Gary Taylor: Got you. I think, just €“ I mean, to your point, I appreciate the thought. I mean, if your population, the risk-score alone, the 2% headwind, it’s not just an issue for you. It’s an issue for the plans that you’re contracting with that they need to find a way to potentially offset that with their bid and benefit package.
Marlow Hernandez: Correct.
Gary Taylor: All right. I appreciate the comment. Okay. Thank you very much.
Operator: Your next question is from the line of Jailendra Singh with Truist Securities. Your line is open.
Jailendra Singh: Thank you, and thanks for taking my questions. My first question, I know, there are a few moving parts here, when comparing 2023 EBITDA outlook versus 2022. So it’d be great if you can spend some time on your expectations around the margin and MLR trends on MA lives you have brought on board over the last couple of years, are those in line with the ramp you are expecting year 2 and beyond maybe any color would be helpful?
Marlow Hernandez: So Jailen, let me start and Brian can follow-up. But we see our medical cost ratios going down year-over-year. The only reason that it’s comparable is that we have on a consolidated basis, a higher proportion of DCE members, which naturally have a higher MCR. As I mentioned in my prepared remarks, we are seeing lower utilization. So our admissions per thousand roughly 7% down, even as we have grown and we expect continued improvement in clinical outcomes for which the APT is a very good proxy. So, overall, we’re seeing margin expansion or improvement in underwriting margin; Brian and I talked about the operating adjustments that we made to gain further leverage on the business; the SG&A, as an example, to drive more earnings and cash.
So when you look at our new definition of adjusted EBITDA, which does not add back de novo losses, and is more of that proxy for cash, you are seeing improvement year-over-year. And when you take out potentially non-recurring reduction and third-party claims, which is $44 million. That gets you to about a $30 million comparable adjusted EBITDA versus the $80 million that we’re guiding at the midpoint, so you can see the material improvement in year-over-year. And we’re integrating a significant number of new members, as you know, recently new over the past 12 to 18 months, proud of the team and how they were able to find the different action items to do improve the operations and start reengineering the company for cash generation. As you know, in 2022, we got less contribution margin than expected for our members and at the same time, had an inflationary environment and higher interest rates.
And our team quickly put their heads down, and while continuing to serve a much higher than expected number of total members, also expanded margins and we’re continuing that momentum into 2023 with great clinical care and also operating efficiencies.
Jailendra Singh: Okay. That’s helpful. Just one quick follow-up. You guys talked about non-Florida Medical Centers EBITDA loss improving there, any color like how would you describe the trends there when compared with your internal expectations? And when you return to adding de novos in future, should we expect any changes to your approach in terms of picking new markets outside of Florida like in terms of approach around like picking markets around investments? Just curious like, I mean, how do you think about that?
