Evolent Health, Inc.

Welcome to the Evelyn Earnings Conference Call for the first quarter ended March 31st, 2025. As a reminder, this conference call is being recorded. Your hosts for the call today from Evelyn are Seth Blackley, Chief Executive Officer, and John Johnson, Chief Financial Officer. This call will be archived and available later this evening and for the next week via the webcast on the company's website in the section titled Investor Relations. This conference call will contain four looking statements under the U.S. federal 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 are filed with the Securities and Exchange Commission, including cautionary statements included in our current and periodic filings. For additional information on the company's results and outlook, please refer to our first quarter press release issued earlier today. Finally, as a reminder, reconciliations of non-GAAP measures discussed during today's call to the most direct comparable GAAP measures are available in the summary presentation available in the investor relations section of the website. or in the company's press release issued today and posted on the investor relations website, ir.evalence.com, and the form 8K filed by the company with the SEC earlier today. In addition to these reconciliations, we provide details on the numbers and operating metrics for the quarter in both our press release and supplemental investor presentation. And now I will turn the call over to Evelyn's CEO, Seth Blackley.

Good evening, everybody, and thanks for joining the call. I'm happy to be here tonight to discuss Evelyn's strong start to 2025 with Q1 financial results at the high end of our expectations and a favorable outlook for the rest of the year. As is typical, our prepared comments are structured around our three shareholder value creation focus areas of one, organic growth, two, expanding profitability, and three, optimal capital allocation. Starting with organic growth, we believe we're positioned as one of the largest and most effective providers of specialty condition management in the country, with 84.8 million product lives on the platform. We believe health plans, providers, and members all demand and deserve a clinically oriented approach that encourages a holistic view of a person's journey through cancer, cardiovascular disease, or musculoskeletal conditions, and we think Evelyn is uniquely positioned to offer those solutions. The strength of our offering led to five new revenue agreements this quarter, covering each of our three major condition areas as follows. First, we have two new health plans that are rolling out our surgical management solutions for commercial lines of business. One is a Blues plan located in the south, and one is a large national plan rolling out the solutions initially to two of its large southern states. We are particularly excited to add these contracts as they are both first-time logos, and we look forward to the opportunity to expand with these partners over time. Third, we expanded the geographic reach of our existing medical oncology technology and services solution with one of our national payer clients to cover an additional 800,000 Medicare Advantage lives. Fourth, An existing partner in the southern state will be adding technology and services solution for advanced imaging and cardiac imaging for approximately 100,000 lives in their Medicaid line of business. And fifth and finally, we expanded our Moscow skeletal services to the Medicare Advantage line of business for an existing partner in the northeast expected to add over 100,000 lives. Altogether, we expect these expansions to represent annualized specialty technology and services revenue of approximately $10 million and new lives on the platform of approximately $1 million. Renewals with our existing customer base also continue to be very strong, with one of our top 10 customers recently renewing through the year 2030. More broadly, the selling environment continues to feel very good across both technology and services and the performance suite. The performance suite pipeline in particular is the largest it's been in the firm's history, and our updated performance suite model with the additional protections and a narrow corridor is getting great traction in the market, and we are confident we'll be able to continue to have sales success with that new contract structure and with the performance suite more broadly. Finally, as a reminder, even with today's new announcements, Evolent remains less than 5% penetrated in its broader revenue opportunity across all products, including oncology. Given the current traction of our solutions and the challenges that payers face in managing these specialty costs, I continue to feel confident in meeting or exceeding our long-term growth targets. Turning now to our second pillar of expanding profitability, We're on track with both core initiatives, which are one, performance suite margin maturation, and two, AI-led automation within our technology and services suite. First, regarding the performance suite margin maturation, our leading indicators for the first quarter track slightly favorable to our expectations. As John will discuss in this section, we are not yet fully recognizing this favorability in our medical expense accruals, but the initial data is a promising sign for a potential faster return to higher performance suite margins. Second, regarding our automation efforts in the technology and services suite, we deployed our off Intel AI solution on over 200,000 reviews during the quarter, leading to higher clinician satisfaction, faster patient response times, and enhanced productivity. While these initiatives are still early, covering a small fraction of our reviews completed during the quarter, I am encouraged by the results to date and our outlook for the ultimate value of these efforts remains unchanged. Moving to our third pillar of capital allocation, as we communicated at the beginning of the year, our primary use of capital during 2025 is balance sheet management. Both debt pay down and the cash reconciliation of certain loss making performance suite contracts in 2024 that have since been restructured. In addition, as I'll discuss in a moment, we are purchasing the oncology navigation assets of one of our joint ventures pursuant to a previously negotiated put-call structure to accelerate our oncology strategy. As John will discuss, we anticipate positive operating cash flow for the rest of the year, and we're well-positioned to continue investing in driving organic growth into the future. While we continue to see M&A as an attractive way to accelerate our strategy in the long term, We do not currently anticipate any new transactions in the near term. In addition to updating you on our three pillars of strategic value creation, I'd like to also highlight the early success of our work deploying a unique, integrated condition management model in oncology. Let's first review how our existing operating model functions across our specialties, using oncology as an example. We work with treating oncologists with a shared goal of approving adherence to evidence-based pathways where we have a track record of consistently increasing adherence by 20 percentage points or more. While these interventions leverage the utilization management process to drive physician engagement, about 85% of our savings opportunity today in oncology is created through non-UM efforts like peer-to-peer consults, provider quality incentives, other practice transformation initiatives, and unique Evalon technologies, with a balance of 15% through utilization management. We grouped these techniques into two broad toolkits of, one, clinical decision support, which includes but is not limited to UM, and two, provider alignment and engagement. Given the work we are already doing with AI and automation on the first leg of the stool around clinical decision support, We expect that UM will continue to quickly shrink as a share of the value we create for our customers from 15 percent today to a much smaller number in the near term, while the total value we create across our platform for our customers will continue to go up. As we have previously discussed, we have also been making important investments to add a third leg to this stool, which is bringing innovative patient-facing navigation services combined with our clinical decision support and provider alignment solutions. We believe this combination will be the most comprehensive solution for oncology management in the market. To build this model, we have worked over the last 18 months with representatives from across the care continuum to find what works, and I'm pleased to announce the official launch of our oncology navigation solution that combines three important components. First, Navigation protocols that we developed internally in close collaboration with one of our largest payers over the last 18 months. Two, we announced today that we are purchasing the assets of oncology care partners through a previously negotiated put-call structure, bringing the best of what oncology care partners developed with practicing community oncologists into Evalyn's model. And three, as we have discussed on previous calls, We have the exclusive U.S. partnership license with Careology, whereby their digital cancer navigation app is integrated into our solutions. We've been piloting this approach for some time, and by the end of May, we expect to be live with our integrated solution across 300,000 members. We are already seeing inspiring results. Let me give you a couple examples of the power of this fully integrated approach. Through an approach refined by Oncology Care Partners, we've been able to integrate our pathways directly into practice EMRs and support those pathways with innovative value-based compensation models. A study we published in the Journal of Clinical Pathways demonstrated significantly higher adherence to our value-based initiatives when these integrations are in place relative to a control group. We're excited to build on this foundation in the time ahead. As a second example, many cancer treatments leave members with a weakened immune system. They and their caregivers live with a high level of uncertainty in which simple common cold symptoms might be fine or might be a severe or even life-threatening condition. A member and their caregivers need to decide in real time whether their symptoms are manageable at home or if they need to go immediately to the emergency department. Our solution is powered by the Careology platform and Evaluant Care Navigators, can use real-time member symptom information to trigger interventions and take the guesswork out of these decisions for the member. In this example, we're able to provide peace of mind to the member and the family, help ensure immediate action were clinically indicated, while also helping avoid unnecessary hospital visits. Going forward, we expect to deploy this platform to customers in both technology services and the performance suite models. Under both models, we believe our oncology navigation solution will drive meaningful ROI to Evelyn and our plans, in part by increasing the dollar pool of medical costs we can influence, while also improving member quality and experience. This innovation is also an example of the differentiation we seek to drive across our platform, prioritizing care quality and focusing on creating clinical value for our members and health fund partners. Before handing it over to John to go through the numbers, I want to recognize the efforts of the 4,500 professionals at Evelyn who focus day in and day out on driving outcomes for our members and customers and ensuring that each of our members receives the care that we would want for our family members. Our recent 2025 employee survey showed an engagement rate of 89%. which is a very strong score relative to benchmarks and one of the highest scores in our history. I also believe that engagement is a leading indicator of our ability to deliver for our customers, our patients and members, and our shareholders. We also continue our normal course board refreshment activities, and I'm excited by our recent board of directors nomination of Sean Gurtin to stand for election at our annual shareholder meeting in June. Sean is an experienced healthcare executive with a career spanning some of the top brands in the industry, including most recently as the Chief Financial Officer of CVS, and we believe upon his election will be a significant value add to Evaluant. With that, let me pass it to John.

Thanks, Seth. I will comment on four areas this evening before turning to guidance. One, revenue dynamics affecting actual results in the quarter, as well as associated PMPM trends. Two, medical cost trend in our performance suite. Three, our outlook for cash generation in 2025. And four, sizing potential policy impacts on our near and medium-term outlook. First on revenue, Q1 revenue of $483.6 million in the quarter was impacted by two partially offsetting items, Without these items, revenue would have been approximately $450 million in the middle of our guidance range. First, recall that we anticipated that contractual changes would shift the accounting for two performance week contracts from gross to net. Those contractual changes are now complete, with one effective on January 1st and the second effective April 1st. Therefore, the extra quarter of gross revenue recorded in Q1 for the contract that converted on April 1st contributed approximately $55 million in revenue with no impact on adjusted EBITDA. The second revenue item in the quarter was related to true-ups for performance suite launches during 2024. In all new performance suite launches, we true-up our capitation rate to reflect actual experience immediately prior to our go-live date. We finalized these true-ups for 2024 performance suite launches during the first quarter and experienced final capitation rates that were on average lower than our initial estimates. In total, we recognized a retroactive revenue impact of minus 12.9 million and released associated claims reserves of 13.4 million for a favorable net adjusted EBITDA impact of 0.4 million in the quarter from prior year development. Finally, the updated capitation rates for 2024 launches lowers our estimated revenue for 25 by approximately $33 million, including $8.4 million in Q1, again on an EBITDA neutral basis. Note that as previewed on our last call, the contractual changes coming into this year, including the conversion of one performance suite contract to Tech and Services, affect our reported PMPM stats. In particular, our Q1 performance suite has a lower mix of Medicare Advantage revenue than last year and has a correspondingly lower average PMPM fee. To be clear, though, our same-store PMPMs demonstrate continued pricing strength. For example, on a same-store basis, our largest oncology contracts saw year-over-year increases of over 20% versus the first quarter of last year. Turning to medical cost trends, Those leading indicators and claims completion for Q1 suggest an oncology trend that is modestly lower than our overall expectation of 12%. While we are pleased to see signs of trend moderation, we have not fully reflected this favorability in our results for the quarter. We also are not yet updating our assumption in our guidance and continue to guide based on a 12% oncology trend for April through December. Favorability on these oncology trends is driven both by modestly lower disease prevalence and strong performance on our clinical management initiatives. Cardiology expense trends are tracking according to our expectations so far this year. Turning to the balance sheet, we ended the quarter with cash of $247 million and revolver capacity of $62.5 million for total liquidity of over $300 million. resulting in a net leverage ratio of 4.1 times our last 12-month adjusted EBITDA. We generated $4.6 million in cash flow operations in the quarter, a result driven by strong customer collections and the timing of performance suite claims reconciliations. Looking out across the rest of the year, we anticipate a modest increase in net debt across the April through December period, generating approximately $40 million in cash flow from operations, after funding reconciliation payments for 2024 performance suite contracts that have since been restructured or converted to tech and services arrangements, and using $51 million to purchase the rest of oncology care partners in Q2. Following the retirement of our 2025 convertible notes in Q4 of this year, we anticipate ending the year with cash in excess of $85 million and a net leverage ratio approximating our current level After these liability management activities this year, we have no outstanding maturities until 2029. Regarding oncology care partners, this joint venture had two components, a portfolio of oncology clinics and a member navigation and practice alignment arm. As Seth mentioned, we are excited to integrate the member navigation and practice alignment capabilities from OCP into our condition management model and believe they will meaningfully enhance our differentiated approach to the market. Prior to bringing the JV fully in-house, we made the decision to close the oncology practices themselves to avoid both channel conflicts with our network providers as well as future capital investment requirements associated with brick-and-mortar models. Closing the clinics contributed to a one-time loss on our income statement during the quarter, despite the strategic value of the navigation and practice alignment work. As Seth mentioned earlier, the navigation and practice alignment capabilities we acquired will be very important to our oncology condition management model. Before turning to guidance, a few words on the impact of potential policy initiatives to get ahead of frequently asked questions. First, our business is generally unimpacted by tariffs. In the vast majority of our contracts, to the extent that there is a significant change in pharma unit costs driven by international trade dynamics, our performance suite contracts contain clauses allowing us to update our rates accordingly. Second, regarding potential changes in value-based programs from CMS, the only program that we participate in today is the Medicare Shared Savings Program through our ACO Evelyn Care Partners. We see the commentary from CMS to date as largely encouraging for MSST, which is a permanent program legislated by Congress as a part of the Affordable Care Act. Commentary from the administration around prioritizing affordability and clinical quality to us reinforces the importance of value-based contracting. Third, regarding potential changes to Medicaid, the policy briefings released in April by CMS leadership suggests that some form of work requirements may be implemented over time. We have estimated the potential impact of work requirements on our book if rolled out across the nation at less than 5% of Medicaid membership, which would translate to 8 to 10 million in adjusted EBITDA for us today. We believe that Medicaid is a critical program for tens of millions of Americans and remain steadfast in our support of these programs. Further, our diversification across Medicaid, Medicare Advantage, and commercial lines of business helps to insulate us from potential policy swings. Finally, we do not currently expect any prospective changes to Medicaid policy would impact our fiscal 2025 results. Now let me go through guidance before we open it up for questions. While we are encouraged by the strength we saw in Q1, we believe it is important to see another quarter of claims completion data before altering our 2025 assumptions on cost trend or our full-year guidance. As a result, we are reiterating our adjusted EVA dot outlook for 2025, that's between $135 and $165 million. To be clear, this guidance continues to assume a 12% oncology trend for Q2 through Q4, despite Q1 coming in lower. Our revenue range for the year is also unchanged between 2.06 and 2.11 billion, supported by planned go-lives in the performance suite in the back half of the year. For Q2 specifically, the EBITDA-neutral performance suite true-ups I mentioned earlier result in a top-line guide of between $440 and $470 million in revenue, with corresponding adjusted EBITDA of between $33 and $40 million.

With that, we'll open it up for questions.

We will now begin the question and answer session.

To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question.

At this time, we will pause momentarily to assemble our roster. The first question today comes from Kevin Caliendo with UBS.

Please go ahead.

Hey, guys. This is Jack. I'm Don for Kevin. Thanks for taking the questions. In your prepared remarks, you mentioned a sequential decline in performance suite PMPM due to a lower mix of MA revenue in the performance suite segment. Given this is, I mean, previously announced contractual and, like, membership changes, is this PMPM level a good baseline going forward? Or maybe how should we think about this for the remainder of the year? Thanks. Hey, great question.

This is a good baseline level for now. We have previously announced a rather large new performance suite go live later this year, which is in MA for oncology.

So when that goes live, I would expect it to take back up a little bit.

The next question comes from Matthew Gilmore with KeyBank.

Please go ahead.

Hey, guys. Thanks for the question. I wanted to ask about the visibility you have to the oncology trend. John, can you give us a sense for how complete the paid claims are? I would assume that's through February. And then can you give us a sense for the leading indicators you track, just sort of what the nature of those indicators are? That'd be great. Thank you.

Yeah, it's a good question, Matt. So let me highlight two things. Now, the first is on the leading indicators. These are authorizations that happen before the service is performed. So that gives us prospective insight into the level of utilization. And that is down a little bit relative to our forecast of being up by 12%. Now, we make a second assumption there, which is the rate at which those authorizations translate into claims. over time. And that's the thing that is ultimately proven out in the claims when we receive them. When we close a quarter, we are typically about 55, 60% complete for that quarter, meaning that the claims that are incurred on our income statement for the quarter, the total claims expense is 55 to 60% actual claims and the balance IV&R That was true and consistent for this quarter. So that's the level of visibility that we have. I think the heard us in the prepared remarks be pretty bullish on what we're seeing so far and wanting to see some incremental claims completion relative to what we have now to affirm that off to claim that a completion rate.

The next question comes from Ryan Daniels with William Blair. Please go ahead.

Yeah, guys, thanks for taking the questions. Congrats on the solid start to the year. I wanted to go into a little bit more detail on the expansion of the oncology products. I'm hoping you could tie into the existing products how the navigation solution will work and kind of what value multiplier you might see by adding that. And then as a derivative there, I'd also like to talk a little bit about how you could potentially tie that into your broader PS contracts over time to help with oncology cost trends there with this novel solution set. Thanks.

Yeah, thanks, Ryan. So let me start by just saying a little bit about the market, Ryan, which is the selling environment fuel is really good, as I mentioned. Our weighted pipeline for the performance suite overall has more than doubled from what it was a year ago, which I think is really indicative of the demand and the opportunity and a lot of that around oncology. And if you think about the demand in the market, I think a lot of that is, you know, around helping manage the cost and the clinical decision support that we talked about and the provider alignment. But I think there is a, you know, for a whole host of reasons, interest in demand in this third leg of the stool on the navigation side. And so we've obviously officially launched that. I'm really excited about it. The team's excited about it. I think it's going to have a really helpful impact on the sales environment. And then on to your point, I do think it increases, you know, probably a reasonable estimate by 10 to 20% the value or savings opportunity that you might see by adding the ability to engage the patient in the way that I described during the prepared remarks. And, you know, a lot of that starts to get at the part A savings in particular, whereas our traditional solution has been more part B as employee focus. So, you know, I think it's in the context of this market opportunity, which is really attractive. We think right now it increases, I think, our ability to translate pipeline to close deals. And I think we'll also increase our ability to drive total savings dollars.

The next question comes from Jessica Tassin with Piper Sandler.

Please go ahead.

Hi, guys. Thanks so much for taking the question. So I was just hoping on two things you might be able to clarify. We were a little bit off on our first quarter performance suite lives estimate. So I'm just wondering, can you describe the quarter-over-quarter cadence of performance suite lives kind of what was the gross reduction from recontracting versus any offsetting growth. And then secondarily, just on the retained profitable performance suite business in 2025, I think our understanding is that that business would be priced to normal trend. So I guess margins would degrade slightly in that portion of the business year over year. When would you expect to be able to reprice that profitable and retained performance suite business? such that you kind of recapture or at least are trending on a PM-PM basis back in line with the annual trend you're observing? Thanks.

Yeah, great question. So on the first one, we had about 600,000 lives convert out of the performance suite into technology and services. There was additionally a few tens of thousands of lives that were a result of partner plan exits, as we previewed at the beginning of the year, those two items are offset by other growth in the line. That's the answer to the first question. On the second question, on overall performance suite contracting timing and cadence, we really think of that on an annual cycle, where each year, because of the structure of our arrangements, we are now seeing automatic increases or changes in our capitation rates as the population changes. So to the extent that there is an increase in cancer mix, for example, towards a more expensive set of diagnoses, that would result in a year-over-year increase in our revenue.

So that's the cadence upon which we think about it.

The next question comes from Jeff Garo with Stevens.

Please go ahead.

Yeah, good afternoon, and thanks for taking the question. I wanted to ask about any potential variation in performance-week gross margins, either by payer mix or by geography, and then Given the results, I'm presuming you haven't hit the lower or upper bounds of any of the new risk corridors on renegotiated arrangements, but wanted to confirm that as well. Thanks.

Yeah, let me take those in reverse order. You are right, not currently sitting in any corridor positions this early in the year. On the gross margin variation, I'll say a couple things. At any individual rate cell level, so that might be TANF for oncology in a particular state for a particular payer, there is some variation at that level of granularity. At the more macro level, are there variations between state A or state B that are predictable and consistent or between line of business A or line of business B, generally we do not see that. We see consistent margin opportunity both across the country and also across lines of business. That's on a percentage basis. Of course, in MA, the PMPMs are higher, so the dollar opportunity is a little higher than it is in Medicaid, but consistent percent savings opportunities across all of our populations.

The next question comes from Anne Samuel with JP Morgan.

Please go ahead.

Hi, thanks for taking my question. This is Kyle Aikman on for Annie. I was curious if you could dig more into the oncology cost trend you experienced in 1Q. You noted cost trend did below 12%. What was your original assumption for trends in the quarter? Was it the same as the 12% for the year or other comparison nuances there? And on that lower than expected cost, would you say that's driven by changes in prevalence or cost of care, or is there any bifurcation there? Thanks.

Yep. All of the trend numbers that were given tonight are in reference to that 12%, which we would think of as the normalized trend excluding Medicaid redeterminations, which last year was a unitary event. On the sources of variation, I highlighted two. The first is on prevalence, which is generally up, but it is up less than we expected it to be. Again, this early in the year, but it's nice to see. The second area is around cost per case, which is also up a little less than we had forecasted it to be based on our leading indicators. And, you know, I think a couple of things there. There's some sort of local dynamics that contribute to that. But as we evaluate the data, a fair bit of that outperformance seems to be coming from real success at our clinical interventions, at guiding practicing oncologists towards what we believe to be the highest quality, lower cost options. And so we're really proud of that and excited to keep pushing that across this year.

The next question comes from Matthew Shea with Needham.

Please go ahead.

Hey, thanks for taking the question and congrats on the quarter. Nice to see two more wins in the commercial space, understanding commercial and employers in Newark. end market. Curious what demand has been like there. Are you seeing interest primarily in surgical management solutions, or what does the scope of discussions look like? And has this end market for commercial and employer required incremental sales capacity, or are you targeting these deals with existing staff? It would be good to just understand what sort of investments you're making as you penetrate the employer space. Thanks.

Great. Yeah, thank you for the question. So I think on your first one, The market, I'd say, across the board, Medicare, Medicaid, and commercial, particularly for oncology, I'd say is very strong right now. In some of the other categories like surgical, musculoskeletal, cardio, I think there's also strength. And I think the surgical one in particular has been strong on the commercial side. So it's been a pretty broad base and consistent across these different lines of business. It's not that surprising, right? The pain points that are created for a Medicare Advantage plan also exist for a commercial plan. I would say most of these opportunities that we're seeing, not all, but most are on the fully insured. commercial side, so they're going through larger health plans. And to answer your second question, therefore, we don't really see a need to increase staffing on the sales side to address those opportunities because they're part of our same conversations with the larger plans around the country. The last thing I'd say is I did just recently see a survey about top issues for self-funded employers, ASO accounts, and oncology is right at the top of that list. And it is an area that we're exploring a little bit of thinking about ways to better and more fully address that area, although that's, you know, not reflected in the announcements today as all those were fully insured.

The next question comes from Constantine DeVese with Citizen. Please go ahead.

Thanks. Just wanted to maybe drill into some of the AI automation investments Seth, you referenced earlier. Maybe just a little bit more color on how those are impacting efficiencies in some of the early engagements and just your updated expectations around sort of spend there and impact as we exit the year? Thanks.

Right. Yeah, good question. So I'll just kind of start with the headline first, which is we continue to see a very significant opportunity here on AI and automation, you know, rolling into 26. I think it will be a material, very significant contributor. and we're very focused on it, kind of consistent with our original plans that we laid out, you know, last year when we kind of first announced this. There are two pieces of it that I would just, you know, break the opportunity into two. One is around making the experience for the provider and the patient member and our internal reviewer more efficient, right? So, fewer number of minutes Spent getting to an answer, shorter amount of time getting to an answer, and that is absolutely playing out in what we're seeing already. And then the second one is, you know, I think in a lot of ways more exciting, which is the ability to get an immediate resolution or which you think of as automation, right, of the review, full automation work of physician or one of our viewers doesn't need to touch it, and that's great for the patient and the provider, the treating provider, because they get the answer immediately, right? And that would be sort of auto-authorization. So it's the combination of those two things. Both are really important to us. And, you know, we're really excited about what we're doing. The last thing I'd note, just, you know, in case it isn't obvious, is that everything we're doing with AI automation is only on the approval side, right? So we never use AI to deny care. or restrict care in any way. And, you know, throughout everything we're doing, we're trying to work through a model that gets the right savings for the system, but in a way that gets patients and physicians immediate answers and the care they need as fast as possible.

The next question comes from Charles Reed with TD Callen. Please go ahead.

Yeah, thanks for taking the question. Maybe just going back to sort of oncology trend and, you know, right now you're running below sort of what you initially expected. You know, would you imagine that so, you know, at what point do you think that that's sort of the ongoing trend and maybe any color in that regard as what you've seen so far in April in regards to authorizations?

Yeah. So on April specifically, we're seeing similar patterns on the leading indicators that we saw during the first quarter. On experience, you know, I would look to Q2 for an update on that. Implicitly, based on my comments earlier that we're 55% complete as we close Q1, means I've got about a month and a half of claims. And after another quarter here, that will significantly increase, therefore giving us meaningfully more data to update these forecasts.

The next question comes from Daniel Grossite with Citi.

Please go ahead.

Hi, guys. Thanks for taking the question. Congrats on the strong quarter here. I was wondering if you could talk a little bit about how the competitive environment has evolved more recently, particularly as you limit how much risk you take in your performance fleet. Clearly, there's still a lot of demand for the performance fleet despite the corridors, but curious if you're running up against managed care solutions like Caroline Specialty or Evacor more often, and if there's been any shift in win rates or anything like that with the new version of Performance Suite. Thank you.

Great. Thanks, Daniel. I'd say the short answer is it really has not changed very much over the last couple years on the competitive environment. I think the things that we are doing, I'd say particularly in oncology, but across the board, Feel really unique the win rates and conversion rates have been consistent with what they've been over the last few years even is that we have shifted the Performance suite model and narrow the corridors in both directions So there's some benefits to the plan to write in that new model and so no really has not shifted I think that comment I made earlier about the the performance suite weighted pipeline being over twice as big as it was a year ago points to that and And, you know, we just, I think some of that, again, is the market is struggling how to manage the oncology spend in general, and I think some of it is the competitive differentiation. That is not going to be a static picture. Obviously, we're going to continue to innovate every quarter, every year. I think the navigation work that we announced today is part of that. Our ability to automate more and make lives better for the, you know, the treating providers part of that. We're going to continue to try to stay ahead, but I feel like we're ahead right now, and that's translating to the weighted pipelines and conversion rates that we've been indicating.

As a reminder, if you have a question, please press star, then one, to be joined into the question queue.

The next question comes from David Larson with BTIG. Please go ahead.

Hi. Can you please talk a bit about the potential impact of 25% tariffs across the pharma industry? How would that impact your model, if at all? Would that increase your own COGS, and then could you pass that through to your plan clients? Just any color there would be very helpful.

Generally, in our performance suite arrangements, we have clauses that allow us to update our capitation rates in the event of a significant change in unit costs, which a tariff, like you indicate, would certainly count as. And so I would not expect a meaningful impact on our profitability from something like that if it were to come to pass.

This concludes our question and answer session.

I would like to turn the conference back over for any closing remarks.

All right. Thanks for joining tonight, everybody. We look forward to connecting over the next few days. Have a good evening.

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