Apollo Medical(AMEH) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total revenue of $348.2 million in Q2 2023, a 29% increase from $269.7 million in the prior year quarter [15] - Adjusted EBITDA grew by 44% to $35.8 million compared to $24.9 million in the prior year period [19] - Net income attributable to ApolloMed was $13.2 million, a 10% increase from $12 million in Q2 2022 [19] Business Segment Data and Key Metrics Changes - Care Partners segment revenue increased by 32% to $325.2 million, with operating income rising 250% to $27.8 million [15][16] - Care Enablement segment revenue grew by 18% to $35 million, with operating income slightly increasing to $7.6 million [16] - Care Delivery segment revenue increased by 14% to $26.7 million, but operating income decreased to $0.6 million due to ongoing investments [17] Market Data and Key Metrics Changes - Membership under management in the Care Enablement segment was approximately 1.3 million lives, with about 650,000 members also in the Care Partners business [16] - The company continues to grow membership in core California markets and new geographies like Nevada and Texas [14] Company Strategy and Development Direction - The company aims to grow membership in core and new geographies, empower providers towards value-based care, and ensure excellent patient outcomes [6][12] - Recent partnerships and acquisitions, including those in Texas and California, are part of the strategy to expand the Care Partners network [10][11] - The company is focused on expanding its Restricted Knox-Keene license to other counties in California to enhance its risk-based ecosystem [25][49] Management's Comments on Operating Environment and Future Outlook - Management reiterated guidance for full-year 2023, expecting total revenue between $1.3 billion and $1.5 billion and adjusted EBITDA of $120 million to $160 million [22] - The company is monitoring Medicaid redetermination processes but has not seen significant impacts on membership or mix yet [13][29] - Management expressed confidence in the ability to manage through potential rate pressures and changes in supplemental benefits [40] Other Important Information - The company ended Q2 2023 with $294 million in cash and cash equivalents, compared to $288 million at the end of 2022 [22] - A tax-related restatement was noted, which has no impact on historically reported GAAP and non-GAAP measures [20][21] Q&A Session Summary Question: Can you elaborate on the RKK expansion and its timing? - Management is working with the Department of Managed Health Care to expand the Restricted Knox-Keene license to other counties, which involves contracting with payers and provider groups [25] Question: How should we assess the quarterly cadence for adjusted EBITDA going forward? - Management indicated that Q3 is expected to be in line with Q2, with a drop anticipated in Q4 based on historical trends [27] Question: What is the status of Medicaid redeterminations? - Management noted that disenrollments began in July but have not had a material impact yet, and they are actively assisting members [29] Question: Can you provide more details on utilization trends in Q3? - A slight uptick in inpatient Medicare Advantage utilization is expected, but overall Q2 did not see significant increases compared to Q1 [31] Question: What is the expected normalized tax structure? - Management indicated that the effective tax rate is expected to normalize to low to mid-30s, which is higher than the industry average [32][33] Question: Are there any positive impacts from direct contracting or ACO reach? - Management has not incorporated any positive impacts from these programs into their guidance, opting for a conservative approach [35] Question: What is the impact of the IntraCare partnership? - The partnership is expected to add significant revenue, although the exact number of patients and their mix is still being assessed [41][42] Question: What is driving the elevated risk adjustment payments? - The increase is attributed to better capturing chronic conditions in the senior population, which has been a focus of the company's operational improvements [45]