Evolent Health, Inc.

Welcome to Evelyn Health's earnings conference call for the quarter and year ended December 31st, 2020. As a reminder, this conference call is being recorded. Your host for the call today is Mr. Seth Blackley, Chief Executive Officer of Evelyn Health. This call will be archived and available later this evening and for the next week via webcast on the company's website in the section entitled Investor Relations. There is some important introductory information. This call contains forward-looking statements under the 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. A description of some of the risks and uncertainties can be found in the company's reports that with the Securities and Exchange Commission, including cautionary statements included in the current and periodic filings. For additional information on the company's results and outlook, please refer to its second quarter news press release issued earlier today. As a reminder, reconciliations of non-GAAP measures discussed during today's call to the most direct comparable GAAP measures are available in the company's press release issued today and posted on the investor relations section of the company's website, ir.evalenthealth.com, and the 8K filed by the company with the SEC earlier today. At this time, I will turn the call over to the company's Chief Executive Officer, Mr. Seth Blackley.

Thank you, and good evening. I'm Seth Blackley, Chief Executive Officer of Evelyn Health, I'm joined by John Johnson, our Chief Financial Officer. I'll open the call this evening with a summary of our recent results, including an update on the key themes of our strategic plan, which are one, strong organic growth, two, expanding EBITDA margins, and three, optimal capital allocation. Next, I'll provide an update on the market and macro environment. Afterwards, I'll share insights and highlights from across the business, and how our differentiated solutions drive value for our partners. I'll then hand it to John to take us through a more detailed financial review of the fourth quarter and full year 2020 results, as well as provide 2021 guidance. I'll close with an update on the organization and a summary of our key focus areas. As always, we'll be happy to take questions at the end of the call. I will say that before turning to the financials that we are very pleased with our strong 2020 results and we feel we are well set up heading into 2021. In terms of the financial overview and results for the quarter, total revenue for the quarter ended December 31st, 2020 increased 15% to $271.9 million from the comparable quarter of the prior year. Adjusted EBITDA for the quarter ended December 31, 2020 was $16.1 million compared to $8.2 million for the quarter ended December 31, 2019. Revenue increased 20.8% to 1 billion for the year ended December 31, 2020, compared to 846.4 million for the year ended December 31st, 2019. Justin EBITDA for the year ended December 31st, 2020 was 41.4 million compared to negative 11 million for the prior year period. As of December 31st, 2020, we had approximately 3.6 million lives on the full platform. plus an additional 6.2 million lives on our new century technology and services suite platform. Overall, we're pleased that we executed on our key financial objectives for the year. Next, I'll provide an update on the status against our strategic plan. With respect to the first theme of strong organic growth, we continue to be on track achieving or exceeding our target growth rates. Our differentiated products and strong market momentum led to strong performance through new partner additions and same-store sales growth in 2020. We added eight new payer and provider partners in 2020, including Florida Blue Medicare, Neighborhood Health Plan of Rhode Island, Emblem Health, Physicians Accountable Care of Utah, and Molina. This was at the top end of our six to eight new partner target, and it demonstrates the diversity of our partner base and the depth across our services business. And we continue to be on plan for our growth objectives for 2021 and beyond as we utilize our core solutions to drive value in the marketplace. Today, we're excited to announce our total cost of care solution, Evaluant Care Partners, has entered into partnerships with two new regional physician groups and large MSAs. We're encouraged by the high growth potential in these respective markets, given the strong clinical reputations and historical performance of these two physician groups. We continue to see demand for our Evelyn Care Partners offering the risk-bearing total cost of care market. By partnering with efficient, high-quality physicians, we unlock incremental value and build opportunities with these physician-led organizations as we expand geographies. In addition to these new partnerships, Evelyn Care Partners has expanded regionally. We increased our lives under management in the state of Texas by entering into a three-year renewal with Blue Cross Blue Shield of Texas Commercial. Including the payer and provider network expansions announced today, our total lives under management for Evelyn Care Partners for 2021 is up to approximately 90,000, which represents 40% growth from 2020 and a large base of total lives under a total cost of care arrangement like this. Furthermore, we are seeing strong same-store sales growth with our specialty management platform, New Century Health. which successfully expanded with Centene in several markets in the fourth quarter of 2020. We are pleased to report that as of December 31st, 2020, nine Centene plans are using our new century health technology and services suite, and we expect to add more states in Q1 2021. In addition to expanding geographies, we've also added pediatrics and radiation oncology management services and related fees to select Centene markets. Adding the scope, we believe, will enhance the value and ROI to our partners. The momentum in our pipeline remains strong. We see our solutions are increasingly in demand in the market, and therefore we have good visibility into 2021. With the two new position groups announced today, we're also well on our way towards our target of six to eight new partnerships. We're diversified across our solutions for 2021 and towards a long-term growth target of mid-teens organic top-line growth. Turning to our second strategic theme of expanding margins, we continue to make progress on our cost reduction effort in line with our expectations. Over the course of 2020, we're able to drive scale and reduce costs to expand EBITDA margins and achieve positive cash flow ahead of schedule. Looking at the fourth quarter, our financial results exceeded our guidance driven mostly in part by strong results in our performance-based arrangements, which John will discuss in more detail in a few minutes. Continuing to deliver strong operational and clinical performance for our partner organizations, coupled with our dedicated overhead cost initiatives, we believe will position us to drive enhanced margins in 2021. We're also on track to reach our medium-term goal of mid-teens' EBITDA margins. Finally, with respect to our third theme, I wanted to provide an update on our strategic portfolio and balance sheet optimization. Across 2020, we delivered on our commitment to further focus on our core and exit the health plan businesses that we've now monetized or entered into agreements to monetize all health plan assets. We closed the passport transaction with Molina in September, 2020, and the lighthouse health transaction with Anthem closed on February 1st, 2021. As previously announced at the JPMorgan conference, we've entered into a definitive agreement to sell True Health New Mexico Health Plan to Bright Healthcare, and entered into a definitive agreement to sell assets of Miami Children's Health Plan to Anthem. Both of these transactions are expected to occur during the first half of 2021. We're confident that in aggregate, the capital return from all health plan investments will exceed the capital invested, and in the case of Molina and Bright, the transactions have led to ongoing services arrangements as well. The monetization of our plans and our discipline cost focus have allowed us to deliver. We paid down our senior term loan on January 8th, and as of today, we have a strong cash position and no senior debt. In conclusion, we've made significant progress on our three key focus areas. We remain focused on our high-growth services business, and the strategic optimization supports our path to mid-teens EBITDA margins. Before providing updates across the business, I'd like to touch on what we see in the overall macro environment and how the need to control healthcare costs is continuing to drive strong momentum in the market. First, with the Biden administration, we're seeing renewed energy to fight COVID, protection or expansion of the Affordable Care Act and Medicaid populations, and acceleration of the adoption of cost-reducing measures that will be a tailwind for our solutions. Second, the erosion of the federal and state tax bases is increasing pressure on Medicare and Medicaid budgets, causing CMS and state governments to continue to focus on ways to accelerate cost reduction. Medicare Part A Trust Fund insolvency is projected to occur in three to five years, and we feel this pressure and similar pressure on state budgets will further accelerate the move to adopt solutions like ours. Continued support of two-sided risk is very encouraging for our partners in evergreen programs like MSSP Pathways to Success. Newer models, such as direct contracting and the geographic model, are likely to accelerate as those model designs are refined, and we therefore view these as promising long-term opportunities as well. Third and finally, the combination of unemployment, a challenging risk coding environment for Medicare Advantage plans, and higher post-COVID healthcare costs for accelerating sales opportunities across the business. In summary, the macro environment's favorable, and we feel that Evelyn is well-positioned to take advantage of these trends. Turning to our business updates, I want to highlight achievements and recent activities across Evelyn's solutions. First, New Century Health, our specialty management offering focused on managing the cost and quality of cardiac and cancer care, continues to build across geographies, scope, and through cross-sell. In addition to the Centene market expansions mentioned earlier, we're pleased to announce New Century Health is now live at Florida Blue Medicare and Molina Healthcare of Kentucky, and Molina Washington is on track to launch later in the first half of the year. The uptake of our previously announced New Century light technology solution was very strong across 2020, with 6.2 million lives on this platform by December 31st, 2020. As John will discuss in a moment, given the rapid expansion of this product, we will now publish this membership separately from the lives on our full platform under the technology and services suite moniker. Second, Evelyn Care Partners, our total cost of care management offering focused on a provider-driven population health approach to improve quality and lower costs, continues to achieve strong provider engagement and clinical outcomes. Mentioned earlier, we're excited to expand our physician network and health plan partnerships in our existing markets. We now have over a thousand physicians in our network managing approximately 90,000 lives, which is approximately 1% of the total lives in these regions. These 90,000 lives represent over $900 million in annual premium equivalent under management for 2021. While we don't recognize gross revenue on this $900 million, our net EBITDA opportunity for Evelyn Care Partners is based on a combination of fixed fees and the savings generated on the entire $900 million of premium. Across 2020, our performance in Evelyn Care Partners exceeded our expectations, contributing to our positive Q4 results. We view this solution as a strategic opportunity for 2021 and beyond. Our decade of experience leading the market in population health provides three major differentiators that drove these physician groups to select Evelyn Care Partners over the alternatives in the market. First, our proprietary technology platform, Identify, provides physicians with real-time information and automated reporting, allowing them to identify the most vulnerable patients and the highest priorities. As an example, we launched a new module in 2020 called Panel Insight that prioritizes and scores all the critical interventions for each physician practice. The prioritization makes it easy for the practice to focus on the highest yield interventions, including risk adjustment and clinical interventions across our suite of proprietary clinical programs, while also understanding gap to goal for reaching target and max incentives for those physicians. Second, our clinical program strategy is based on a personalized approach to population health and targets impactable patients. Our care advisors and community health workers are in direct communication with patients, and providers to avoid readmissions, increase engagement, and coordinate preventable care. We act as an extension of the physician office, and the physician group can remain independent while providing better care at a lower cost. Third, we have a proven track record of success in enabling providers to drive cost savings and deliver superior quality care. As a reference point for the value created by the Evalent Care Partners solution, CMS recently announced that for 2019, The five ACOs that Evelyn supported in the NextGen ACO program earned a combined $84 million in savings for Medicare, receiving share of savings payments of more than $66 million. In addition, they outperformed other ACOs in the program on average savings by approximately 40%, as well as outperforming on quality scores. The NextGen ACO program is a good example of our total cost of care solutions proven track record, and can be leveraged with private payer populations where we're beginning to gain traction, as previously discussed, as well as with other future CMS programs, such as direct contracting. Finally, Evelyn Health Services, our administrative simplification offering, focused on helping payers streamline operations and provide outstanding service to members and providers, continues to achieve strong operational performance with current and new customers. We're also pleased to share the team led a successful launch at Maryland Physicians Care, which went live on January 1st, 2021, to support more than 200,000 Medicaid beneficiaries in Maryland. The recent Go Live exemplifies the unique value provide health plans and risk-bearing providers by coupling our industry-leading clinical solutions with our end-to-end administrative solution. Our intense focus on machine learning drives cost savings for our customers and ultimately lowers the cost for consumers. Overall, we have confidence in our performance, and we feel we are very well positioned entering 2021. Before I turn it to John, I wanted to provide a preview on how we'll be organizing for 2021. With the expected divestiture of True Health, we will reorganize our services business into two segments. The first will be clinical solutions, which will include our specialty management and physician-oriented total cost of care solutions, along with New Century Health, and the Evelyn Care Partners brands. The second segment will be Evelyn Health Services, which will house our administrative simplification solution and certain supporting population health infrastructure. We will begin to report the results of these segments with our Q1 2021 financials. With that, I'll turn it to John to give additional details on our financial performance, as well as to provide guidance.

Thanks, Seth, and good evening, everyone. Overall, we're pleased with our achievement relative to our 2020 financial goals, exceeding the high end of ranges for both our revenue and adjusted EBITDA targets. Our consistently strong results across 2020 demonstrate our commitment to execute against our attractive financial model, and we carry that same disciplined momentum into 2021. We entered 2020 with high visibility into a base of strong revenue growth. And as Seth mentioned, we exceeded our growth expectations, adding eight new clients throughout the year, in addition to driving strong same-store growth. For the full year of 2020, we had revenue of $1 billion, including $925 million in services revenue, which represented 34% organic growth in services over 2019. On the bottom line, we achieved sequential improvement across the year, primarily due to strength in our performance-based arrangements and continued focus on cost control efforts. Adjusted EBITDA for the full year was $41.4 million, or 4.1% of revenue, representing a 535 basis point improvement over our 2019 adjusted EBITDA margin. This profitability expansion, combined with a disciplined approach to investment in capitalized software development, further allowed us to achieve our positive free cash flow target for the year. In the fourth quarter specifically, our strong revenue and adjusted EBITDA results was positively impacted by both higher than forecasted shared savings in our performance-based arrangements and lower than forecasted medical utilization, driven in part by the ongoing coronavirus pandemic. While we expect the pandemic to continue to add volatility to the industry in the near term, the underlying earnings power of our business, driven both by our growth and our operating cost containment efforts, continues to be strong. Now let me take you through our detailed results for the quarter before turning to guidance. Beginning with our consolidated fourth quarter results, revenue increased 15% year-over-year to $271.9 million, mostly through the impact of new partner additions and cross-ups. Adjusted EBITDA grew to $16.1 million relative to $8.2 million in the same period of the prior year. Adjusted loss available for Class A common shareholders was minus $0.6 million or minus $0.01 per common share for the quarter compared to minus $5.8 million or minus $0.07 per common share in the same period of the prior year. Turning to our fourth quarter results by segment, in our services segment, fourth quarter services revenue increased 20.8% to $246.5 million. up from $204 million in the same period of the prior year. The increase in services revenue was primarily driven by new partner additions and cross-sell expansions within our existing partner base. Adjusted EBITDA from our services segment for the quarter was $20.4 million, compared to $6.5 million in the prior year. Turning to our true health segment, which we have entered into an agreement to sell to BrightHealth, we had premium revenue of $30.2 million in the fourth quarter. Claims expense as a percentage of premium revenue was 82% in the fourth quarter, an increase of roughly 10% over the first nine months of the year, and reflective of both a modest bounce back of medical expenses as well as a premium deficiency reserve accrual that was taken against the plan's federal line of business. Adjusted EBITDA from True Health for the quarter was minus $4.3 million, Turning to the balance sheet, we finished the fourth quarter with $355.3 million in cash, cash equivalents, and investments, including $119.4 million in cash held in regulated accounts related to the wind down of Passport. Excluding cash held for Passport, this represents $235.9 million of available cash, an increase of $76.9 million versus the end of the third quarter. and principally driven by our strong adjusted EBITDA performance, as well as $64 million in cash returned from Passport in the quarter. Cash deployed for capitalized software development in the quarter was $5.9 million. Two January events to note on the balance sheet. First, we repaid our $75 million term loan with Aries Capital Corporation, with the associated warrants granted to Aries from our December 2019 financing also retired in cash. We also received an additional $20 million in cash from Passport in early January. Pro forma for these two items, our 12-31-2020 available cash balance was $157.3 million. We have no other outstanding senior debt in place today, and aside from the $27 million balance on our 2021 convertible notes, we have no other debt maturities until 2024 and continue to expect adjusted EBITDA less capex to be positive in 2021 and beyond. which will give us the ability to invest in differentiating our core services while maintaining a strong balance sheet. An important strategic achievement across 2020 was the development and rapid expansion of our technology and services suite for oncology and cardiology. This product delivers strong ROI for our partners at gross margins that can be three to five times higher than our dominant performance suite offering. In addition to driving attractive margins, From a go-to-market perspective, this offering gives us the opportunity to demonstrate the value of our platform to new partners, serving as a foothold for further expansion and potential upsell to the performance suite. By the end of 2020, this platform was deployed across health plan partners covering 6.2 million lives at an average fee of 40 cents per member per month. Given the strategic importance of this product in our portfolio, We will delineate these lives separately when we announce lives in the platform each quarter going forward. On our full services platform, which includes members on the New Century Health Performance Suite, as of December 30, 2020, we had approximately 3.6 million lives, up modestly from 3.5 million in Q3. Our average full services platform PMPM fee for the quarter was $22.65, compared to $17.55 in the same period of the prior year. Turning now to our 2021 outlook, with a signed agreement to sell TrueHealth New Mexico, we are making some changes in how we report on our financials for 2021 to provide greater depth and transparency on the business consistent with our evolving strategy. To that end, we are reorganizing our services business into two reportable segments, and we are adding the new century tech and services numbers as a separately reported membership number. True health segment financials will be reported at the discontinued operation held for sale beginning with our Q1 results, and as such, we are only guiding for our services business. On the top line, we come into the year with strong visibility to exceed 20% organic growth in the services business, excluding passports. In fact, we have over 95% visibility into the midpoint of our revenue guidance. In terms of profitability, the progress on our cost work combined with the strength of our performance-based arrangements will increase our adjusted EBITDA even on top of our outperformance in 2020, despite the disposition of passports. Specifically, the midpoint of our 2021 guidance projects an incremental 120 basis point improvements over our 2020 results. These profitability initiatives also set us up well for future margin expansion, according to our plan. Looking across the year, our inter-quarter EBITDA will vary as usual based on timing of new partner go-lives, shared savings revenue recognition, performance-based economics, and other factors. Now let me turn to guidance. For the full year, we expect total revenue of $830 to $880 million. With respect to full year adjusted EBITDA, we are forecasting a range of 40 to 50 million. For the first quarter specifically, we are forecasting total revenue of 205 to 215 million. And finally, we are forecasting adjusted EBITDA for the first quarter of 10 to 14 million. With that, I will turn it back over to Seth.

Thanks, John. I want to close with a few updates on our organization. as well as a summary of our key messages. Looking at the organization, we have a very strong leadership team in place with decades of experience and a deep bench to execute on the key themes of our strategic plan. Evalyn continues to be a destination for healthcare's top talent, and talent will continue to be a differentiator for us. Our focus on employee engagement, strong individual and leadership development, And transparent communication has allowed us to retain top performers across the organization, as well as achieve a firm-wide engagement score of close to 90% for 2020. This world-class talent gives us a long-term competitive advantage and a strong culture. As a mission-driven organization, our company culture reflects an atmosphere of respect, honesty, and humility. Evelyn recently received a perfect 100 score on the Human Rights Campaign Foundation's Corporate Equality Index for 2020. Across 2020, we also appointed a diversity equity inclusion leader and have fostered the development of eight business resource groups for employees that focus on promoting inclusion, educating on bias and culture, and supporting DE&I initiatives. I'm also proud to report that our newly launched firm-wide inclusion score debuted at close to 90% and trended positively across the year. In summary, John and I are honored to work alongside our deeply talented and dedicated team and executed on our strategy of driving strong organic growth and achieving our mid-teens growth target with our differentiated solutions. Second of scaling the business to drive enhanced margins and third and efficiently allocating capital. Our high level of visibility into 2021 gives us strong confidence in achieving our targets for the year. Thanks everyone for participating in tonight's call.

With that, we'll end our formal remarks, and we're happy to take questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Ryan Daniels with William Blair. Please go ahead.

Yeah, guys. Thanks for taking the questions and for all the color. I apologize if you hit on this in the prepared comments. I had another call, so I hopped on late. But it seems like a lot of momentum lately in physician partnerships versus healthcare systems. And I know the market in general with risk-bearing appears to be shifting a little bit towards doctor groups. So I'm curious if you can comment on that phenomenon and what it means to Evalent and how that's resonating in your pipeline and close rates.

Yeah, Ryan, happy to. I think you're right. You know, within our provider sales segment, we are selling more frequently to physician groups, in particular independent physician groups, over the last couple years. And that's based on the last decade of experience where we've had some experience with both health systems and physician groups. have found just the slightly more nimble entrepreneurial nature of the physician groups and the kind of starting point they have without the health system assets allows them to be more aggressive at attacking the total cost of care. and when you look at the results that we're getting and and the next gen aco results and that sort of thing it kind of proves out that point and so we have shifted our sales activities over the last few years in that direction we've had a lot of success i think particularly in the last you know 12 to 18 months as you've heard lots of announcements down this category ryan um the two new groups that we signed uh and we announced today are good examples of that and i think this that i want care partners business now as a unit, when you think about $900 million of premium, we have an opportunity, an EBITDA opportunity on that entire $900 million based on the savings off of that premium. And so obviously having efficient aligned providers is critical to that. And we couldn't feel better about the setup we have.

I think you'll continue to see more down the physician sector over time.

That's very helpful. And then just in regards to the new metric you reported tonight on the new century technology and services platform, is that $6.2 million exclusively the newer, kind of lighter version of the offering that you launched this year, or does that include lives from the corner century that are in that as well?

That's the newer platform, Ryan. And, you know, look, I'd just say it's a bright spot across the year. We had several bright spots. I think this is one of them. It's, you know, a nice way to roll out quickly across a larger plan, and it has a nice margin profile, and then it creates a really nice opportunity for us to come back around on those 6.2 million lives and have opportunities around the full performance suite. which is the Florida Blue relationship that we announced last year as an example of that. And so it's a nice kind of one-two punch that is set up with the rollout of this light product.

Yeah, I guess it's just that my math, if it's right, seems like about $30 million run rate, which seems very impressive for a product you just launched less than 12 months ago. So I don't know if you would agree with that math, but is it around that $30 million run rate?

Hey, Ryan, this is John. Your math is about right. And yeah, we're very pleased with the rapid rollout and expansion of that product.

And then last one for me, how should we consider the pipeline there versus kind of the core new century? I mean, we've talked about this in the past, but I'm curious now that they have this lighter starter version if more clients are perhaps looking at this as a foot in the water before they go all in. So is it at all cannibalizing other sales, or do you think it's incremental? because you're getting a client base that otherwise might not have approached your services. Thanks, guys.

Yeah, sure. Ryan, this is Seth again. I can take that. Yeah, we view it as incremental. And if you look at where we've rolled out these lives, a lot of it's with some of our national relationships and the larger payers. And what's nice about it is that you can go across the country state by state very quickly. You don't have to align on what a benchmark is, which you have to do for the performance product, and that takes more time. So you can kind of get to a place where, you know, the math is a lower PMPM, higher margin, but a lot more lives. And then we, you know, will see opportunities to come in behind and set up the full performance suite as a follow-on. And, you know, the Florida Blue example, which I mentioned a minute ago, is an example where that's only 125,000 lives and 75 million of revenue. And so it doesn't take many of that $6.2 million to convert over to make the whole thing work really well. So we view it as additive and really excited about it.

Okay. Well, I congratulate you on a great year and all the success and progress you've made. Thanks so much.

Thanks, Ryan. I appreciate it.

Our next question comes from Robert Jones with Goldman Sachs. Please go ahead.

Great. Thanks for taking my question. This is Jack Rogoff on for Bob, and apologies I also jumped on late. I guess, are Centene and Molina the only customers of yours that are using New Century Lite, or are there others that are also in this group?

No, we have a couple others. And, you know, within some of our partners, they may have a little bit of both, right? Some performance and some Lite, depending on the regions and the markets.

Got it. That makes sense. And then, apologies if I missed this, but How do you define the full platform? Is that the full suite of New Century or is that the full suite of Evalent services in some sense? Just trying to delineate if that's like pure New Century lives or is that more of a broad bucket?

Yeah, the full platform life, Jack, this is John. Think of that as our traditional life metric. So that's inclusive of New Century performance suite lives as well as the Evelyn Care Partners lives, the lives in the administrative platform, and so on.

Perfect. That's what I thought. That makes sense. And then last one for me, I guess, did you disclose what specific programs they'll be supporting with these two new regional physician groups?

It's our total cost of care management solution, which is, you know, focused on the clinical side and the clinical work of reducing the total cost of care on the total premium dollar for Medicare Life. So, it's sort of a $10,000 annual per member number that we run at, and it's a total cost of care clinical solution.

Makes sense. Thanks a lot.

You're welcome, Jack.

Our next question comes from Charles Rye with Cowan. Please go ahead.

Yeah, hi, this is Cal Sternick on for Charles. Question on NCH. So it looks like you guys have been having a lot of success there on the payer side with just the oncology and cardiology solutions. So curious if there are any other high-cost, high-acuity practices that you're exploring to maybe expand the NCH platform.

Yeah, sure, Cal. Seth, I can take that. We are thinking about it. Right now we're very focused on cardiology and oncology because we still have actually quite small market share nationally. If you think about the number of lives relative to several hundred million life opportunity. So the first opportunity is just to expand market share with those two, but certainly the approach that we're taking to doing this management, which is, I'd say, provider led. in a way that maybe some of the traditional specialty management offerings have not been, I think does resonate in other areas. And it's something that, you know, eventually we will do. The timing is, you know, is later.

And right now we're focused on cardiology and oncology.

Makes sense. And then, you know, I know with Centene and Molina, they both have a big presence in the exchanges. I'm curious if, and with any of the other payers you guys have as well, if there would be any benefit to the business from the special enrollment period, which could add new members, or anything from enhanced subsidies. So across your partnerships, do you cover any individual lives, and is any benefit there reflected in your guidance? Thanks.

Hey, Cal, this is John. So we do have individual business on the platform. And so certainly if there were a bump in membership there, we could be beneficiaries of that. I would not expect that to be significant. It's a reasonably small portion of our business, but we do have individual members on the platform.

Great, thank you. Yeah, thanks for the question.

Our next question comes from Sean Wineland with Piper Sandler. Please go ahead.

Hey, thanks for the question. This is actually Matt Shea on for Sean. Seems like we've been hearing more about specialty management on earnings calls. Curious if you see the competitive environment changing meaningfully and how you kind of think you stack up against other programs in the competitive space, maybe CBS's oncology management program, for example.

Yeah, Matt. So, I would say we have not seen a meaningful shift in the competitive landscape. You know, the focus of our work is very deep, obviously, around oncology and cardiology. There are some other players that I would say are broader. You know, Evacor might be an example. And our work tends to be, you know, differentiated by our ability to drive outsized cost savings based on our focus in these areas. I think the good news is particularly for oncology, it's such a pain point in the payer community and the trends are so high that being a dedicated, focused player that provides differentiated results is, I think, a good spot to be in. you know, competition is not the main issue we run into. So we feel good about the outlook for that solution and both for oncology, but also for cardiology.

Okay, good to hear. And then with the recent Blue Cross Blue Shield board addition, did that play any role in expanding the partnership with Blue Cross Blue Shield Texas and maybe stepping back a bit? How should we think about further penetration with the Blues plans?

Yeah, I mean, it's interesting. We have, you know, obviously a couple blue relationships now out of, I think, 36 total. So, in general, the way to think about it is that there's close to 100 million incremental lives that are available that we want to do our best to go serve that community and that network. We're building credibility there. You know, Kim's addition to the board is an important part of that. But, you know, a lot of the work is, frankly, doing a great job for Florida Blue. and having that word of mouth go out to the other plans. And so we're pretty focused right now on execution, supporting our partners that we have, and doing a fantastic job so that the references are the place we want them to be. And I think that's going to be probably the biggest driver of our success in the blue segment.

And we're off to a good start there, I think.

Okay, got it. Thanks for the question, guys. Congrats on the quarter.

Thank you. Thanks.

Again, if you'd like to ask a question, please press star then one. Our next question comes from David Larson with VTIG. Please go ahead.

Hi. Congrats on a good quarter. Can you maybe talk a bit about the impact that COVID is having on your book of business and your selling efforts? Is there more pressure on state budgets, for example, and is that pushing you into the Medicaid market and they continue to be receptive? Any thoughts there? Thank you.

Sure, David. So I'd say in general the COVID impact is pretty modest for us overall. You know, on the sales side, you know, the increased pressure that you describe on the budgets I think will help some over time. So that's probably a slight positive going forward. On the kind of performance side and our ability to execute, COVID adds volatility to life, right? In general, it's probably a slight tailwind to us in 2020. For 2021, David, it's, you know, probably more neutral. And I would say in general, all the, you know, the guidance we gave you obviously reflects our views on all this and the fact that it's pretty modest overall for us.

Okay. Appreciate it. And I hopped on a bit late. Sorry if you covered this. But with the Molina infill potential for new century health, have you sized that, like, Any thoughts there? Thank you.

We haven't sized it. I mean, we're live in Kentucky. We're going live in Washington soon. They obviously have, and that represents a reasonably modest portion of the total lives. Again, kind of like the blue comment, I'd say right now we're focused on doing a great job for them as a partner. And as we do that, hopefully we'll have opportunities to expand. You know, it's obviously a very large opportunity depending on which states and what form it takes. You can use some of the examples like the Florida Blue example as a for instance on what a block of lives can mean. So there's very large opportunity. But, you know, our task right now is to execute, deliver, have them feeling great about it, and we'll hopefully have opportunities to address that opportunity over time.

Okay. I appreciate that. Thank you.

Sure. Welcome.

This concludes our question and answer session. I would like to turn the conference back over to Seth Blackley for any closing remarks.

Great. Nice to connect with everybody, and we'll hope to talk to you live soon. Thanks a lot.

Thanks, all.

Good night.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.