Signify Health, Inc. Class A

Good morning. My name is Juan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Signify Health Four Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press a star followed by number one on your telephone keypad. If you would like to withdraw your question, please press stop followed by number two. Thank you. At this time, I will hand over to your host, Jennifer DiBerardino, Head of Investor Relations. Jennifer, you may begin your conference.

Good morning and welcome to Signify Health's fourth quarter and full year 2021 earnings conference call. This call is being webcast live and a recording will be available on the events page of our investor website at signifyhealth.com through May 3rd, 2022. Throughout the call this morning, we will be referencing the financial tables that appeared in our press release dated March 2nd, 2022. In addition, the fourth quarter and full year 2021 earnings call summary slide presentation we have posted to the events page of the IR website. This morning, we will discuss Signify Health business outlook, and we will also make certain statements about our future performance, including projections about our future financial performance, our anticipated growth strategies, anticipated trends in our business and our outlook, including estimates for total gap revenue, total adjusted EBITDA, in-home evaluations, bundled payment program size, and bundled payment weighted average savings rate. These statements are only predictions based on our current expectations and projections about future events and constitute forward-looking statements within the meaning of the federal securities law. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements. Please note the cautionary language about our forward-looking statements as presented in our earnings press release and in our annual report on Form 10-K, which will be filed later today. That same cautionary language applies to the statements made in this conference call. We will also discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. Reconciliations to the relevant GAAP numbers for these non-GAAP measures are included in the earnings release filed on Form 8K yesterday and also in our Form 10K, which will be filed later today. As a reminder, we intend to participate in industry or sell-side sponsored conferences. In lieu of issuing a press release to announce each conference, we will be posting our conference attendance on the events page and calendar of our investor relations site at signifyhealth.com. I encourage you to register for alerts on the investor site so that you receive an email notification each time we add a conference, other event, or other updates to the investor relations calendar. Joining me on the call today are Kyle Armbruster, Chief Executive Officer, and Steve Seneff, President and Chief Financial Officer. Kyle will provide a business overview, followed by Steve with a financial overview. We will have an operator-facilitated question and answer session after our prepared remarks. Now I will turn the call over to Kyle.

Thank you, Jennifer. Good morning, and thank you for joining us. As I sit here this morning and reflect on the past 14 months, I'm proud of and thankful for all we've achieved. We successfully managed, through another year of the pandemic, and we continue to evolve with our clients as they turn to us to support them in new ways. Our accomplishments were many, and to name a few, we were recognized by Fast Company's annual list of the world's most innovative companies, we launched new products and programs like Transition to Home and our Partnership Program, and we continue to successfully execute operationally to exceed our financial targets each quarter. On Tuesday, we closed on our first significant acquisition as a public company of Caravan Health, a leader in enabling accountable care organizations, or ACOs, to excel in population health management and value-based payment programs. We went through a robust diligence process to find Caravan and feel this is a great match as they share our passion for partnering with provider organizations to share risk and drive better patient outcomes. While a lot changed for Signify in 2021, what remained constant is our dedication to driving forward our vision of transforming the U.S. healthcare system, from fee-for-service to value-based payment. Yesterday evening, we announced our financial results for the fourth quarter and full year 2021 and guidance for another strong year in 2022. For 2021, revenue grew by a strong 27% to $773 million, and adjusted EBITDA increased 37% to $171 million from a year ago, largely driven by our in-home evaluation, or IHE volume growth, and our Home and Community Service segment, or HCS. For 2021, we performed over 1.9 million IHEs, reflecting significant expansion with our clients that will continue to drive IHE volume growth into 2022 and beyond. Results in our Episodes of Care, or ECS, segment for 2021 reflected the ongoing impact of COVID-19 with its variants driving pressure in program size and savings rates. We expect these impacts to lessen over time as COVID cases continue to decline, but we have factored in some ongoing impact into our 2022 outlook. We are proud of our significantly improved outcomes we've helped to achieve for beneficiaries and the savings we've generated for our provider partners in the BPCIA program and with our commercial clients. Provider partners are committed to bundled payment programs, and we believe CMMI is also committed and will announce a new iteration for 2024 within the next 12 months. We are very excited about the opportunity we have with Caravan Health and our ongoing efforts to expand our reach in value-based care. The combination enhances the value proposition to providers as our services will have a multi-payer applicability to a larger portion of a provider's panel. By multi-payer, we're referring to our deep relationships and existing contracts with private insurers and state and federal governments. A strategic focus for Signify Health has always been driving more participation and success in value-based payment arrangements by integrating episodes of care into total cost of care models. Episodes of care help providers manage the cost of specialist care within total cost of care models. We believe these two payment models are synergistic and help maximize total savings and clinical outcomes. We view the highly anticipated CMS announcement last week about a refinement of the direct contracting model, now called ACO, realizing equity, access, and community health, or REACH, as extremely favorable to a combined Signify Caravan business model. ACO REACH is tightly linked to achieving improvements in clinical outcomes by addressing social determinants of health and reducing inequities. The REACH approach is consistent with other ACO models and will extend the pathway for providers to assume total accountability for the quality and cost of their patient's care. Signify's in-home evaluations are specifically designed to collect social determinants of health data and enable the connection of patients to services. And together with Caravan, we believe we have the right set of capabilities to meet all of the model requirements set forth by CMS. Models such as the Medicare Shared Savings Program and REACH create important stepping stones along the pathway for primary care practices. And we've recommended to CMS a model focused on chronic condition bundles that would complement MSSP and REACH and provide specialty providers a similar stepping stone to risk, and rewards of advanced alternative payment models. Participation by all providers, primary care and specialty, is essential to achieving the Innovation Center's goal of all patients being aligned to an accountable relationship by 2030. We believe no organization is better suited to achieve CMS's goals than Signify Health. We look forward to a successful integration of Care Event Health into our operations and the ability to provide another complementary value-based model to our client base. while expanding our provider networks across both lines of business, episodes, and ACOs. Turning to home and community services, 2021 was a great year for the business, and we believe the momentum we have will carry forward into 2022. The value of our in-home evaluations for both our customers and Medicare Advantage members remains meaningful. Customers have asked us to do more, and one of several ways we are meeting that demand is through our partnership program we announced in January. We believe in connecting individuals to the right follow-on care, whether that's seeing their primary care physician or a behavioral health provider after the in-home visit, or activating home care, transportation, or food assistance after an acute episode. Developing a partner ecosystem with solutions that connect care and drive alignment among providers is critical for us to deliver a more integrated experience. For our partners, we provide an opportunity to accelerate innovation through a platform that is projected to engage more than 2 million people this year through our IHEs. Additionally, partners have an opportunity to participate in the episode of care programs we manage. Our initial focus is on partner technologies and services that support behavioral health, remote patient monitoring, social determinants of health, member engagement, distribution channels to employers, and care optimization. We're proud to work with our partners who share a vision and are eager to see innovation resulting from this program. Given investor focus on possible regulatory scrutiny of in-home evaluation work since the OIG report last September, we would like to note that the recently released Medicare Advantage Rules Part 1 and 2 contain no reference to in-home evaluations and no proposed changes that would negatively impact our business model. We also see the CMS request for comment on the collection of standardized social determinants data as a positive for our in-home evaluations. We capture a range of social factors that can impact beneficiary health and are working with our MA plan clients to identify and address these types of needs for their members. The more social determinants data, MA plans, and CMS have, the better they are able to design programs to meet those needs. We continue to believe the value and independence of our comprehensive in-home evaluations for MA plans is a tailwind. We view our recent announcement that Optum expanded their volume commitment with Signify through 2026 as another very positive sign that they and our broader client base are tapping Signify Health versus insourcing because they recognize and continue to recognize the value they derive from our services. As a result, we believe that insourcing risk of volume is very low. To meet increasing IET volume demand, in 2021, we grew our network of physicians, nurse practitioners, and physician assistants to over 10,000. As we increase volumes in certain geographic areas, recruiting and credentialing can experience delays. But largely, we're not experiencing the same clinician labor issues being reported more broadly. As we have often said, a significant benefit of our flexible network is that we credential our providers in multiple states, allowing us to deploy them wherever evaluation demand requires, including rural communities. The value of our logistics and routing technology included within our proprietary IPED application makes it easy for our clinicians to do what they value most, spend quality time with patients, instead of dealing with administrative issues in a facility setting. Beyond clinicians, technologists are in high demand, and lead time to fill these roles have been extended with elevated compensation packages. To alleviate this challenge, we are opening a technology center in Ireland to recruit and retain technologists in a market plentiful with talent. We have created an IRIS legal entity, chosen an office location in Galway, and have been recruiting for key roles. We expect to have a core team in place by the summer. We are excited about the opportunity to have an additional source of qualified talent to add to Signify. In closing, we are very pleased with our 2021 results and many of our accomplishments, which establish a strong foundation to expand upon as we move through 2022 and beyond. When we filed for our IPO a little over a year ago, we outlined a bold vision to drive transformation of the U.S. healthcare system from fee-for-service to value-based care. Our 2021 performance and acquisition of Caravan Health have advanced us in realizing that vision. We simplify participation in highly complex payment programs and enable health plans and providers to successfully transition to value-based payments. We provide comprehensive and highly valued in-home evaluations while facilitating services in and around the home to create synergies between our HCS and ECS businesses. With the addition of Caravan Health, We add further functionality, broader populations, and innovation to our platform to drive increased value for our customers and patients. I'll now turn the call over to Steve to walk you through our fourth quarter and 2021 financial results.