of the medical expense line, means that it's related to either our internal folks whose salaries are otherwise classified as medical expense, so it's primarily our internal care delivery teams. And a lot of that kind of one-time nature of the expense was, in fact, related to the IPO, as you mentioned. It also is where some of the expense headed to our one-time payment for some of our business partners, also associated with the IPO. But either way, I would tell you, you'll see some equity-based comp in the medical expense line in the future, but not to the same degree that we saw in the first quarter, which was more materially higher just given the IPO. All right, great.
spk08: Thanks.
spk02: Our next question coming from the lineup, John Ransom with Raymond James. Your line is open.
spk04: Hey, good afternoon. Where do you guys think you will sit as you move through the year in terms of catching up on the backlog of the risk adjustment scores?
spk05: Well, we've got pretty good visibility on, uh, the, the, the members that, um, that we've had, uh, for longer than a year. Uh, and, and we did a very good job at the back end of last year. So I think you'll see some of those numbers already embedded in the revenue for 2021, as Thomas mentioned earlier, you know, we had over 18,000 new members. Um, and it's just unclear to us, you know, we have no visibility per se on whether the, um, plans, uh, that they were with is again, remember 85% of our, our growth comes from switchers and people like us and they're switching from other, other, uh, legacy plans. Um, whether they did the coding or not, you know, whether they did the work or not to actually get the accurate codes defined. And so we'll, We just have to wait and see in the mid-year sweeps.
spk04: Great. And, you know, another company mentioned this week that there's this backlog of something like a billion, you know, it's a nice round number, a billion office visits, physician office visits, and people aren't getting diagnosed and they aren't getting, you know, and I'm just wondering, I know you got the intensive gaps of care model. Do you have a sense for your population? Is there... In your opinion, as we think about the algorithm of costs, COVID recedes, but is there an elective way that you're modeling that would relate to people finally being able to see the doctor without having to quarantine for two weeks? Is that part of your assumption for the back half of the year, just more elective-type procedures?
spk05: Yeah, John, let me take a crack at that. Thomas, I know you've got some comments on this. I think the algorithms that we have, the reason I'm very comfortable with Ava's algorithms with respect to kind of the prioritization of kind of who and when we kind of get the MRA completed is really with resources that we have internally. And remember, we have the Care Anywhere team that takes care of the members, particularly the high acuity, uh, high risk members. And so we're seeing them all the time. And so we make sure that all the information that we, we, uh, uh, capture is included in our thinking with respect to risk adjustment. Um, and, and so that, that part of it is, is really good. Um, I think, I think with respect to, uh, acuity, um, Thomas, what do you think on that?
spk06: Like I said earlier, I don't think right now we're seeing any change in terms of pent-up demand or increases in underlying acuity relative to what we would typically experience or anticipate. Back in 2020, when COVID really first began, we did see sort of that more significant ebb and flow on things like electives. But at this point, we're sort of seeing, I think, what we would consider to be more standard and customary. So I think, as I mentioned earlier, we want to obviously keep an eye on that ourselves as we think about the rest of your outlook. But right now, there's really no kind of yellow flags or red flags we would highlight for the investors and analysts today.
spk04: Great.
spk05: Thanks so much. Yeah, John. Let me just finish the thought also. February, back into February, March, April, I mean, it's all kind of back down to normal in terms of admissions per thousand.
spk04: Right. Thank you. Awesome.
spk05: Yep.
spk02: Our next question coming from the line of Jeff Carroll with Piper Sandler here on his office.
spk07: Yeah, good afternoon. Congrats on the first quarter and thanks for taking the questions. I want to ask a little bit more on member enrollment. And you mentioned the modest expectations for the remainder of the year. But I want to ask, what are the key factors that determine how you might perform capturing new members for the rest of the year here in 2021 relative to what's in your internal plan?
spk05: Yeah, I can take that one. And Thomas, again, please add color. Yeah, I mean, as you know, I mean, AEP is such a, you know, material part of our membership growth. And I think we had a very good OEP, which is January through the end of March. And during that period, members can switch plans. And we did a very good job of growing that. I think once you get into the April to December timeframe, it's just a little bit more unpredictable. Um, and, and so I think we're taking a, uh, you know, probably a, uh, a conservative view, but again, it's, it's just, it's, it's a little unpredictable. Um, but, but we've had a very good, you know, first quarter, uh, and, um, uh, and, and we'll, we'll see what happens. And when we have the, uh, Q2, uh, uh, announcement. I was going to add to that.
spk06: No, I think that's well said and spot on, Jeff. The only other thing I might add in terms of segments of the population, you know, really the principal growth you might see in the second through the fourth quarter would be people who are aging in to Medicare and kind of choosing inmate for the first time or, you know, potentially duly eligible members, those who are eligible for both Medicare and Medicaid, are allowed to change plans, you know, outside of AEP. But you wouldn't see a lot of plans switching, obviously, happening outside of that AEP period.
spk07: Excellent. That helps. One more follow-up from me. I wanted to ask about stakeholder reception to the IPO and growth so far in 2021. I know you've mentioned that raising awareness was part of the rationale for going public. So I want to ask what the feedback has been. I think most importantly from providers that either are or could join alignment networks, but also from brokers or other stakeholders.
spk05: Yeah, Jeff, I can take that. Thank you for that question. It's been fantastic. The provider community is working with us, as I mentioned, particularly in our existing states and existing markets. Part of the growth is going to be fueled by additional providers in the existing geographic footprint. And that's exactly what's happening. And the teams are working on not only provider contracts, but really strategic kinds of relationships. And particularly in some of the new markets, what all the providers really want is market share gains. And so what we've been able to prove is consistent, high-quality, low-cost, translating into these products that are innovative. And these innovative competitive products versus the other plans out there is what's driving market share growth. And so the providers are seeing that. And, and, uh, and, and it's really interesting. They, they love Ava. They love, uh, the clinical model. Um, but from, from, from a lot of the strategic level dialogue, it's around product and product leadership. So that's still going great. The brokers are excited. Um, uh, they, uh, love the innovation. They love the fact that we, and they just keep saying to us, you know, it's just so good. You guys just keep doing what you say you're going to do and you keep doing it. So both have been fantastic responses. Thank you for that question.
spk07: Thanks so much.
spk02: And as a reminder, ladies and gentlemen, to ask a question, please press the star then the one key on your touchtone telephone. Our next question coming from the line of John Ransom with Raymond James. Your line is open.
spk04: Hey, Sarah. Thanks for letting me sink one more in. If you think of yourself as a consumer marketing company, I know it's more complicated than that, and you look out as you get bigger, do you think your funnel for new patients, the way those come in, some word of mouth, some broker, some other, are you looking to move that funnel in any way? Is there something you can do as you get bigger in the world now? Do you think that it's going to continue to be like you've always had?
spk05: Yeah, that's a great question, John. Thank you. I think about that all the time. And really, the growth that we've experienced over the past several years has been really word of mouth. We have not as of yet invested in the brand Alignment Healthcare. And so it's really been the performance and living our values. You know, just put the senior first, you know, support the doctor, use data and technology to revolutionize care, and then do it all with a serving heart. Like, that's what we've been focusing on. We've been executing those values. And that's what's led to the growth. And so now as we get bigger and bigger, and as we are expanding the geographic footprint, not only within the existing states but increasing states, it starts making a lot more sense for us to invest in that brand. So we're spending a lot of time determining what that means, how we position that, and I think the growth that stems from that is going to be very, very exciting.
spk04: And are you – I mean, at this early juncture, are you thinking – more rifle shots on websites these prospects might visit, or are you thinking more of a mass market branding exercise? How do you think about spreading the word efficiently?
spk05: I would say both and, but we would have really, as usual, what will be very financially disciplined and be data-driven, metrics-driven, outcomes-driven. But I think we're going to be very tactical in specific markets, down to the zip code level in many respects. But I do think there's going to be some more broad awareness of the brand. And again, I think it makes sense the bigger we get.
spk04: Well, I'm looking forward to your tagline. I mean, it tastes great, less filling. I mean, the madmen are going to have fun trying to come up with a tagline. It'll kind of break through. I'm looking forward to it. That's right. Thanks, guys. Thanks, John.
spk02: Ladies and gentlemen, that's all the time we have for questions. That does conclude our conference for today. Thank you for your participation. You may now disconnect.
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