Bright Health Group, Inc.

Ladies and gentlemen, welcome to the Bright Health Group first quarter 2023 earnings call. My name is Kelly, and I'll be coordinating your call today. I will now hand you over to Stephen Hagen, investor relations director, to begin.

Good morning, and welcome to Bright Health Group's first quarter 2023 earnings conference call. 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 column may contain forward-looking statements under U.S. federal securities law. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A 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 obligations to revise or update any forward-looking statements or information. This call will also reference non-GAAP amounts and measures. A reconciliation of the non-GAAP to GAAP measures is available in the company's first quarter press release, available 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 9, 2023, which may be accessed from the investor relations page of the company's website. We announced on April 28 that we are exploring strategic alternatives for our Medicare Advantage business. While our board of directors evaluates the options for this business, we are not going to be conducting a Q&A session on this call. With that, I'll now turn the conference over to Bright Health Group Chief Executive Officer Mike Mykin.

Thank you, Stephen, and good morning, everyone. I'd like to begin by noting that this will be Kathy Smith's last earnings call with Bright Health. Kathy has been a great partner to me and the rest of the leadership team over the past few years, and I wanted to thank her for her commitment and service to Bright Health. I would also like to formally acknowledge Jay Matuszak, who will be stepping into the CFO role later this week. Jay brings a wealth of both financial and industry knowledge to Bright Health as we continue on our journey of transition. I'll start this morning with some brief comments on our announcement regarding the Medicare Advantage business. I will then discuss the strong start to the year for our business before turning the call over to Kathy to go over our first quarter results. As Steven noted, We announced on April 28th that we are exploring strategic alternatives for our California Medicare Advantage business with a focus on a potential sale. Our board of directors is conducting this evaluation following inbound interest. Our California Medicare Advantage business, which consists of brand new day and central health plan, is well positioned in serving aging and underserved consumers. Following a successful annual enrollment period, and solid in-year membership growth, the Medicare Advantage business remains on track for our membership and revenue targets for the year, which Kathy will discuss further. While there are no assurances at this time of the eventual outcome of the evaluation of strategic alternatives, a potential sale of the business would substantially bolster the company's financial standing and position our consumer care delivery business well for future growth in the attractive value-based care delivery market. In our April 28th announcement, we also provided an update that in partnership with our banks, we have extended the minimum liquidity waiver for our credit facility through June 30th, adding additional flexibility as we evaluate the strategic alternatives for the Medicare Advantage business. and work through the timing of capital needs and statutory capital releases from the wind down of our ACA marketplace insurance business. While our board evaluates the options for our Medicare Advantage business, the Bright Health team remains focused on advancing our value-based care model to drive our business forward. Our value-driven care delivery business, the consumer care segment, continues its strong momentum in serving a growing number of consumers through value-based care partnerships with payers. Consumer care had a strong start to the year, generating positive operating income in the first quarter. We ended the quarter serving 373,000 consumers through value-based contracts and have raised our forecast for end-of-year value-based consumers, including our REACH ACO, to a range of 335,000 to 355,000 consumers, up 57,500 consumers at the midpoint from our prior forecast. We continue to see robust demand for value-based care arrangements, and our unique offering in the ACA marketplace segment has attracted multiple payer partners. We've driven strong retention of former Bright Healthcare Marketplace members through these relationships, resulting in solid growth in the total number of patients in our clinics from 2022 to 2023. Our business is well diversified across payer, partners, and geographies. Our REACH ACO business started the year as planned, and we continue to expect approximately 65,000 consumers in this business at year end. We have meaningfully expanded our primary care physician base and the number of federally qualified health centers we are partnering with this year. growing each by over 50%. Profitability in the REACH ACO business continues to meet our expectations. Our consumer care segment reported positive GAAP operating income in the first quarter, and we continue to expect adjusted EBITDA profitability for the segment for the full year. We're being prudent in the level of risk we are taking in the consumer care segment and are focused on achieving adjusted EBITDA profitability for the year while setting ourselves up for greater risk sharing and fully capitated models in future years. Our consumer care business is well positioned for long-term profitable growth. I want to provide one example of the growth opportunities in our consumer care business. As we've continued to build our value-based care capabilities in the business, we have been working on ways to expand the services we are bringing to our physician group partners. On January 1st, a major independent physicians association in California joined our REACH ACO. In the first quarter, we expanded our relationship to support this IPA in partnering with a major national payer to enter a value-based care arrangement largely focused on the Medicaid population. For our consumer care business, we benefit through fee-based payments and some incremental upside sharing based on value creation. We also expect to support our IPA partner as they move other payer relationships to value-based care arrangements, resulting in additional lives supported through this physician enablement arrangement during the year. We see this IPA relationship as a great example of the opportunities for growth in the consumer care segment. We have been developing long-term relationships with provider organizations through our REACH ACO business, and we will continue to support them as they look to expand into additional risk-bearing relationships across payers and lines of business. In our discontinued operations, we are making meaningful progress on the wind down of our ACA marketplace insurance business, quickly processing claims and reaching final settlements with providers. We continue to get closer to a certain liability for the discontinued business and have increased our estimate by 1% to 3% compared to our year-end forecast, primarily due to increased provider settlement activity. The most recent risk adjustment report was in line with the December 2022 report, supporting the risk adjustment payable reserve we booked to date. We expect our claim to be 95% complete by the end of June, and our ultimate liability is becoming more fixed and certain, supporting our balance sheet position. I'll now hand it over to Kathy to provide additional details on our first quarter performance and our updated outlook.