Q1 2024 P3 Health Partners Inc Earnings Call

Participants

Ryan Halstead; IR; Gilmartin Group LLC

Sherif Abdou; CEO and Director; P3 Health Partners Inc

Atul Kavthekar; CFO; P3 Health Partners Inc

Amir Bacchus; Chief Medical Officer and Director; P3 Health Partners Inc

Aric Coffman; CEO; P3 Health Partners Inc

William Bettermann; EVP and COO; P3 Health Partners Inc

Brooks O'Neil; Analyst; Lake Street Capital Markets

Josh Raskin; Analyst; Nephron Research

David Larsen; Analyst; BTIG

Gary Taylor; Analyst; TD Cowen

Jason Ader; Analyst; William Blair

Presentation

Operator

Hello, and welcome to the P3 Health Partners first-quarter 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would like now to turn the conference over to your host, Mr. Ryan Halstead. You may begin.

Ryan Halstead

Thank you, operator, and thank you for joining us today.
Before we proceed with the call, I would like to remind everyone that certain statements being made during this call are forward-looking statements under the US federal securities laws, including statements regarding our financial outlook and long-term target. These forward looking statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.
Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements.
We will refer to certain non-GAAP financial measures on this call, including adjusted operating expense, adjusted EBITDA, adjusted EBITDA per member per month, medical margin, medical margin per member per month, medical margin per member per month [persistent lines], [and cash use]. These non-GAAP financial measures are in addition to and not a substitute or superior to measures of financial performance prepared in accordance with GAAP.
There are a number of limitations related to the use of these non-GAAP financial measures. For example, other companies may calculate similarly titled non-GAAP financial measures differently. Please refer to the appendix of our earnings release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.
Information presented on this call is contained in the press release that we issued today and in our SEC filings, which may be accessed from the Investors page of the P3 Health Partners website.
I will now turn the call over to Dr. Abdou, CEO and Co-Founder of P3 Health.

Sherif Abdou

Thank you, Ryan. Good afternoon, and welcome, everyone, to our first-quarter 2024 earnings conference call. I am joined today by Eric, Amir, Bill, and Atul. We would like to begin by providing an update on the tremendous progress made in the first quarter.
We just reported a strong Q1, which exceeded our internal expectation on the top line but fell short on our adjusted EBITDA target. Overall, we are quite pleased with the start of the year, and therefore, we're reaffirming our previous full-year guidance of positive $20 million to positive $40 million of adjusted EBITDA for the year.
Starting with the top line, our revenue for the first quarter of 2024 grew approximately 29% year over year, supported by a strong pipeline. As we previously indicated, our per member per month funding was up approximately 8% year over year, despite the headwinds of substantial membership growth, along with the B28 and 24 changes and the benchmark reduction.
Our Medicare lives have grown to approximately 126,800 lives, or 23% growth year over year, which already exceeds the low end of our guidance range for the full year. This includes approximately 11,000 SCO reach lives, up from 7,400 at the end of last year.
As we said before, our percentage of persistent live is a key driver of our pathway to profitability in 2024. I'm pleased to report on the success of our member renewal in the new year. Approximately 90% are now persistent, as defined by live from December 2023 that remain with us in January 2024, up from 86% last year. To date, we have launched in six new counties, adding 8,000 to 10,000 new live with an existing payer partner, expanding our total number of counties served to 27.
Operating expenses improved to $26.2 million versus $35.6 million during the first quarter of 2023, representing a 26% year-over-year decrease and robust operational efficiency. Our medical expense in the quarter were approximately 12% lower sequentially, which reflects our view of a normalizing utilization trend consistent with the commentary we made in our last quarter call.
While we agree with the principle of conservatism in the current environment, we also believe that we are overconservative to the tune of between $20 to $30 PMPM based on year to date for basis. Atul will go into much more detail, but we will continue to work with our actuarian auditor to align our reserve with actual paid claim.
With that as a context, our adjusted EBITDA was a loss of $19.8 million, roughly flat to the first quarter of 2023. On a PMPM basis, we were approximately $86 better than Q4 of last year and approximately $11 better than the first quarter of 2023.
Lastly, we are thrilled to announce our strategic partnership with innovator to leverage their advanced AI platform. Through this partnership, we will advance P3 in the areas of predictive modeling, accelerate quality gap closure, and provide our clinicians with actionable data data at the point of care.
With that, I'd like to turn it over to our CFO, Atul Kavthekar.

Atul Kavthekar

Thanks, Sherif. I will start today by discussing our recent quarter and how we are progressing towards our full-year guidance, then I'll provide updates on our liquidity position at the end of the quarter.
Top-line results for the first quarter were in line with our expectations, with capitated revenue up $384 million and total revenue up $388 million, both representing growth of 29% compared to the prior year. In the first quarter, our medical margin was $36.6 million, or $96 on a PMPM basis.
There are two noteworthy factors that impacted our medical margin in the quarter. The first is the general approach of conservatism around our IBNR and medical expense accruals. As an example, as we look back at last year's activity, with the benefit of having time for the claims from that period to present themselves, we have confirmed what we suggested at that time and now estimate that we had a cushion at that time of between $20 to $30 on a PMPM basis.
We will continue to work with our actuaries over the next few quarters to observe the actual paid claims experienced in 2024. Specifically, we will work to reevaluate our reserve estimates in light of the easing of utilization over the first quarter of 2024, around which Dr. Bacchus will provide for further details. Over the next few quarters, depending on our data collected, it may be appropriate to favorably adjust our reserves.
The second item worth mentioning is the impact of a timing difference related to our Part D exposure. Essentially, we recognize the full expense in the quarter, but we do not recognize any credit for the rebates until subsequent quarters when these amounts are typically provided by the health plan. The impact of this in the quarter is approximately $8 million.
As it relates to operating expense trends, our corporate general and administrative expenses decreased from over 12% of revenue in the first quarter of 2023 down to below 7% in the current quarter. This is a sequential improvement from 8% of revenue from the fourth quarter of last year and consistent with our guidance for high single digits. We remain committed to continually improving our operating efficiency and continue to monitor spending.
Adjusted EBITDA for the quarter was a loss of $19.8 million, compared to a loss of $19.1 million in the first quarter of 2023. On a per member per month basis, adjusted EBITDA was a loss of $52, an improvement of $11 PMPM compared to the first quarter of 2023, as we successfully improved margins and lowered costs on a per member basis.
We anticipate showing improvements as benefits from medical cost reduction, operational efficiencies, and potential positive true ups flow throughout the year. These will create a contour rather than a straight line spread of results.
Our net loss in the first quarter of 2024 improved by 5.7% compared to the same period in the prior year, in part due to the improvement in corporate and general expenses. For the remainder of the year, we expect these expenses to continue to taper.
As for liquidity, we ended the quarter with approximately $32 million in cash. Additionally, at the start of the second quarter, we received approximately $15 million in regular cash capitated premiums and an additional $15 million of capital on our new note.
In that end, we are reaffirming our full-year 2024 guidance. We still expect M&A members to be between 125,000 and 135,000 and remain confident that our 2024 revenue will be between $1.45 billion and $1.55 billion. Medical margin will range between $230 million and $250 million, representing $165 and $175 on a PMPM basis, and finally, adjusted EBITDA ranging from plus $20 million to plus $40 million.
We're confident in our ability to achieve our EBITDA guidance for multiple reasons. First, we have the potential of a significant reserve release with our 2023 actual claims almost complete and showing strong improvement from previously booked expenses. Second, we started the year with strong membership growth, increased persistency, and overall increased funding source. Third, we expect an increase in our accrual of sweeps this year. And finally, our daily key indicators point to utilization being more on par and even below what we saw in 2023.
And with that, I'll turn it over to Dr. Bacchus.

Amir Bacchus

Thanks, Atul.
In our last earnings call, I stated that we had early indications of decreased medical expenses from December '23 to January '24. Now that the data is more mature, I can indeed report that December of '23 to quarter one 2024 continues to show a downward trend in utilization.
For admits per thousand, we saw a decrease of 2%. For emergency department visits per thousand, they decreased by 6%. In addition, despite the two midnight rule change, we continue to see improvement in our observation thousand rate to the tune of a decrease of 10%. During the first quarter, medical expense was $918 PMPM, improving from $1,042 sequentially, a 12% decrease.
In addition, P3 has continued to bend the cost curve for high-risk members by accurately projecting and implementing appropriate care plans without incurring additional costs. We continue to proactively manage utilization for cost avoidance, as well as conduct concurrent claims reviews for recoveries where we are delegated. Our effectiveness in high-risk populations has been a key driver in P3's ability to effectively manage medical cost trends.
Our care model continues to be effective in reducing cost, working in tandem with our high-risk population green improved focus on palliative and hospice care, increased enrollment into the COPD program, and continued provider and patient engagement. We remain focused on improving utilization management to reduce unnecessary utilization and wasteful spending while improving the patient experience.
Lastly, as Sherif mentioned, we're excited to have partnered with innovator to ignite our AI and data capabilities. We will use in innovator EHR agnostic physician engagement solution to seamlessly close coding and care gap and use the company's population health analytics suite and we will use innovator's patient engagement solutions to drive omnichannel patient outreach to improve the patient experience.
Thank you. And with that, back to you, Sherif.

Sherif Abdou

Operator, let me make some closing comments, and then I'll turn it over to Aric.
Today, we reaffirm our 2024 guidance across all our metrics and shared with you that our membership was up 23%, our revenue was up 29%, our OpEx was down 26%, and our funding per member per month was up 8%. And despite that the EBITDA is lower than expectations, we shared with you information to affirm and give confidence to myself and the team that we will achieve the targeted EBITDA positive for 2024.
With that, I would like to reiterate that now is the right time for P3 to transition to our new CEO, Aric Coffman. I believe he is a perfect fit to guide P3 through the exciting new chapter.
As I reflect on how far our company has come since inception, I am thrilled to welcome Aric to the team. I am thrilled with a deep sense of confidence that P3 is on a sound footing and poised for continued success. So let me answer three questions is: why now, why Aric, and how we're going to do that transition.
As I mentioned to you, as myself and the company mature from founding to operating to growing, it's time for a fresh leadership. It's well known that transition of founder into new CEOs and operator is a great and important step in any growing organization. And I believe it is important for us to bring in fresh blood and fresh set of eyes and skill set to continue to lead P3 under the same mission, vision, and values that we've built on.
Second is why Aric. So I believe, for me, I knew Aric, over 10 years, 2014, I think or 2013, the first time we've met and we work together in HealthCare Partners who was the Vita and I continued to stay in touch with him through the last 10, 12 years. And two years ago, Aric and I met, had lunch in the Seattle area, and I introduced the idea to him to become the successor to myself in P3. And since then, we've been working on, then finally came to the conclusion yesterday to make that decision. So I believe that Aric is the right leader for the next phase -- chapter for P3 -- and I'm going to be staying on as an advisor. I'm going to work very closely with Aric throughout the transition period. And I'll be always available for any question or any support that anybody needed throughout the transition period. And I'm going to remain on the Board to work with a Board director as well to continue to enhance the value creation in P3.
With that, I'm going to turn it over to Aric.

Aric Coffman

Thanks, Sherif. Let me start by saying how excited I am to join P3 and how impressed I am with capabilities and trajectory.
As was mentioned, I met both Sherif and Amir many years ago while serving as a medical director and a practicing surgeon at a predecessor company to HealthCare Partners. They were early pioneers of value-based care, and we spent time together while at HealthCare Partners. I have learned a lot from them and will continue to do so as the CEO of P3.
Following my initial time at HealthCare partners as we transition to DaVita Medical Group, I've been served as CEO of the Everett Clinic in Northwest physicians network in Washington state. While there, I worked closely with Bill Bettermann who serve as my COO. We both stayed for a few years after the acquisition by Optum. These experiences, along with my most recent role as CEO of Honest Medical Group, helped me develop the necessary skills transforming care delivery from fee-for-service to value-based care.
As we are all aware, our healthcare system continues to have significant pressures. We have an aging population, a shortage of PCPs, and high rates of physician burnout. We need scalable solutions that engage clinicians and patients to bend the cost curve while providing high-quality care. The P3 model of physician-led scalable, capital-light value-based care platform has a clear advantage along with the the delegated functions, including claims and utilization management.
P3 has demonstrated the ability to lower healthcare costs through physician and patient engagement and a growing market with significant whitespace. We will create depth in our existing practices by adding Medicare Advantage and Medicare ACO reach membership to capture more mine share of the providers we serve. P3 is also at an inflection point of achieving profitability, which will fuel our future growth.
We look forward to expanding our footprint to capitalize on a tremendous opportunity. I am confident in our ability to drive long-term sustainable value for the entire healthcare system, our patients, as well as for our stakeholders. I look forward to the opportunity to engage with many of the participants on this call over the coming months. It will be a pleasure to connect with our talented employees and associates across the organization as well.
Thank you. So with that, operator, we're ready for Q&A.

Question and Answer Session

Operator

(Operator Instructions) Brooks O'Neil, Lake Street Capital Markets.

Brooks O'Neil

Thank you very much. Good afternoon, everyone, and welcome, Aric. It's the an interesting time to join P. three. Let me start by just asking you obviously the Company it took more or less the last year slowed growth of 29%. Revenue growth is not exactly slow, but focused at existing accounts is existing of provider relationships, existing members. As you think about the future now the time to resume growing in new markets? Or do you think you need the Company needs more time to strengthen its base before beginning to look through more aggressive, a growth posture again?

Aric Coffman

Hey, Brooks, this is Eric Compton. Thanks so much for the question. No. What I think is we have to have measured growth as we move through the rest of this year are writing is solid, and we're clear on how we're adding those lives into the portfolio. That makes sense to me. Let me ask you that the judge listening to commentary around the industry, particularly towards the end of 2023, it was clear that many MA plans has seen significant utilization pressure that put a lot of pressure on the underlying economics of their business model.
And my sense is companies like three three organizations like P. three, we have the deep experience in value. But in the Medicare marketplace today, is that your sense are you getting significant outbreak from MA plans with you guys work suggests that there's a huge opportunity for you to expand and bring that knowledge and experience you have to markets beyond where K-Bro currently serve? Yes, yes. Brooks payment.

Amir Bacchus

A this is Amir. How are you? Absolutely. Yes. From what from what we see, the MCOs and Medicare Advantage plans, et cetera, continue to look for that solution in multiple different areas. As Eric said, we want to make sure we're growing smartly right? And we will continue to do that. But the interest is very, very high in multiple areas in multiple states.
So as we continue to prove the model that the model really truly truly was increased EBITDA that we want to create that we've said we will obtain this year not only driving more and deeper into their practices. We are in because of also ACO reach, then we'll be more apt instead of just going deeper into the counties are in. But the look and spread to potentially other counties outside of the states that we're in today.

Brooks O'Neil

Great. That makes total sense. Let me just ask one final one for a tool. I'm not sure tools that I understood exactly what you're seeing with regard to the $8 million credit. Would you mind helping me understand helping us understand that just a little bit better?

Sherif Abdou

Yes, Brooks, thanks for the question. The the three it says it's really pretty straightforward weeks expense. The costs associated with the drugs in the current quarter as they're incurred. The revenue that offsets that, i.e., the rebates are two are given to us and administered at the end of the year when we receive all that information from the from the the health plans. So it's similar to last year.
As you recall, there was a little bit more of a timing difference in the way we record and I sweeps and we are a change that that hasn't happened yet for the rebates. That's something we'll work on over the course of the year. But it's really as simple as that.

Brooks O'Neil

Okay. Thank you very much.

Operator

Josh Raskin, Nephron Research.

Josh Raskin

Thanks. I'll start with the Congress to Sharif on all the success so far and the building of the company and founding really, really impressive. And I welcome Eric as well. Good to hear your voice as well. My question is on the revenues. I think you said PMPMs were up sort of 8%. I'm calculating something a couple of basis points lower than that. And so I'm just curious if that was sort of in line with expectations.
And then I know you've talked about sort of having less risk than others around the impact of each 28. But do you have a view on what the impact was to this early in the year? Do you have to wait for the M&A plans to kind of keep your data or better sense on your membership risks?

Sherif Abdou

Well, it'll evolve over the year, as you know. But I think look, it's generally in line with what we expected potentially a little bit better than what we expected. So we're very pleased the that is that it came out that way, at least that's certainly what with the documentation and the files are saying now on. But we'll monitor it. And as far as any kind of if you're going up in the different calculation, we can certainly work that off line and get you where we are.

Aric Coffman

Yes, Josh saturated. Thank you very much for your kind words. And we expected. If you remember last time we said that in the middle single digits in a few of you look at the rebate accrual, it's about the middle single digit. The rest of it is benchmark improvement. So it's came right or a little bit better than we expected at the entire is 8%. Some of it as a benchmark, but they're ever growth is about half to 5% from that from the 8%. And we still like we said our over all wrapped is still about 1.046. So we still have a cushion and runway to continue to improve that. But we see are, in fact of the B 28 fashion.

Josh Raskin

And then second question, just on discussions with your MA plan partners. As you think about 2025, now your MLR in the first quarter still over 100%. They now want to get down by the end of the year. But what sort of changes are you looking for for 2025? You know, is there where you guys have a higher percentage of premium? Are there certain benefits if you're looking to carve out? I'm just curious, sort of as you go into those negotiations turn a bit, it's due next month. How are you thinking about what you're looking for?

Sherif Abdou

Yes. So absolutely a great point. Just we will see is conversation by modifying our exposure to the ancillary services are the benefits and in excess of the medical benefits and also talking about the renegotiating or eliminate how ends and we find actually receptivity differently in considering moderating the benefits are flattening or even decreasing into the play and where the exposure on the medical cost becomes a better. But you said that MCRs over 100 and we looked at it, including the network expense or right around 90.5 for the first quarter, my calculator out for, yes.

Josh Raskin

Got it. Just a last one, if I guess you're going to just the reserve methodology. I heard you talk about sort of this conservatism that may play out as you can answer to pay final claim for 2023. And what you've done with the run out, there's a chance that it reserves developed favorably. Are you reserving 1Q reserves and sort of the same methodology, are we getting sort of conservatism on conservatism? Is your view that you now you've got the same level of with over on the same methodology in your 2024 accrual?

Sherif Abdou

Yes, Greg? Yes. So let me just address the methodology change and then I'll pass it onto tooled. Up until the second quarter of last year, we had calculated the IB&R according to that trend will period. There was no additional question. And after that, we started adding 9% to 7.5%. So we think that the claims paid were calculated the triangle than we had 9%, and that is what we're that 9% or 7.5% is what we call cushion, Josh?
Yes, that Josh, I guess the punch line is that we we suspected there. There may be some cushion that was larger than is necessary. We had the opportunity to go back and actually study the numbers now that they have to run out. And that's indeed what we are finding with the data. So the process now is really and again, just to remind you and everyone else, we don't we don't necessarily set these amounts in book value amounts into the determine the amount to book we have a third party actuary that does that. And so right now, we've begun to corroborate all that analysis when that third party actuary. And then part of that is going to be green. So what is a reasonable and appropriate amount of cushion to be entering into. And so that's something we'll work on over the next, hopefully the next quarter. But certainly over the next two quarters.

Josh Raskin

Makes sense. Thanks.

Operator

David Larsen, BTIG.

David Larsen

Paint business, Chinese Chan on for dear life. And I'll just echo my peers and say my congrats to both Sharif and so on. The first question on EBITDA came in below our model. I was just wanted to ask what can devise the comp then to reaffirm the full year guidance. And can you talk about a little more about your visibility into that EBITDA and how should we expect EBITDA to trend throughout the year?

Atul Kavthekar

Yes. Daniel is a great question. So let me this is a tool. Let me just hit on a couple of things. I think when we think when we talked about the rebate recognition, that is strictly a timing issue, we had anticipated that that was going to be recognized in the quarter, and it's just not going to be recognized until later in the year. So we're not question it's just an issue of timing on.
But the other component that I think are really the key drivers here is really around the cost reduction and the efficiencies of the business and the utilization as it relates to medical expense management, many, many initiatives that are in place, a lot of them are gaining traction and we haven't even seen the full effect of those yet, but we will over the remainder of the year.
And then as I mentioned, we talked about the sweeps. We had a initial opportunity to start recognize them because we were able to predict them. I think we will continue to develop that further and work with our our auditors. But those are all fundamental things that give us confidence in the outlook. And this is all outside of any potential adjustment. With regards to the reserve. Hope that answers your question.

David Larsen

Yes, that's very helpful. And just a quick follow-up. I appreciate the detail on the 90% persistent line. Just can you remind us again, what kind of greater visibility that gives you guys are margin profile? Any additional color there would be helpful. Thanks.

Amir Bacchus

Hi, Jenny, Zamir. So yes, obviously, the more persistent life is the more we can help to manage the chronic care of that patient, right? So if indeed we see patients coming in at one year, okay, that's fine. But when they start to go into the two years, three years, did it with greater precision persistency, we have much better opportunity, not only to have gain their trust, but to help them manage the significant chronic diseases that we see every day, whether being COPD, congestive heart failure, diabetes, renal disease, et cetera.
So it's building that relationship that takes time with our care management team and especially on those high-risk rising risk patient populations to work directly with our clinicians to maximize their care and for their outcomes. So that's why that persistency is also important to us. I'm sure you've seen data as we've looked at it before. And those cohort analysis, as we've looked at patients who have been with us for a certain period of time, we see significant reductions and the overall medical expense.

David Larsen

Got it. That's helpful. Thank you.

Operator

Gary Taylor, TD Cowen.

Gary Taylor

Hi, good afternoon. I'm going to make sure I understood the couple of the numbers. First on the Part D, the $8 million rebate you expected, it doesn't sound like that was typically recognized in the first quarter. Was that would you recognize those rebates in the first quarter?

Sherif Abdou

Historically, we did not historically recognized them in the quarter. We sort of followed the same pattern that we had. Our anticipation was that they were going to be recognized in the first quarter. That's something we're going to work on with the with the auditors going forward around policy and documentation. This is the tool, by the way.

Gary Taylor

Got it. So hedge, you'd recognize those and EBITDA would have been unlike negative 12, that would have been more in line with what you thought the quarter would look like? Correct?

Sherif Abdou

That's correct.

Gary Taylor

And then on the reserve release, um, in that 25 to $30 per member per month, are we multiplying that by three for mostly coming up for Q?

Atul Kavthekar

We multiply that by by 12. When we think about what ticket release, I know in the fourth quarter, I think you said there was a $23 million reserve position. So three or 12 kind of put us like 10 to $30 million range, almost maybe suggesting almost all that could come back to you. I just wondered how we should think about TM. per member per month. We're thinking about that on sort of a 12 month based on a full year basis.
So but again, before we again, we're speculating on what amount of that is actually going to recover because there is certainly an appropriate amount of conservatism to have in the business. But that's something we're going to determine alongside and led by the analysis that the actuaries are going to do. So there's a there's a process of corroboration, but you know, our our our position is that we've had a chance to look at the hard numbers, and this is what we're seeing over the course of the year.

Gary Taylor

That's helpful. Last one for me. On the increase sweep revenue expected at this point, that's still the 4Q 24, our expectation. And could you quantify at all?

Atul Kavthekar

This is a tool again, I'm not sure we are in a position to quantify it. But I think the way we're thinking about this year versus last year, there's two aspects to it, and I'll talk about the timing in a minute. one is that the business is simply bigger and therefore, we believe that the sleeves, the percentage and the amount that we expect as far as the final sweeps go should grow as well versus last year.
The second component of that is, as you recall last year, that was a relatively the new thing for us to accrue on sweeps that won't actually be known until the future. And that is something that we've gotten not only better at, but also more greater buying with our auditors who have carefully reviewed it with our own actuaries citing there's two aspects to why that ought to be bigger this year than next.
And it is our expectation that we will at least to some degree accrue that smoothly over the four quarters. But there will still be a component of this without getting too much into the weeds, Gary, they will still be a component of this that will be specifically recognize in the fourth quarter as we get much closer and much more refined data later in the year.

Gary Taylor

Great. Appreciate it. Thank you.

Operator

Ryan Daniels, William Blair.

Jason Ader

Hey, guys, this is Jason Ader on for Ryan Daniels. Thanks for taking the questions. First off up in your 10 Q filing and I believe you said it in the prepared remarks as well, you noted that you borrowed the remaining 15 million from the promissory note and your cash burn this quarter was still about 20 million. So I guess just with all that, how should we think about your liquidity position going forward? And just your general comfort level around the cash balance for the next few quarters? Thanks.

Atul Kavthekar

Yes. Look, I think from a couple of things. one is, as I mentioned, right after the quarter started, we receive, for example, a fairly substantial premium payment on it had that happened literally 24 hours earlier. You would have seen a 15 million better cash flow from operations. So I think there's some timing sensitivity. So I wouldn't read too much into any one quarter with regards to cash flow from operations on, we feel that we are in a good position from a capital standpoint, as we've said in the past.
But I think as we've also said in the past, we are positioning ourselves for more rapid growth and more rapid growth in this business. Simply requires more capital. And so that's something that we do think about. So we would we would always consider that as an opportunity for for purposeful growth.

Jason Ader

Okay, perfect. Understood. Thanks. And then also in your prepared remarks, you mentioned that the partnership with innovator. Can you just talk a little bit more about the reason for going with the partnership route versus in-house? And then just to the second part of this, can you just remind us what you were doing previously before the partnership for the capabilities there bringing in I thought you were doing the predictive modeling, et cetera. So it's just the more efficient route that you're deciding to go.

Sherif Abdou

Yes. So this is Ralph. So what we've done before, we had a an algorithm for that predictive modeling, and we had a tech stack that is up to date that was doing the job. What we are mainly going to shift in innovation or what attracted for this our partnership with innovation or is there a I platform and having that tools to enhance our ability to do the modeling to enhance our ability by putting the notification. It's an EHR agnostic as a tool that can communicate with the with the providers at the point of care.
So that's what we're doing with is accelerating closure, improving the predictive modeling and the the and the communication at the point of care. And it's going to take 12 to 18 months to implement the full partnership to be in effect, and it will be cost neutral for us as well. So enhancing the eye of the benefit that I mentioned and customers through that. That's what attracted us to through innovation.

Jason Ader

Okay, perfect. That makes sense. Thanks. If I could just sneak one final one then in terms of the ACO reach contribution, can you just talk about your longer-term vision for the program and how I guess or if the ECL regional eventually contribute our tier results? Just kind of curious if you can just double click on what your long-term vision as your Thanks.

William Bettermann

Yes, thanks so much. This is Bill. So, you know, as you've heard in prior calls with with us, the ACO REACH program is something that we're getting in, not just a toehold that we're going all in this past year, and we've grown substantially from 23 to 24 in all of our markets. With that being said, as Dr. Kaufman alluded to in the beginning, we're very going to be approaching this very carefully using our data analytics to look at where we're having success, where we have opportunities to continue to grow in this particular platform. But we're excited about where we're at. We've had some nice successes last year and into this year. Dr. buckets, anything you want to add?

Aric Coffman

The only thing I would add is, Jack, as you've heard us talk about before with our with our providers that we have about 27 hundred or so providers in the MA lives that we have with them to reach. This gives us a much bigger and bigger, bigger, deeper opportunity to go into each of those practices for more mind share with those clinicians. So as those collision instead of having 100, 200 with us now we can have three, 400 or so with us, it just creates an overall better mouse trap to drive better performance for their understanding of value-based care overall.
I think this will conclude today's conference call. Thank you for attending.