Bright Health Group, Inc.

Hello, good morning and afternoon. Thank you very much for joining us today for Bright Health Group first quarter 2022 earnings call. My name is Gemma and I'll be the operator for today. If you would like to ask a question, it's star followed by one in a telephone keypad. And if you change your mind, it's star followed by two. I now have the pleasure of handing over to our host, Stephen Hagen. Please go ahead, Stephen. Thank you very much.

Good morning and welcome to Bright Health Group's first quarter 2022 earnings conference call. The question and answer session will follow Bright Health Group's prepared remarks. As a reminder, this call is being recorded. Leading the call today are Bright Health Group's President and CEO, Mike Mikan, and CFO and Chief Administrative Officer, Kathy Smith. Before we begin, we want to remind you that this call may contain forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. The description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the risk factors in our current and periodic reports we file with the SEC. Except as required by law, we undertake no obligation to revise or update any forward-looking statements or information. This call will also reference non-GAAP amounts and measures. The reconciliation of the non-GAAP to GAAP measures is available in the company's first quarter press release. Fill up on the company's investor relations page at investors.brighthealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our Form 8K dated May 4, 2022, which may be accessed from the investor relations page of the company's website. Before we begin the call, I would like to note that Bright Health Group will be participating in the Bank of America Healthcare Conference on May 10th. With that, I will now turn the conference over to Bright Health Group Chief Executive Officer Mike Mikan.

Thank you, Stephen. Good morning, everyone, and thank you for joining Bright Health Group's first quarter 2022 earnings call. I'll open my remarks with an overview of the progress we've made on the strategic actions we discussed on our last earnings call and provide some commentary on our recent announcements. Then I'll turn the call over to Kathy to give additional details on our first quarter results and some technology and product updates. We always start with our mission. At Bright Health Group, we are focused on making healthcare right together. Our model is built on the belief that by connecting and aligning the best local resources in healthcare delivery with the financing of care, we can deliver better outcomes at a lower cost for all consumers. Bright Health Group had a strong start to the year, demonstrating solid performance in the first quarter, while continuing to deliver substantial growth. Now that we have reached significant scale, Bright Health Group is maturing as a business, with 2022 focused on optimizing the company and executing on our strategic initiatives. We've made the investments necessary to position Bright Healthcare as a differentiated competitor in states with significant addressable markets in both the commercial marketplace and in Medicare Advantage, as well as establishing our new health care delivery business. In the first quarter, our overall performance was in line with our expectations, and we continued to exceed our growth targets. We expect the next phase of growth for the company to be more capital efficient as we focus on performance within our markets and expanding our new health business. Our underlying capabilities are maturing and improving each day as we continue to drive down operating costs and leverage our technology investments to enhance our performance. Bright Health Group is well positioned in 2022 with key tailwinds and strategic actions supporting better performance. Bright Healthcare now serves over 1.1 million consumers, and New Health has reached approximately 530,000 lives served under value-based contracts. We have scale in major markets, including Florida, Texas, North Carolina, and California. A percentage of our commercial marketplace membership that was new to us in 2022 was consistent with our expectations at 56%, meaningfully lower than 2021 on strong renewal rates and lower overall impact from new market entries. Bright Healthcare's Medicare Advantage business produced solid year-over-year growth, now serving over 120,000 consumers. We are operationally in a much stronger position, significantly reducing our claims backlog, successfully implementing our new technology platforms, and demonstrating new health differentiation to our bright healthcare business while it is becoming a meaningful contributor to our overall results. On our fourth quarter 2021 earnings call, we detailed specific actions on which we've made meaningful progress on to drive improved year over year results. Those actions included, one, net pricing action in core markets. The pricing actions we took for the majority of our membership in legacy commercial markets in excess of our underlying medical cost trends have resulted in an improvement in our medical cost ratio when looked at on a comparable basis. Overall, we expect net pricing in both commercial and Medicare Advantage to remain an important lever in 2023 as we continue on our path to profitability. Two, unit cost reductions and medical management initiatives. We have also made meaningful progress on the unit cost and medical management opportunities that we identified last year as areas for improvement. We are focused on specific initiatives in contracting, out of network rates, specialty provider networks, and more closely managing high cost cases. We have taken actions on these initiatives and have visibility to delivering on the medical cost management EBITDA contribution we included in the bridge to our 2022 forecast. Three, risk adjustment actions. our high-performing local care partner networks were better prepared this year for our strong growth, which allowed us to attribute members to owned and affiliated positions much faster, including in Florida and new markets such as Texas. This has enabled our owned and affiliated positions to engage with their members earlier in the year. That early engagement combined with higher renewed membership and the significant investments we made in data and operational capabilities helps ensure we are accurately capturing the risk of the population we serve. Four, claims and clinical platform stabilization. We successfully launched all of our new market membership on our new claims administration platform on 1.1.2022. The new claims platform is performing well and covers nearly one-third of our commercial membership. We also added resources to our legacy outsource claims platform, and we are seeing improvements in the performance of that system. Kathy will provide additional details on the progress we've made on our technology platforms and the impact so far this year. We continue to expect that we will transition the remainder of our commercial members to the new claims management platform on 1 1 2023. Our proprietary clinical system, Panorama, is also delivering significant benefits to our performance this year. With all of our legacy commercial markets on Panorama currently, And we expect to have all our commercial membership on Panorama by 2023. And five, we are addressing talent and cost structure. We remain disciplined on our expenses as we continue to focus on productivity gains and operating expense leverage, while also adding selectively to our team to support growth and enhance our operational performance. Bright Health Group has a unique model that is successful across multiple market structures. We will continue to lean in to the markets where our fully aligned care model can deliver differentiated results, where we can get sufficient scale, and where we can deliver on our financial targets. We are focusing our commercial business to offer individual and family plans in 10 states, where we believe we can drive differentiated value through our fully aligned care model. We believe these decisions place us in the best position to achieve long-term success for our members and care partners. These states have a substantial addressable market at approximately 50% of the commercial marketplace consumers. We have meaningful scale in Florida, Texas, and North Carolina, and growth opportunities with strong care partner relationships in the other seven states. Optimizing our footprint supports our strategy for profitable, capital-efficient growth on our path to improved performance in 2023 and our target for enterprise-adjusted EBITDA breakeven in 2024. Bright Healthcare will be exiting the commercial marketplace in six states for the 2023 plan year. Illinois, New Mexico, Oklahoma, South Carolina, Utah, and Virginia, as well as discontinuing our employer group business. The markets we are exiting represent approximately 8% of total Bright Healthcare membership. Our forecast to contribute less than 5% of our 2022 enterprise revenue. and will have an immaterial impact on revenue in 2023 and beyond. We expect modest 2022 cost savings associated with reduced spending in the markets we are exiting, which has been contemplated in the range of adjusted EBITDA guidance we've provided for the year. And we also expect the benefit to our capital position as we will not need to add growth capital to the exit markets. We forecast a total savings of approximately $100 million in reduced operating expenses and future capital needs. Over time, we also expect to have the opportunity to recover or redirect the statutory capital currently invested in these states after we resolve all medical claims. This is an example of an increased focus on capital-efficient growth. Bright Health Group will continue to grow as we deepen our presence in Bright Healthcare's 2023 commercial marketplace state and as we build on our 120,000 member Medicare Advantage business. We will also continue to grow the new healthcare delivery and provider enablement business, including deeper penetration in the Bright Healthcare business and expanding new health external payer relationships. We have built a differentiated, fully aligned care model, and our market decisions for 2023 are focused on optimizing this model to deliver the best healthcare experience for consumers and for the long-term success of our business. I'll now hand it over to Kathy Smith, our CFO and Chief Administrative Officer, to go over our quarterly performance and provide some additional updates on the business.