1Life Healthcare, Inc.

Ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Music Thank you. Ladies and gentlemen, thank you for standing by. and welcome to the One Medical second quarter 2021 earnings conference call. At this time, all lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star, then 1 on your telephone. I would now like to hand the conference over to your speaker for today, Avery Singh, Securities Counsel at One Medical. You may begin.

Thank you, Operator. Hello, everyone, and welcome to One Medical's fiscal 2021 second quarter earnings call. I'm joined today by Amir Dan Rubin, Chair and CEO of One Medical, and Bjorn Thaler, Chief Financial Officer of One Medical. A complete disclosure of our results can be found in our press release issued earlier today, as well as in our related Form 8K, all of which are available on our website at investor.onemedical.com. As a reminder, today's call is being recorded, and a replay will be available on our website. As part of our comments today, we will make forward-looking statements. These statements include statements regarding our pending acquisition of Iora Health and are based on management's current views, expectations, and assumptions, and are subject to multiple risks and uncertainties. Actual results may differ materially and we disclaim any obligation to update any forward-looking statements or outlooks. Please refer to the risk factors in our most recent annual report as updated from time to time by our other reports and filings with the SDC, including our quarterly reports. We believe that the COVID-19 pandemic continues to create particular complexity when it comes to providing a forward-looking view of the business and we are providing our guidance on a good faith basis per recent SEC recommendations. We would like to specifically caution investors that our future performance will be harder to predict for the foreseeable future. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, August 4th, 2021. Information contained in today's statement should not be relied upon as representing our estimates as of any subsequent date. Of note, it is one medical policy to neither reiterate nor adjust the financial guidance provided on today's call unless it is also done through a public disclosure, such as a press release or through the filing of a Form 8K. Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A historical reconciliation to comparable GAAP metrics can be found in today's earnings release. Finally, during the call, we may offer incremental metrics to provide greater insights into the dynamic of our business. These details may be one time in nature, and we may or may not provide updates in the future. And with that, I shall turn the call over to Amir and Bjorn for the prepared remarks and to take your questions.

Thank you, Ivy. Welcome, everyone. And today, we are pleased to share results from our second quarter, and update you on how we continue to perform, innovate, and grow. In Q2, we delivered strong results, as our human-centered and technology-powered model is resonating with a growing number of employers and consumers. Our membership count surpassed the high end of our guidance of 620,000 members for the quarter, nicely highlighting our momentum when considering we surpassed 500,000 members only a few quarters ago. Similarly, our revenue also exceeded the high end of our guidance, We achieved all this by delivering compassionate and impactful care through our fabulous team members and our technology, delighting our growing membership base. We also continued our focus on clinical innovation. For example, earlier in Q2, we highlighted the results of a peer-reviewed study showcasing how our model delivered outsized impacts in controlling diabetes, thereby enabling improved member health outcomes. We also continued advancing the power of our technology, For example, through further machine learning approaches that make navigating healthcare easier for our members and team. We also continued our strong growth this quarter, leveraging the multi-pronged approach that we laid out during our IPO, including growing across markets, in our product portfolio, and with our partners. Additionally, building upon our advancements, we are excited for the proposed acquisition of Iora Health and the opportunities it presents to extend our model to serve more individuals across every stage of life, from children to adults to seniors. Turning to our Q2 performance, we had a strong quarter. We ended Q2 with 621,000 members, growing our membership base 31% year over year. We added 23,000 members during the quarter and have added more than 145,000 members over the past 12 months. We delivered $120 million in Q2 net revenues, which was up 54% year over year. We delivered a Q2 care margin of $53 million, or 44% of net revenue, which represents our highest quarterly care margin ever reported, even with our ongoing entry into new markets. We also delivered Q2 adjusted EBITDA of positive $7 million. Both our care margin and adjusted EBITDA results showcase the leverage inherent in our model. On the heels of four back-to-back strong quarters with positive adjusted EBITDA, we are pleased to announce today that we expect our full year 2021 standalone adjusted EBITDA to be approximately breakeven. And while we're not providing 2022 guidance at this point, we are pleased to update our long-term goal for one medical standalone of achieving sustained positive adjusted EBITDA from year end 2022 to year end 2021. a full year ahead of the schedule we laid out as part of our IPO. In addition to our strong financial performance, our team continued to serve our members and our communities with a powerful technology and operating platform that combines nationwide on-demand as well as scheduled telemedicine, proactive outbound digital population health services, convenient in-person care, testing and vaccination services, and longitudinal chronic care and virtual behavioral health integrated into primary care. Our team also continued to deliver pediatric services for whole family care, workplace screening and testing services through our Healthy Together program, vaccination services, including for COVID-19, mindset behavioral health services, One Medical Now national digital health services, and coordination of specialty care through connectivity with our health network partners. We see that our technology-powered multimodal care model coupled with our breadth and depth of services, continues to be a strong differentiator in the market. During Q2, we also continued to innovate with a technology-powered clinical care model. We were pleased to share results of a peer-reviewed publication highlighting how one medical members in our diabetes management program saw significant improvements in both glucose control and cholesterol levels. Notably in the study, average hemoglobin A1C levels decreased by approximately two points. This two-point reduction is a significant improvement when compared to similar studies highlighting virtual-only solutions that did not include primary care to manage chronic care and reported improvements of only up to one point compared to our two points. For context, previous studies have found that a one-point reduction in hemoglobin A1C is linked to a reduction in risk of death by 21%, heart attacks by 14%, and microvascular complications by 37%. Building on our previously published study last year in JAMA Network Open that showed a 45% reduction in total cost of care, this is yet another proof point that our member-centered and technology-powered primary care model can generate superior outcomes. We also continued to innovate with our technology platform. We furthered our data interoperability with more health network partners and information exchanges, allowing for more sharing of information across a continuum of settings and advancing our role in owning the complexity of navigating care on behalf of our members. We also continue to expand our machine learning models to support streamlined analysis and sorting of external and internal data to make it more actionable with reduced administrative burdens on our team. This past quarter, we also continue to see many diverse opportunities for growth As we laid out during our IPO, these opportunities include growing with consumers and with enterprise clients, growing in existing markets and in new markets, growing with existing partners and with new partnerships, growing service offerings, and growing the populations we reach. To date, we have demonstrated a track record of successfully executing across these growth avenues. We continue to see strong membership growth across our consumer and enterprise channels. with our model attracting a diverse set of enterprise clients. In Q2, we began new relationships with organizations and industries across legal, financial services, manufacturing, construction, insurance, real estate, commerce, software, and consumer goods. We also continue to serve members and importers with a growing set of service offerings. with recent examples including One Medical Now, One Medical for Kids, Healthy Together Workplace Return Services, and Mindset Behavioral Health. For example, of the top 10 largest clients we signed in the quarter, 60% purchased multiple offerings, highlighting how our robust solution set continues to attract and serve a diverse client base. We also continued expanding our market presence and our health network partnerships, creating more opportunities for consumer and enterprise membership growth and more coordinated care across a continuum of settings. In addition to our nationwide digital health coverage, we are on track to expand in-person coverage from nine markets at the time of our IPO to 22 markets next year before considering IORA. Our health network partnerships are advancing clinically and digitally integrated care where we can further coordinate care and help reduce avoidable costs. while also advancing seamless service by owning the complexity of navigating care for our members. This past quarter, we were also excited to open our doors in new markets such as Kansas City and Birmingham and Huntsville, Alabama, with the launch of our partnership with Pareto Health. In total, we opened 14 new offices during Q2 across both new and existing markets, ending the quarter with 124 total offices along with nationwide digital health coverage. We also continue to make progress in preparation for launching our upcoming new markets, which include Columbus, Ohio, Houston, Texas, Milwaukee, Wisconsin, Raleigh-Durham, North Carolina, the Miami, South Florida region, and Dallas, Fort Worth, Texas. Accordingly, we continue to see tremendous opportunities for long runways for growth in the employer-based insurance markets. with a total addressable market of approximately $170 billion for primary care in the commercial segment in the United States. We have demonstrated a strong track record in engaging with members to help drive better health outcomes and lower healthcare costs. Moreover, we believe we can take these core strengths and also apply them to further serve the senior population in risk-bearing programs in Medicare through our proposed acquisition of Iora Health. The acquisition would meaningfully expand our potential market opportunity, adding approximately $700 billion to create a combined total addressable market of $870 billion across commercial and Medicare segments, including Medicare Advantage and the new Medicare Direct Contracting Program. As we shared on the transaction announcement call, our vision with IORA is to create a premier national member-based, technology-powered, primary care-centered healthcare organization. We believe we will be uniquely positioned to serve people nationwide and across every stage of life, from pediatrics through the golden years. Together, we will be able to provide nationwide digital health coverage and in-person care in 28 markets, which could reach more than 120 million people or nearly 40% of the entire U.S. population. we will bring together One Medical's proven capabilities to attract, delight, and retain members, as well as to manage ongoing chronic conditions while helping to reduce healthcare costs, with IORA's strengths in delivering outstanding high-service, high-quality, value-based care to seniors under global risk models. As you saw in the IORA cohort data we shared with you in the Form S-4 filed with the SEC, IORA has been able to deliver outstanding outcomes under full risk while successfully managing third-party medical costs. Together, we will be able to further serve members and their families as they age into Medicare and migrate from employer-based insurance into Medicare. We will also extend our positions as a premier place to practice medicine by offering opportunities across a spectrum of patient populations, geography, and digital health models. We will also be able to further coordinate care with health network partners, to deliver better health outcomes and help lower costs. Most importantly, we plan to continue to delight our members with a modernized approach to in-person and digital healthcare with advanced capabilities for population health and care management within a range of reimbursement models, including full-risk models. We believe the acquisition of IORA will further One Medical's position as a leader in consumer-driven, technology-powered, high-quality, value-based healthcare. that will support our members in living healthier lives while simultaneously saving costs, and as we help them own the complexity of navigating healthcare across a complex ecosystem. In closing, we delivered an outstanding Q2 and first half of 2021, as our team and technology help us to continue to perform, innovate, and grow. With our strong performance, we are now expecting our full-year membership to reach 670,000 680,000 members, our full-year revenue to reach $475 million to $485 million, and our annual adjusted EBITDA to be approximately break-even. We continue to perform with impact to our more than 621,000 members as our multimodal care model, technology platform, geographic reach, and breadth and depth of services remain strong and growing differentiators in the markets. We continue to innovate in our care model, recently highlighting how our technology-powered and team-based approach embedding chronic care management into a member-based primary care model delivers better results for consumers and employers. And we continue to execute across our many growth opportunities, serving more consumers and enterprise clients, expanding our footprint, aligning with premier partners, and growing our service offerings. While we have seen much success to date, We believe we are just getting started in our mission to transform healthcare. We are also excited by the opportunity to grow with Iora Health to expand our model to further serve the senior population, creating a significant opportunity to serve members of all ages and across every stage of life. We look forward to keeping you updated on our progress and appreciate your engagement with us. Now, let me turn it over to our CFO, Bjorn Thaler.