1Life Healthcare, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to one medical fourth quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press the star, then the one key on your touchtone telephone. If you recall, operator assistance, please press star, then zero. I would now like to turn the conference over to your speaker host, Ken Goff. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to One Medical's fourth quarter and full year 2021 earnings call. I'm Ken Goff, Head of Investor Relations, and I'm joined today by Amir Dan Rubin, Chair and CEO of One Medical, and Bjorn Dahler, 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 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 outlook. 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 SEC, 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 good, safe basis per recent SEC recommendations. We would like to specifically caution investors that our 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, February 23, 2022. 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's 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 8-K. 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 dynamics 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'll turn the call over to Amir.

Thank you, Ken, and thank you, everyone, for joining us. The fourth quarter capped off an exciting year for One Medical as we continue to perform, innovate, and grow with our mission to transform healthcare for all. simultaneously delivering exceptional results for multiple key stakeholders. We delighted even more members and extended our reach from a growing number of adults and children to even more seniors in risk-based models. We assisted even more employers, facilitating hybrid work environments with our hybrid model of virtual and in-person care to support employee recruitment and retention, improve levels of health and productivity, and value-based care savings. We further improved our environment for providers and our team with our built-for-purpose technology, operating systems, and outstanding medical offices to even better position ourselves to be the best place in which to deliver healthcare and to innovate for the future. And we continued advancing more highly coordinated care by digitally and clinically integrating care with health network partners and extending our senior health at-risk health plan relationships. As we delivered for these stakeholders, we grew membership by 34% and achieved positive adjusted EBITDA prior to the acquisition of the IORA senior health business. In 2022, we will continue to advance better health, better care, and better value in a better team environment to even more people across all stages of life and even more markets. Now, let me review in more detail our human-centered and technology-powered differentiated models. and how we are continuing to simultaneously address the needs of and deliver positive impacts to multiple key stakeholders. Our differentiated One Medical model has been designed to be human centered with a unique membership orientation, facilitating low friction access to healthcare with our incredible team across virtual and in-person settings. And it's also been designed to be technology powered with our built for purpose software powering our team to offer longitudinal care across hybrid settings and helping us clinically and digitally align with health network partners to help coordinate high-value care across a continuum of settings and payment models. Turning to our members, we hear that they continue to highly appreciate the healthcare experience and outcomes we deliver. Last year, we continued to deliver average net promoter scores of 90 for member satisfactions. we continued to average 90% or greater annual member retention, including 90% or greater retention with our consumer members, 80% plus retention with our at-risk senior members, and 90% plus enterprise annual contract value retention. Our technology innovation, along with our hybrid model and dedicated team, continued driving high member engagement levels, which support our strong results. With our consumer and enterprise members, we averaged approximately 11 interactions per member last year, including approximately two times in person and nine times digitally. Similarly, for our senior health population, we averaged more than 21 interactions per member, including approximately three times in person and 18 times digitally. In terms of growth, we saw a 34% increase in members year over year. reaching 736,000 members at the end of the last calendar year. Our member count includes 703,000 consumer and enterprise members, growth of 28% over the last year, and more than 33,000 at-risk senior members, growth of more than 65% on a pro forma basis compared to IORA a year ago. For this growing base of members, we continue delivering outstanding health outcomes and high-value care. This past December, the New York City Health Department once again showed us to be ranked first for viral load suppression among HIV patients. Our mental health services have been shown to drive a 50% reduction in severe anxiety in recent data from a health plan in one of our markets. For diabetic patients, we achieved reductions in average blood glucose levels at twice what others have shown in publications, moving more patients from uncontrolled to controlled diabetes as per a peer-reviewed study published last year. With our further expansion into at-risk senior health services, we're extending our premier experience to more and more aging adults and enabling better health outcomes. Since the closing of the IORA acquisition last fall, we have been able to successfully bring one medical senior members into at-risk senior health relationships in two legacy one medical markets, showcasing our ability to align our senior commercial members into at-risk health programs. Additionally, we've been able to demonstrate that we can retain our members and then reduce medical claims expense ratios over a series of years. For example, we continue to see declining medical claims expense ratios in all of our cohorts of at-risk patients, showing our ability to reduce avoidable costs and waste and improve health. While our newest 2021 cohort had initial year one medical claims expense ratios above those seen for prior year one cohorts, due to COVID-related impacts, our prior year cohorts overall have continued to show year-over-year medical claims expense ratio decline. More specifically, with our Medicare Advantage population, when comparing first-year cohort medical claims expense ratios to last year's 2021 medical claims expense ratio, our 2017 and prior cohort has declined from 103% to 74%. Our 2018 cohort has declined from 108% to 83%. Our 2019 cohort has declined from 97% to 83%. And our 2020 cohort has declined from 98% to 91%, all of which you can see in our 10-K. Beyond delighting our members, we continue to address the needs of importers. In 2021, we added approximately 500 new importers, now reaching more than 8,500 importers. We added employers in such sectors as entertainment, consumer goods, software, insurance, manufacturing, real estate, construction, biotech, education, financial services, professional services, and many other sectors. As we've extended our hybrid model to more and more markets, we are also gaining the attention of larger and larger employers. For example, we are delighted to begin rolling out One Medical nationally to the employees and dependents of one of the nation's largest banks. As previously noted last year, we also maintained an enterprise contract value retention rate of over 90%, and more than 75% of employer clients now extend the one medical benefit to dependents. We continue to hear from employers how they value that our model combines digital health, in-person care, testing, vaccination verification and care services, whole family care, pediatrics, behavioral health, and care coordination with specialty services. Moreover, employers are seeing that we not only are an outstanding benefit to support recruitment, retention, and productivity of employees, but can also save them money. We have noted in the past a peer-reviewed study published in the Journal of the American Medical Association, JAMA Network Open, how we saved an employer 45% on their health benefits costs. Additionally, this past quarter, we received data from a regional commercial health plan indicating that we achieved top-tier performance at the 90th percentile in avoidable emergency room visits for adults and at the 100th percentile for pediatrics in their accountable care offering. We performed at the 95th percentile on value-based care measures, such as avoiding unnecessary imaging for low back pain, and at the 90th percentile in avoided medical admissions for ambulatory care-sensitive conditions. which includes such things as avoiding admissions for diabetes or hypertension by providing proactive primary care. In addition to delighting numbers and employers, we are also transforming healthcare deliveries for our providers and teams. Our purpose-built model supports premier providers delivering longitudinal primary care, reducing burdens and frustrations experienced elsewhere. For example, we estimate that our technology platform requires 40% fewer tasks than providers would experience elsewhere with a major electronic health record system. Our salary provider model and dedicated support team facilitates our providers focusing on the healthcare needs of our members across digital and impersonal modalities. Our technology and team model stands in contrast to incentives and approaches so prevalent elsewhere, which focus on maximizing fee-for-service volumes, which can encourage lower-value transactional care less longitudinal engagement with patients, and greater provider burnout. We believe we are the best place for primary care providers and our team to deliver innovative healthcare, whether they seek to deliver care in person or virtually, whether they serve children, adults, or seniors, and across markets around the nation. Accordingly, we believe that our model allows us to better attract and retain providers. Indeed, we are pleased to share that Forbes and Statista have just recognized One Medical as one of America's best employers in the nation for the second year in a row. With our health network partners, we believe we can better coordinate care across a range of settings, owning the complexity of coordinating care on behalf of members and payers and delivering value-based safety. And we're continuing to grow our partnerships and markets. Today, we are pleased to announce a new partnership with Hartford Healthcare in Connecticut. Accordingly, we will continue to expand our reach with our national digital health presence and soon entering our 29th in-person market. We are also working with a number of health network partners to further coordinate care for all our members, building upon our clinical and digital integration and alignment around value-based care. We believe these partnerships will be tremendously impactful and differentiated as we grow our senior health population. We have also continued expanding our health plan relationships inner senior health at-risk model, growing from just one major health plan partner at the start of 2020 to eight health plan partners in 10 different markets by the end of 2021. Adding multiple payers positions us to increase their growth potential and promote even higher retention levels, as patients who might switch between health plans with which we contract may now be able to maintain their longitudinal provider relationship with us. Looking back on the past two years, We expanded members by 74% and increased from approximately 7,000 to more than 8,500 enterprise clients. We launched remote visits. Our national One Medical Now virtual services, our mindset behavioral health services, our Healthy Together COVID service, further extended our One Medical for Kids services, and extended further into at-risk senior care with the IORA acquisitions. At the same time, the volatilities and uncertainties that COVID has brought over these last two years will still continue and have some impacts on us in 2022, including volatility and member growth due to vaccine verification members we served last year, lower COVID-related revenue from things like testing, an assumed lag in the return to more normal visit rates for non-COVID-related primary care, some staffing outages in the beginning of the year driven by the surge in Omicron, and an increase in near-term medical expense ratios driven by COVID. Notwithstanding some of this overhang from these COVID-related factors, we believe we have never been better positioned to serve more people in more markets across every stage of life with better health, better care, better value in a better team environment. We are making smart investments in our team, our technology, and our growth, and we believe our strategic positioning has never been stronger. We'd like to thank our incredible human-centered and technology-powered team who continue in their dedication to transforming healthcare for all. Now, let me hand it over to our CFO, Bjorn Thaler, to take you through some of our numbers further. Bjorn?