Astrana Health, Inc. (NASDAQ:ASTH) Q1 2024 Earnings Call Transcript

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Jack Slevin: Got it. I appreciate the color and congrats on a really strong quarter.

Chandan Basho: Thanks Jack.

Operator: Thank you. And next we will go to Jailendra Singh from Truist Securities. Please go ahead.

Jailendra Singh: Thank you and thanks for taking my questions. First question on the care delivery business, I saw around $8 million sequential decline. I understand last quarter in Q4 you had some true up, so that probably was expected but anything you can highlight there in terms of trends you saw in the business? And Is Q1 a good run rate for rest of the year for that business? Just trying to understand if there was any impact from change healthcare disruption on that business?

Brandon Sim: Hi, Jailendra. Thanks so much for your question. In terms of the change from Q4 to Q1, Q4 and Q2 is usually when there’s annual quality bonuses, as well as any one-time true-ups that happen on the delivery side of the business. So that’s the change that you see. In terms of change in the impact, we have very minimal change related business in terms of our delivery assets, although there’s not an impact there.

Jailendra Singh: Okay. Use Q1 as a good run rate for the rest of the year from a revenue point of view.

Brandon Sim: Yeah. You will see some enhanced profitability in Q2 and Q4 from those bonuses as they come in.

Jailendra Singh: But then my follow-up, a managed care company, I mean player last we called out pressure in the ACO business driven by some data they received by from CMS impacting their 2023 results and also their 2024 assumptions with you guys entering MSSP this year, and I believe we are accruing towards breakeven margins just curious what you have seen in the data. I understand clearly limited but just curious if there’s anything to flag from your experience point of view. And similarly outside of the $4.7 million adjustment you called out in ACO reach, can you talk about your experience in that program in general please?

Chandan Basho: Hey, Jailendra, thank you for the questions. I think your question — first question and please correct me if I’m wrong is around MSSP and our experience so far is early on, and we had — to approximately breakeven during the first year of our participation and MSSP, we are still underwriting this quarter to a breakeven during this lack of a large experience in that program. I would probably guess that MSSP profitability especially because it’s coming in from a 15 to 18 month cycle would probably show most likely in 2025. Financials are not in this year and we haven’t contemplated any profitability from MSSP ACO in this year’s financial projections. On the ACO reach business, which we do have more experience in and a couple of clarifying points.

The first is that the $4 million to $5 million adjustment as Tom mentioned that was that was fully taken in terms of and the charge this quarter. And it’s a one-time thing but also isn’t related to ACO reach, but rather separate ACO reach businesses as Chan had explained earlier. In terms of our ACO reach performance, we’re actually seeing pretty promising results and we are booking a bit of profitability this quarter as Chan mentioned because of the increased visibility and the confidence we have that the medical cost trends are fairly positive given the ACO reach program.

Jailendra Singh: Great. Thanks guys.

Brandon Sim: Thanks Jailendra.

Operator: [Operator Instructions] And next we’ll go to Christian Borgmeyer, TD Securities. Please go ahead.

Christian Borgmeyer: Hi everybody. This is Christian Borgmeyer on for Garik [indiscernible]. Thanks for the question. So, as we think about the Medicaid redetermination period winding down, what are you seeing lately in terms of reenrollment through exchange and commercial products? Are you noticing any disruptions in care for patients as they navigated through any re-enrollment and if there’s been a lot some care what tools with a strong deploy to reengage some members that may have not been seeing their PCPs lately? Thanks.

Brandon Sim: Hey Christian. Thank you for the question. And as I mentioned earlier we still saw growth in Medicaid around 7% year-to-date even net of redetermination. And the commercial class exchange business rose by even more than that, it was well over 16% I believe in the commercial segment based on some of the recapture as I mentioned with some of the Medicaid members into exchange. I would say that the efforts have largely gone successfully. Medicaid and the business has still grown despite redetermination and we’re not seeing any higher activity levels in the in our remaining Medicaid members that compare to prior to retailer redetermination. As you mentioned, the redetermination period is ending in a short while. So, I think for the most part, headwinds around that redetermination program are generally mitigated from our point of view.

In terms of member engagement, continuity-of-care, we think that’s a really strong point of differentiation for our model. Patients will be determined for in a different type of answer plan or even a different payer. I know it’s not your question but even for Medicare Advantage still have access to the vaccine, 13 workers, plus discharge planning, technology platform, and primary and specialty care providers now increasingly to service them for their institutional network as well. And so there’s really strong ability for us to continue care, exactly where the patient has experienced it leading to more longitudinal relationship with the patient and ultimately investing — allowing us to invest more in the patient’s health over time. So, we think that’s a big part of the model I discussed earlier that we are so diverse in terms of how we serve the patient.

And we think that’s paying off as we’ve gone through this Medicaid redetermination process.

Christian Borgmeyer: Okay. Got it. That’s helpful. Thank you.

Brandon Sim: Thanks Christian.

Operator: [Operator Instructions] And there appear to be no further questions. At this time, I’d like to turn the floor back to Brandon Sim for closing remarks.

Brandon Sim: Thank you everyone for tuning in this evening to our first quarter of 2024 earnings results. As always, we are around in our offices in both Hayward, California and Las Vegas, Nevada. And if you’re in the area, please don’t hesitate to e-mail us if you’d like to meet. And we look forward to discussing our results next quarter and seeing you guys. Thank you and have a good evening.

Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference. We thank you for your participation. You may disconnect your lines at this time and have a great–.

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