Jessica Tassan

Jessica Tassan requested more detail on the expected MBR seasonality for 2026, particularly the Part C and Part D slopes, and how it compares to 2025. She also asked about AEP retention and the drivers of projected lower intra-year growth in 2026.

Answer

CFO Jim Head explained that 2026 MBR seasonality would likely follow a similar pattern to 2025, with Q1 and Q4 typically higher and Q2 lower, but with Part D profitability slightly more weighted to the first half. He noted strong AEP retention in 2025, which benefits MBR for mature cohorts, and a cautious outlook on sustained intra-year growth due to market movement.

Jessica Tassin asked for more detail on the expected slope of Alignment Healthcare's MLR throughout 2026, specifically regarding typical Part C seasonality and a flatter Part D MLR, and whether this cadence would be similar to 2025 (excluding sweep payments). She also inquired about AEP retention and the lower projected intra-year growth from Q1 to Q4 2026, seeking to understand if it's due to fewer new adds or increased churn/switching, and the resulting mix of year-one versus tenured membership.

Answer

CFO Jim Head confirmed that the MLR seasonality in 2026 would likely follow a similar pattern to 2025, with Q1 and Q4 typically having higher MBRs and Q2 being the seasonal low, as reflected in the Q1 guidance. He noted that 2026 Part D profitability would be slightly more weighted to the first half. Regarding intra-year growth, Mr. Head explained that while AEP saw significant movement, the company is not yet banking on that sustained growth throughout the year. He highlighted strong retention during AEP as a positive factor, contributing to maturing cohorts and improved MBRs.

Jessica Tassan of Piper Sandler Companies asked for an update on the margin maturation framework for new member cohorts and the potential impact of California's exclusively aligned enrollment (EAE) D-SNP policies.

Answer

CFO Jim Head stated that the cohort maturation framework remains stable, with year-one members performing around an 89% MBR and improving over time. He highlighted that with 50% of members in year one or two cohorts, the company's execution has been strong. CEO John Kao addressed the D-SNP issue, stating that members often prefer to opt out of mandated Medicaid networks to join Alignment for greater choice, and he does not expect this dynamic to negatively impact them in 2026.

Jessica Tassan of Piper Sandler inquired about the expected changes in California's competitive landscape for 2026 and any planned investments to support the sales force. She also asked if Alignment is receiving requests from capitated providers for contract changes and at what point the company might consider re-assuming that risk.

Answer

CEO John Kao stated that while the rate notice helps all plans, Alignment's relative advantages in Stars and V28 remain significant, positioning them well against competitors. CFO Robert Freeman added that their global cap providers typically do not take Part D or supplemental benefit risk, which fosters better alignment and has prevented requests for concessions. They will continue to grow their at-risk book while working with high-performing capitated partners.

Jessica Tassan asked if new members in non-California markets start with a higher MBR and if their profitability eventually converges with California members. She also inquired about member retention during AEP and sought thoughts on the final CMS rate notice.

Answer

Executive Robert Freeman explained that while some non-California markets start with a higher MBR, they often present a greater opportunity for improvement and eventually converge. He noted that AEP retention was strong and similar to the prior year's record high. CEO John Kao added that the company is well-positioned for any rate notice outcome due to its relative advantages, though his gut feeling was that the final rate could be slightly higher than the advance notice.

Jessica Tassan asked about any structural changes to capitated contracts for 2025 and inquired about actions being taken to mitigate the Part D liability shift from the IRA redesign.

Answer

Executive Robert Freeman stated there were no structural changes to capitated contracts for 2025 and that he did not expect a significant MBR change in that book of business. He noted that Part D is expected to be a tailwind to MLR in 2025, and the company's Care Anywhere program provides a clinical advantage in managing drug costs for high-acuity members under the new IRA rules.

Jessica Tassan inquired about specific AI tools rolled out nationally to network providers, the rollout process, any early outcomes or savings data, and which clinical categories Privia Health might target for future AI-enabled improvement, such as care transitions or end-of-life care planning.

Answer

Parth Mehrotra, CEO of Privia Health Group, referred to earlier comments on AI, elaborating on targeted clinical categories for AI-enabled improvement, including patient interaction, care gap closures, chart prep, scheduling, patient engagement (agentic AI), medication adherence, risk assessment, and clinical decision support. He emphasized the goal of productivity lift for capacity-constrained physicians and deep work with patients as payment models evolve. He also mentioned applications in revenue cycle and fee-for-service workflows, noting partnerships with existing innovators and investment in Navina for tangible benefits, describing it as a 3-7 year journey with significant margin accretive and productivity enhancing potential.

Jessica Tassan inquired about specific AI tools rolled out nationally to Privia Health's network providers, the rollout process, early outcomes or savings data, and future clinical categories targeted for AI-enabled improvement, such as care transitions or end-of-life care planning.

Answer

Parth Mehrotra (CEO, Privia Health Group) referred back to earlier comments on five buckets of AI investments. He highlighted categories like patient interaction (care gap closures, chart prep, scheduling), Agentic AI for patient engagement, medication adherence, risk assessment, and clinical decision support to enhance physician productivity. He mentioned an investment in Navina last year for clinical decision support and ongoing partnerships with new innovators, emphasizing that this is a 3-5-7 year journey expected to be margin accretive and productivity enhancing.

Jessica Tassan asked for details on utilization trends by service and payer type (Medicare, commercial, Medicaid) and whether any trends feel unusual or elevated.

Answer

CEO Parth Mehrotra reported seeing consistently strong ambulatory utilization, which benefits their business. Concurrently, they are observing the same elevated downstream trends that payers have been discussing. He emphasized that Privia has been positioning its business to operate in this 'new normal' utilization environment for the past few years, and the company's strong results reflect its ability to manage through these trends.

Jessica Tassan of Piper Sandler asked for an explanation of why the Q4 upside in platform contribution did not flow through more completely to adjusted EBITDA, questioning if there were any one-time operating expenses.

Answer

CFO David Mountcastle and CEO Parth Mehrotra explained the difference was due to higher operating costs in Q4. Specifically, a strong sales year led to higher true-up commissions for the sales team, and better-than-expected company performance resulted in higher bonus accruals, both of which are factored into adjusted EBITDA but not platform contribution.

Jessica Tassan from Piper Sandler inquired about the impact of MSSP benchmark rebasing on performance, noting that Privia's largest ACO may be in a rebasing year in 2024, and sought to understand any potential tailwind for 2025.

Answer

CEO Parth Mehrotra confirmed the largest ACO is up for rebasing next year but stated this is a normal course of business that is already factored into the company's outlook and long-term 20% EBITDA growth target. He emphasized that Privia's diversified strategy with multiple ACOs across various states and business lines is deliberately designed to mitigate risks from idiosyncratic events like a specific benchmark change.

Jessica Tassan inquired about the early experience with insurance-paid BetterHelp members, specifically their behavior, conversion from cash pay, and their utilization and retention patterns.

Answer

CEO Chuck Divita stated that while it's still early for definitive conclusions, all observed trends regarding conversion, usage, and session numbers are consistent with expectations. He noted significant growth in insurance sessions, indicating strong interest in using insurance for mental health services.

Jessica Tassan inquired about the behavior of insurance-paid BetterHelp members, specifically their conversion from cash pay, utilization patterns, and retention rates based on early experience.

Answer

Chuck Divita, CEO, stated that while it's still early for definitive conclusions, all observed trends—including conversion, usage, and number of sessions—are consistent with expectations. He highlighted significant growth in insurance sessions and strong underlying demand for mental health services, supporting the scaling of the insurance offering.

Jessica Tassan from Piper Sandler Companies inquired about the outlook for Chronic Care Solutions in 2026, the progress of the current selling season, and any notable competitive dynamics impacting retention and pricing.

Answer

CEO Charles Divita noted the employer channel is in line with expectations, but the health plan channel faces continued pressure. He highlighted the new cardiometabolic program's holistic approach as a key differentiator. CFO Mala Murthy added that the market is highly competitive but expressed confidence in leveraging Teladoc's large member base for cross-selling opportunities, given current low penetration rates.

Jessica Tassan inquired about the impact of BetterHelp's shorter-duration weekly contracts on churn and revenue per member, and questioned the rationale behind acquiring UpLift for payer coverage instead of leveraging the existing BetterHelp provider network.

Answer

CFO Mala Murthy explained that weekly offers boost user conversion despite higher churn, resulting in a net positive effect, though it impacts initial revenue per user. CEO Chuck Divita clarified that the UpLift acquisition was a strategic move to accelerate their entry into insurance-covered services, not a reflection of any inability of the BetterHelp network to gain payer contracts.

Jessica Tassan from Piper Sandler asked for a qualitative description of the differences between the existing behavioral health offerings in the Integrated Care segment and the incremental capabilities BetterHelp would provide if brought in-network for payers.

Answer

CEO Chuck Divita explained that while the B2B Integrated Care segment has a scaled mental health offering ($150M in 2024 revenue), BetterHelp's key differentiators are its strong consumer brand, its ability to drive high user volume, and its proven platform for rapidly matching patients with therapists, which many network providers struggle with.

Jessica Tassan asked about the competitive landscape as payers consider covering BetterHelp, any nuances between commercial and Medicare Advantage, and the potential SG&A burden on Teladoc in a payer-sponsored model.

Answer

CEO Chuck Divita reiterated that BetterHelp will remain a predominantly direct-to-consumer business, with the payer initiative being an exploration to serve consumers who want to use their benefits. CFO Mala Murthy added that the initiative could leverage existing marketing spend to attract a wider consumer base by offering another payment choice, rather than creating a significant new SG&A burden.

Jessica Tassan asked about the competitive dynamics for BetterHelp as it engages with payers, questioning whether payers prefer a single virtual behavioral health partner or a broad network. She also inquired about the potential SG&A burden on Teladoc in a payer-sponsored model, given the need to drive utilization.

Answer

Chief Executive Officer Chuck Divita reiterated that BetterHelp's primary focus remains its direct-to-consumer model and that the payer initiative is an exploration to help existing consumers access their benefits. Chief Financial Officer Mala Murthy clarified that the SG&A impact should be viewed as leveraging existing marketing spend more effectively. Instead of being a new burden, offering a payer option is another way to convert consumers brought in by current advertising efforts, potentially making that spend more efficient.

Jessica Tassan questioned the confidence in the 103% Medical Loss Ratio (MLR) for new contracts reflecting conservatism rather than inadequate pricing, and sought clarification on the MLR and operating expense (OpEx) combination required to achieve the 7-10% long-term target margins for the Performance Suite.

Answer

CEO Seth Blackley expressed confidence, citing the asymmetric structure of new contracts, conservative underwriting, and a generally conservative guidance approach. He noted that incremental care margin in the Performance Suite disproportionately contributes to EBITDA due to the fixed-cost nature of many investments, and that the legacy cohort is already achieving target margins.

Jessica Tassan questioned the confidence in the 103% MLR for new contracts reflecting conservatism versus inadequate pricing, and asked for the specific MLR and OpEx combination needed to achieve the 7%-10% long-term target margins in the Performance Suite.

Answer

CEO Seth Blackley highlighted the asymmetric structure of new contracts, conservative underwriting, and a generally conservative guidance approach. He explained that incremental care margin in the Performance Suite disproportionately falls to EBITDA due to fixed cost investments, expressing confidence in achieving 7%-10% margins for the entire book over time.

Jessica Tassan of Piper Sandler sought clarification on two points: the quarterly cadence of Performance Suite lives, including the impact from recontracting, and the timeline for repricing retained Performance Suite business to reflect current cost trends.

Answer

Executive John Johnson clarified that approximately 600,000 lives converted from the Performance Suite to Technology and Services. Regarding repricing, he explained that contracts are on an annual cycle where capitation rates automatically adjust based on changes in the population's risk profile, such as a shift in cancer mix.

Jessica Tassan asked what portion of the Performance Suite book was profitable in 2024 and whether the un-renegotiated, profitable contracts would see margin contraction in 2025.

Answer

CFO John Johnson stated that the mix of profitable versus unprofitable contracts remained about the same in Q4, though the overall profitability curve shifted down. He confirmed there will be 'modest contraction' in the profitable, un-renegotiated book in 2025, which is factored into the guidance and is part of why the company is only recovering about half of the prior year's margin decline.

Jessica Tassan of Piper Sandler & Co. asked for clarification on the $100 million price increase in relation to risk corridors and inquired about the potential impact of the Inflation Reduction Act (IRA) on the business.

Answer

John Johnson explained that the $100 million in sought-after rate increases is intended to restore profitability in affected markets, not just to reach the edge of a risk corridor. Regarding the IRA, Johnson stated that Evolent anticipates minimal impact as the company does not typically take risk in Medicare Part D.

Jessica Tassan with Piper Sandler & Company asked about the differences in yield between new and tenured Hinge Health clients, specifically whether there's a saturation point or if yield continues to improve over time. She also inquired about the types of conditions targeted in 2025 for enrollment efforts and any new conditions planned for 2026.

Answer

James Budge, CFO, stated that the 2025 new client cohort achieved 3.3% engagement in their first year, a significant improvement over prior cohorts (1.3% at 6 months, 2.5% at 1 year), indicating continued yield momentum. Daniel Perez, Co-founder and CEO, explained that targeted enrollment uses multiple data sources like claims and pharmacy data to identify individuals in active MSK care or at risk for high-cost claims, steering them towards digital physical therapy, but did not specify new conditions for 2026.

Jessica Tassan asked about the differences in yield between new and tenured clients, and the specific conditions targeted by Hinge Health's enrollment efforts in 2025.

Answer

James Budge, CFO, reported significant progress in 2025, with the first-year client cohort achieving 3.3% engagement by year-end, a notable increase from prior years' typical rates, indicating continued yield momentum. Dan Perez, Co-founder and CEO, explained that targeted enrollment leverages multiple data sources (claims, pharmacy, prior auth) to identify individuals in active MSK care episodes or at risk of high costs, aiming to improve outcomes and steer them away from low-value, high-cost care, though specific algorithms and conditions were not detailed.

Jessica Tassan inquired about the fourth-quarter utilization trends, particularly how the pull-forward of care by Silver members in 2025 might impact 2026 utilization due to higher deductibles. She also asked for color on the overall market size post-effectuation and the adequacy of market-wide pricing to prevent 2026 risk adjustment issues.

Answer

R. Scott Blackley, Oscar Health Chief Financial Officer, clarified that Q4 utilization was modestly higher than expected, primarily due to a risk adjustment true-up, with utilization pressure attributed to members accelerating care (outpatient, professional, substance abuse, mental health, labs) as enhanced premium tax credits expired, not indicating a carry-forward impact. Mark Bertolini, Oscar Health Chief Executive Officer, stated that the market shrunk by 5% post-OEP, with significant shifts in membership mix (Silver down, Bronze up, Gold quadrupled) due to higher deductibles. He highlighted uncertainty regarding paid members after grace periods and projected market contraction towards the lower end of the 20-30% range as members face higher out-of-pocket costs.

Jessica Tassan inquired about the fourth quarter utilization trends, particularly how they relate to 2026 expectations, and sought clarification on the overall market size post-effectuation and the adequacy of market-wide pricing to prevent 2026 risk adjustment issues similar to 2025.

Answer

R. Scott Blackley, Oscar Health Chief Financial Officer, stated that Q4 utilization was modestly higher than expected, primarily due to members accelerating care before enhanced premium tax credits expired, with no significant carry-forward concerns. Mark Bertolini, Oscar Health Chief Executive Officer, added that the market shrunk by 5% post-enrollment, but final paid membership and market contraction clarity would come mid-year, with an expectation of reaching the lower end of the 20-30% reduction range by year-end due to potential disenrollment from higher out-of-pocket costs.

Jessica Tassan of Piper Sandler sought to understand the core assumptions for returning to profitability in 2026, plans to fortify the balance sheet in a potential downside scenario, and the impact of a large issuer's late 2024 risk adjustment data submission.

Answer

CFO Scott Blackley stated that 2026 pricing incorporates conservative assumptions about market morbidity and program integrity changes. He expressed confidence in Oscar's ability to access capital if needed, given the company's low leverage. He also clarified that the late risk adjustment data submission from another issuer had a minimal, single-digit million-dollar impact.

Jessica Tassan of Piper Sandler asked if the 2025 risk adjustment payable is expected to be a similar percentage of premiums as in 2024 and inquired about the margin profile of bronze plans, including MLR and SG&A, to assess margin stability amid a potential downward mix shift.

Answer

CFO Scott Blackley stated that while there's no change to the risk adjustment outlook yet, sustained high claims could lower it as a percentage of revenue. He projected a flatter MLR seasonality and gradual SG&A ratio increases through the year. While declining to give 2026 specifics, he affirmed the company's focus on disciplined pricing to continue expanding margins. CEO Mark Bertolini added that the final plan mix depends on the outcome of subsidy and integrity rule changes.

Jessica Tassan requested the quantification of prior period development for Q4 and the full year 2024, and also asked about Oscar's pricing strategy for Silver plans to ensure enrollment of intentional, premium-paying members.

Answer

CFO Scott Blackley quantified prior period development at $62 million for the fourth quarter and $126 million for the full year. He explained that Oscar's pricing strategy is disciplined across all metal tiers to balance growth with profitability. He also noted that Oscar polices its brokers and collaborates with CMS on payment integrity. CEO Mark Bertolini added that many members on zero-premium plans use them as catastrophic coverage with low utilization.

Jessica Tassan from Piper Sandler questioned the implied Q4 guidance, which suggests flat medical claims expense or a shrinking risk adjustment payable, and asked how Oscar's risk adjustment forecasting practices have evolved over the past two years to improve accuracy.

Answer

CFO Scott Blackley attributed the expected Q4 MLR performance to several factors: the Q3 COVID spike was a temporary event, SEP additions will decelerate, and payment integrity initiatives are ramping up. Regarding risk adjustment, he described their modeling as a consistent, multi-year practice that, while inherently volatile, has served them well and produced stable estimates.

Jessica Tassan asked how Omnicell contends with the lease structures prevalent in competitors' ADC install bases, questioning if Omnicell waits for lease expiry, if customers upgrade early, and if lease terms will constrain competitive conversions. She also inquired about the risk that AI tools might enable health systems to develop their own pharmacy inventory management platforms, potentially undermining OmniSphere's 2027 launch.

Answer

Baird Radford, EVP and CFO, explained that Omnicell now offers its own financing/leasing opportunities, in addition to third-party options, to remain competitive and potentially gain customers. Randall Lipps, Chairman, President, CEO, and Founder, stated that AI is a valuable tool, but requires an effective infrastructure. He believes OmniSphere, being geared toward AI and providing an enterprise-wide, reliable, and secure infrastructure for real-time data, is a net positive for Omnicell.

Jessica Tassan from Piper Sandler asked about Omnicell's strategy for contending with the lease structures prevalent in competitors' ADC install bases, specifically whether Omnicell needs to wait for lease expiry or if customers upgrade early, and if lease terms will constrain competitive conversions. She also asked about the risk of AI tools enabling health systems to develop their own pharmacy inventory management platforms, potentially undermining OmniSphere's launch.

Answer

Baird Radford, EVP and CFO, stated that Omnicell has introduced its own financing program to complement third-party leasing, allowing them to remain competitive in bid situations and potentially gain additional customers, without a wholesale shift in business practices. Randall Lipps, Chairman, President, CEO, and Founder, believes AI is a net positive for Omnicell, as health systems need an enterprise-wide, reliable, and secure infrastructure like OmniSphere to effectively utilize AI for supply chain optimization and real-time data modeling, whether through Omnicell's offerings or their own tools.

Jessica Tassan of Piper Sandler Companies inquired about the current competitive landscape, momentum in the large hospital market, and the potential impact of macroeconomic headwinds on customer demand, including any changes in competitor behavior.

Answer

Randall Lipps, Founder, Chairman, President & CEO, stated that while hospital conversations are changing, their buying behavior has not. He noted continued momentum and competitive strength, emphasizing Omnicell's evolution into a technology company with a comprehensive, cyber-secure enterprise platform that resonates well with both current and prospective customers.

Jessica Tassan inquired about the distribution of the tariff burden between Omnicell and its customers, specifically asking if price increases are being passed through. She also asked if the XT Amplify product line has a more favorable domestic supply chain and sought confirmation that its XTExtend product is currently being deployed.

Answer

CEO Randall Lipps stated that Omnicell is not currently passing on significant price increases but may reduce discounts in the future, emphasizing that reorienting the supply chain is the primary mitigation strategy. COO Nnamdi Njoku clarified that the XT Amplify portfolio is sourced globally, contributing to tariff exposure, and confirmed that the XTExtend product rollout began last year and is ramping up.

Jessica Tassan asked for clarification on the drivers of the 2024 bookings upside, questioning if it was primarily from the new XTExtend and Amplify portfolio or if there was also unanticipated strength in core XT cabinet sales. She also inquired about the company's supply chain diversification and its ability to mitigate tariff risks through pricing or cost management.

Answer

CFO Nchacha Etta attributed the strong bookings performance to a combination of factors: robust demand for connected devices, a final surge in XT upgrades as that cycle concludes (including some market share gains), and solid early demand for the new XTExtend offering. Regarding tariffs, Etta stated the company has processes to mitigate potential impacts, expecting minimal disruption due to a combination of factoring inflation into 2025 pricing and flexibility in managing cost of goods sold.

Jessica Tassan asked for a directional outlook on the cabinet business contribution for 2025 and whether the XT Amplify program alters the historical 10-year cabinet life cycle.

Answer

CEO Randall Lipps stated that while the G-Series upgrade cycle is diminishing, the large installed base of XT systems presents expansion opportunities through the XT Amplify program. He clarified that Amplify extends the product life cycle by serving as an "on-ramp" for next-generation software and hardware, allowing customers to adopt new technology with less disruption.

Jessica Tassan asked for an explanation of how PhreesiaOnCall integrates into the provider workflow to deliver educational content to HCPs, and inquired about the typical booking visibility for Network Solutions revenue ahead of the calendar year.

Answer

Balaji Gandhi (CFO, Phreesia) explained that Phreesia is testing various non-obtrusive ad formats within PhreesiaOnCall, integrated into the natural product usage workflow, with early tests showing effectiveness. He also stated that Phreesia typically enters a calendar year with 60-70% visibility for Network Solutions revenue, as many clients operate on a calendar year basis.

Jessica Tassan asked for an elaboration on how Phreesia on Call integrates into the provider workflow to surface educational content to HCPs, and how network solutions revenue is typically booked (ahead of calendar year vs. intra-year) and if FY26 is consistent with historical experience.

Answer

CEO Chaim Indig explained that Phreesia on Call is testing different ad formats within the product, designed to be non-obtrusive and in the natural flow of use, with early tests showing effectiveness. CFO Balaji Gandhi added that Phreesia typically enters a calendar year with 60%-70% visibility for network solutions revenue, as many clients operate on a calendar year.

Jessica Tassan asked who bears the risk for the patient payment extensions offered by AccessOne.

Answer

Balaji Gandhi (CFO) clarified that Phreesia is not the risk bearer. The risk is shared between PNC Bank, an important partner, and the healthcare provider client itself.

Jessica Tassan asked who bears the risk for uncollected dollars related to AccessOne's payment extensions to patients.

Answer

CFO Balaji Gandhi clarified that Phreesia does not bear the risk. The risk is shared between PNC Bank, an important partner, and the provider clients of AccessOne, with Phreesia driving technology-first payment solutions.

Jessica Tassan asked about the ROI visibility for Network Solutions customers, their flexibility to adjust campaigns, and the real-time data available to them for modifying media spend.

Answer

CEO Chaim Indig explained that while campaigns undergo a formal medical legal review (MLR) process, clients have the flexibility to titrate spending. He noted that due to Phreesia's strong, measurable ROI and growing scale, it often becomes a recipient of increased ad dollars from clients throughout the year.

Jessica Tassan asked for details on the 'postscript engagement' product, including its mechanics and payment model. She later inquired about the timing of Network Solutions contract renewals, questioning if they are time-bound or impression-bound.

Answer

Executive Balaji Gandhi clarified that the postscript product is impression-based, similar to other campaigns, and leverages platform data to send prescription reminders. He and CEO Chaim Indig later added that Network Solutions campaigns are sold for a fixed number of messages and are resold upon completion, making it an ongoing process.

Jessica Tassan asked about the network solutions selling season, potential tailwinds from Part D, and pharma customer feedback regarding the presumptive HHS secretary nominee.

Answer

Executive Balaji Gandhi noted that visibility into the fiscal 2026 outlook is slightly ahead of last year. Regarding the HHS nominee, he reiterated that Phreesia's platform is built on privacy and consent to deliver personalized health information that improves outcomes.

Jessica Tassan asked what factors increased Phreesia's visibility to guide for growth in average revenue per AHSC and inquired about the opportunity to leverage the Patient Activation Measure (PAM) within the existing client base.

Answer

Executive Balaji Gandhi explained that the improved visibility is the result of a multi-year strategy to broaden the solution suite, leading to intentionally larger deal values. He noted that PAM is required in programs like Kidney Care Choices (KCC), making Phreesia's offering stickier for participating nephrology clients and creating opportunities for inclusion in future CMMI models.

Jessica Tassan asked about the tone of recent conversations with CMS, their receptivity and posture towards Medicare Advantage, CMS's focus areas (STARS, risk adjustment, rates), and UnitedHealthcare's lobbying efforts.

Answer

Bobby Hunter (CEO of Government Programs, UnitedHealth Group) stated that the company has been encouraged by the administration's receptivity to conversations with the industry about modernizing and improving the Medicare Advantage program, contrasting it with the previous administration. He appreciates the fact-based discussions and will continue to bring ideas for program stability and modernization, but clarified that UnitedHealthcare is not lobbying for anything in particular.

Jessica Tassan asked about the tone of recent conversations with CMS, their receptivity and posture towards Medicare Advantage, CMS's focus areas (STARS, risk adjustment, MA rates), and UnitedHealthcare's lobbying efforts.

Answer

Bobby Hunter, CEO of Government Programs, UnitedHealth Group, expressed encouragement regarding the current administration's receptivity to industry conversations about modernizing and improving the MA program, contrasting it with the previous administration. He emphasized the value of fact-based discussions for constructive solutions and continued to bring ideas for program stability and modernization, without specifying particular lobbying efforts.

Jessica Tassan asked about the drivers behind UnitedHealthcare's strong Medicare Advantage growth, particularly in Chronic Special Needs Plans (C-SNP), and the economic implications of this success for 2025 and beyond.

Answer

Robert Hunter, an executive, confirmed the company is on track for its full-year growth target of 800,000 new MA members, with diversified growth across HMO, dual-eligible, and C-SNP plans. He attributed the success in managing members with chronic conditions to strong value-based care integration with both internal and external providers, which positions them well to serve these complex and high-need populations.

Jessica Tassan from Piper Sandler Companies asked if the company was observing any divergence in food versus med-surg purchasing patterns that might indicate changes in care intensity. She also requested the approximate size of the advisory business and the visibility into its projected double-digit growth for fiscal 2026.

Answer

President & CEO Michael Alkire responded that it is difficult to glean care intensity changes from those specific portfolios and that no significant dynamic has been observed. CFO & Chief Administrative Officer Glenn Coleman sized the advisory business at roughly $50-100 million and stated the company expects growth to exceed 25% in fiscal 2026, with high confidence based on four large, multi-year contracts that have already been signed.

Jessica Tassan inquired about the differential ability of hospitals to absorb tariffs on consumables versus capital purchases and asked for a breakdown of purchasing volume between OpEx and capital. She also asked if there were any one-time items in net admin fee revenue and why contract renewals were completed ahead of schedule.

Answer

President and CEO Michael Alkire stated that tariffs impact both OpEx and capital, though capital planning allows more time for strategic adjustments. He described the OpEx/capital mix as too dynamic to quantify, as it depends on the economic health of hospital systems. Chief Administrative and Financial Officer Glenn Coleman confirmed there were no one-time items in net administrative fees and attributed the accelerated contract renewals to strong execution by the team.

Jessica Tassan of Piper Sandler sought confirmation on whether 'firm for the term' pricing protects members from tariffs, asked if there was evidence of purchasing pull-forward, and requested details on what makes the digital supply chain offering distinct and appealing to prospects.

Answer

CEO Michael Alkire confirmed that 'firm for the term' pricing is embedded in supplier contracts, meaning suppliers absorb tariff costs. He stated it was too early to tell if purchasing pull-forward occurred. He described the digital supply chain's appeal as providing suppliers with data access for real-world evidence studies, which helps demonstrate product value and impact on costs.

Jessica Tassan sought clarification on the liability related to the sale of future revenues to OMNIA, asking why it grew quarter-over-quarter and if it represents a threshold for retaining upside. She also asked if the Q1 purchasing increase was driven by fee share rates or other factors.

Answer

CFO Craig McKasson explained that the OMNIA-related liability grew due to a final $42.3 million payment made in July to finalize the transaction, and it is now expected to decline quarterly. He clarified the current portion is the anticipated payback amount, not an upside threshold. He also stated that the strong Q1 purchasing performance was driven by increased contract penetration and technology-enabled pull-through, not changes in fee share percentages.

Jessica Tassan from Piper Sandler Companies asked for details on the Ambient Scribe workflow, including EHR integration, and the long-term vision for the workflow suite across different care settings.

Answer

CEO Jeff Tangney described the current Scribe workflow as a simple copy-paste to the EHR, with a key feature being the ability for doctors to train their own note templates. While EHR integrations are in progress, he positioned the iPhone as the physician's 'peripheral brain,' with Doximity's suite of widgets for news, scribe, dialer, and GPT creating a synergistic daily workflow tool.

Jessica Tassan asked for clarity on the expected revenue cadence throughout the fiscal year and sought to understand the composition of the workflow tools opportunity, questioning if it essentially doubles the TAM and if AI is considered a separate, additional opportunity.

Answer

CFO Anna Bryson explained that revenue should still see sequential step-ups, with Q3 likely being the highest quarter due to mid-year upsells. She noted that earlier January launches might even aid the upsell cycle by providing a longer ROI tracking period. She confirmed that workflow tools (Act 2) are a distinct opportunity from the News Feed (Act 1), and AI is viewed as a potential third distinct opportunity (Act 3) in the future.

Jessica Tassan of Piper Sandler sought clarification on key performance indicator (KPI) accounting, specifically whether the average starting ARR for new platform clients is incremental and how a migrating client with reduced spend is treated. She also asked about implementation timelines and the financial contribution from the Upfront acquisition.

Answer

CEO Dan Burton clarified that the $300,000 to $700,000 average ARR is entirely incremental revenue from net new platform clients, often cross-sold from the existing app client base. A migrating DOS client who reduces their total spend would negatively impact the dollar-based retention metric, not the new client ARR metric. He added that implementation timelines are a few months for all new Ignite clients. CFO Jason Alger noted that the Upfront acquisition was a slight EBITDA headwind in Q1 but is expected to become accretive later in 2025.

Jessica Tassan questioned the extent to which Health Catalyst can control the pace of client migrations to the Ignite platform and asked for the expected completion timeline for the entire migration process.

Answer

CEO Dan Burton stated that the company works closely with clients to manage a responsible migration pace, balancing client needs with financial impacts. He confirmed they are on track to have the large majority of clients migrated by mid-2026. This controlled pace helps manage the associated costs and the temporary headwind on dollar-based retention. He also noted that technology gross margins are expected to improve in the second half of 2025 as a significant portion of migrations are completed.

Jessica Tassan from Piper Sandler sought clarification on the nonrecurring services contracts, asking if they are with new or existing customers, their relation to international deals, and whether international contracts are typically software-only.

Answer

CEO Dan Burton explained that these nonrecurring contracts are predominantly with existing clients, both in the U.S. and internationally, for specific improvement projects. He highlighted that clients appreciate the defined budget structure and that these contracts often stack up, creating a recurring-like spend pattern. He also confirmed that most technology contracts are accompanied by a services component.

Asked about the value proposition that secured a major client renewal, whether new products are being added at the same price point, and for details on the interaction between their out-of-network product and the No Surprises Act (NSA), including future savings potential.

Answer

The renewal was attributed to a strong partnership, driving real savings, and leaning into the NSA business with improved automation. The company is now able to sell new products like PlanOptix to existing clients and is building out a pricing and packaging function to better bundle offerings. Regarding NSA, they see growth opportunities with existing clients and at the state level due to their scale advantage.

Asked for clarification on revenue yield differences by payer type, the circumstances behind the large customer attrition and why it's considered an anomaly, and for an update on pending litigation.

Answer

The yield degradation is primarily due to negative mix accentuated by the one large customer, and the company is working to improve its disclosures on this. The customer attrition was a one-off strategic decision by that client to in-source capabilities and is not seen as a broader trend. On litigation, the company is vigorously defending itself, views recent legal developments as encouraging, and expects to file a motion to dismiss in its centralized case in mid-January.

Asked if the incoming CFO was involved in the revised forecast, about the contractual nature of the lost program and the risk of similar attritions, and for the drivers of the volume growth.

Answer

The incoming CFO was not involved in the forecast. The program attrition is not a contractual issue as there are no volume commitments; it's considered a specific strategic move by one client, not a broad risk. The volume growth is driven by increased healthcare utilization and inflation within the existing customer base ('same-store sales').

Jessica Tassan asked for clarification on the level of core business attrition embedded in the 2025 guidance and questioned the strategic rationale for the Amwell Psychiatric Care (APC) divestiture and its impact on the behavioral health offering.

Answer

CFO & COO Mark Hirschhorn acknowledged that 2024 attrition was material but stated it has been processed and he expects a far less significant impact from churn going forward. CEO Dr. Ido Schoenberg explained that the divested APC business was a low-margin, physical staffing operation that was not strategic for their technology-enabled care model. He affirmed that behavioral health remains a core focus, delivered effectively through the Amwell Medical Group (AMG) and automated programs.

Jessica Tassan of Piper Sandler questioned how Amwell's SilverCloud solution interacts with other virtual behavioral health providers, asking why its presence is complementary rather than cannibalistic.

Answer

CEO Ido Schoenberg explained that Amwell's core value is providing a single, orchestrated pathway to numerous clinical programs. While Amwell offers native programs like SilverCloud, the platform can integrate any third-party or client-preferred solution, making the core orchestration service valuable regardless of the specific program used.

Asked about the mix of guaranteed PMPM revenue versus variable revenue in new bookings and how the low end of the revenue guidance is covered by high-visibility revenue.

Answer

Steve Barnes explained that the revenue mix dynamics are similar to prior years. The fourth quarter revenue is driven by a combination of performance guarantees (which are PEPM-based), new ARR launches, and variable usage-based revenues. He noted that the growing health plan business can have more variable launch dates and ramp-up periods.

Asked about the competitive landscape in light of the CalPERS deal, questioning if a competitor's aggressive cost trend guarantees are achievable for Accolade and if the company is enhancing its platform to match such targets.

Answer

Accolade is capable of delivering strong trend line guarantees but chose not to match the winning bid for CalPERS, which they viewed as having materially lower fees and an extraordinary amount of fees at risk. They believe this disciplined approach is better for all stakeholders long-term and that such aggressively priced deals often come back to them when competitors fail to deliver. Their ability to deliver trend improvements is already there and depends on customer configuration.

Asked for a detailed breakdown of the FY '24 Annual Contract Value (ACV) number, including what it comprises, the assumed attainment of contingencies, and whether utilization-based revenue is included.

Answer

ACV includes only B2B contract revenue and does include an estimate for 12 months of utilization-based revenues; it excludes D2C revenue. The conversion from ARR to ACV is about 80-85% after accounting for PG realization and launch timing. It was emphasized that ACV is now just one predictor (approx. 70%) of the following year's revenue, with platform-connected and D2C growth being other key components.

Inquired about the confidence in raising the 2023 MSSP and ACO REACH accrual, the historical progression of savings rates in those programs, and the outlook for total Medicare Advantage membership in 2024.

Answer

Confidence in the higher government VBC accrual comes from favorable beneficiary cost trends and higher-than-planned enrollment in care management programs. The 2022 savings rate of 5% was a record high for the ACO. For 2024, the company will focus on operations, efficiency, and cash flow rather than aggressive membership growth, suggesting a flattish year-over-year outlook for MA lives.