John Ransom

John Ransom asked about the evolution of Alignment Healthcare's AVA platform to 'bend the trend' beyond traditional population health, and sought the company's perspective on whether MA is a good deal for taxpayers, given conflicting studies and discussions in D.C.

Answer

CEO John Kao outlined AVA 2.0's focus on more precise stratification, efficient clinician workforce management, and improved clinical outcome measures. He detailed program enhancements in transitions of care, case management, palliative care, and potential investments in specialty company captives. Regarding MA's value for taxpayers, he stated it's a very good deal for seniors and, post-V28, is largely 'apples to apples' for taxpayers, aligning with CMS's goal of growing MA the right way.

John Ransom asked about Alignment Healthcare's strategy for 'bending the trend' with its AVA platform, moving beyond traditional chronic disease management (pop health 1.0) to a '2.0' approach in deploying assets. He also inquired about Alignment's stance on the ongoing debate regarding whether Medicare Advantage (MA) is a good deal for taxpayers, referencing conflicting studies from MedPAC and Avalere, and what data Alignment points to.

Answer

Founder and CEO John Kao outlined a '2.0' approach for AVA, focusing on operational precision (stratification models, clinician workforce management), clinical outcome measures, and program improvements (transitions of care, case management, palliative care, provider integration). He also mentioned investing in specialty company captives (dental, vision, transportation, flex card) to capture margins and de-delegating acute authorizations to IPAs. Regarding MA's value for taxpayers, Mr. Kao stated it's a very good deal for seniors and, post-B28, is 'pretty much apples to apples' for taxpayers, believing CMS aims to grow MA responsibly by minimizing gaming and ensuring program integrity.

John Ransom of Raymond James Financial asked about Alignment's public advocacy efforts in Washington D.C. and the evolution of its care model towards predictive analytics. He later followed up on improving Star Ratings, specifically CAPS measures, and the industry's challenge in defining and communicating quality and value to taxpayers.

Answer

CEO John Kao highlighted the company's recent testimony before a House subcommittee, where he believes their differentiated, senior-focused model is being recognized as a positive example for the industry. He explained that the care model is becoming more personalized with advanced analytics, a necessity as V28 tightens revenue. Kao identified CAPS scores as the primary area for Star Ratings improvement, which involves better care coordination with IPA partners. He acknowledged the industry's challenge in proving value to taxpayers, suggesting V28 is forcing a focus on this issue.

John Ransom of Raymond James asked about the evolution of the AVA technology platform, specifically what is new and different at the patient engagement level compared to a few years ago, and where the next opportunities lie for driving down medical costs.

Answer

CEO John Kao stated that AVA's risk stratification and proactive care management models are working very well. He explained the next evolution is a 'culture of continuous improvement,' focusing on the efficacy and ROI of each module. The ultimate goal is for AVA to integrate the entire end-to-end member journey, from prospect to care management, creating a seamless consumer platform that can support multiple revenue models in the future.

John Ransom inquired about the mix of 2025 growth between existing and new markets and asked for commentary on the challenges of downstream provider contracting in the current MA environment.

Answer

CEO John Kao stated that all 2025 growth will come from existing markets as the company focuses on reaching cash flow positivity to fund future expansion. He argued that Alignment's model, which emphasizes population health management over pure financial engineering, allows them to work collaboratively with providers to increase their surplus, differentiating them from competitors facing pushback.

John Ransom asked Chris McGinnis about the decline in Prescription Transaction Revenue (PTR), specifically whether it's primarily due to a lower take rate or script degradation. He followed up with Wendy Barnes and Laura Jensen regarding the potential for a partnership with Lilly, given Lilly's own direct-to-consumer program, LillyDirect.

Answer

Chris McGinnis, Chief Financial Officer, clarified that GoodRx is focused on stabilizing script volume, with MACs expected to be flat to slightly declining. He explained that renegotiating lower fees across the supply chain aims for longer-term durability, framing it as a holistic approach with a bidirectional flow of funds, sharing brand economics with retailers. Laura Jensen, Chief Commercial Officer and President of Pharma Direct, and Wendy Barnes, Chief Executive Officer, addressed the Lilly question by explaining that while manufacturers build their own D2C experiences, they also seek partners like GoodRx to reach patients and learn about D2C. Wendy highlighted data showing better consumer outcomes for price discovery within GoodRx's integrated environment compared to fragmented manufacturer websites.

John Ransom asked Chris McGinnis about the decline in Prescription Transaction Revenue (PTR), specifically whether the reduction from the historical $5 take rate on 100 million scripts is primarily due to a lower take rate or also includes script degradation. He also asked Wendy Barnes about the potential for a partnership with Lilly, given the suitability of GoodRx's model for Lilly's direct-to-consumer strategy.

Answer

Chris McGinnis (CFO, GoodRx) clarified that the company is trying to stabilize the underlying volume of scripts, with MAC trends expected to be relatively flat. He explained that the decline is due to renegotiating for longer-term durability and predictability, emphasizing a more holistic, bidirectional flow of funds with retailers, sharing brand economics. Wendy Barnes (CEO, GoodRx) stated they wouldn't comment on specific deals but highlighted that pharmaceutical manufacturers are building their own direct-to-consumer experiences while also looking to meet patients on other platforms like GoodRx. Laura Jensen (Chief Commercial Officer and President of Pharma Direct, GoodRx) added that manufacturers don't have to choose between their own solutions and partners, and GoodRx provides a proven platform for patient engagement. Wendy Barnes further stressed the data showing better outcomes for consumers finding all their drug prices in one environment like GoodRx versus multiple manufacturer-specific sites.

John Ransom of Raymond James Financial asked if the pivot to a cost-plus pricing model has hurt GoodRx's price competitiveness and inquired about the company's updated marketing strategy and messaging, particularly for branded drugs.

Answer

CEO Wendy Barnes conceded that the cost-plus model has raised prices in some instances, a necessary trade-off to improve pharmacy economics. She announced an imminent brand relaunch, the first major refresh in three years. CFO Chris McGinnis added that marketing spend will increase in the second half to support the brand refresh and new growth initiatives like subscription offerings.

John Ransom from Raymond James Financial questioned the impact of the pivot to cost-plus pricing on price competitiveness and inquired about the company's evolving marketing strategy and messaging.

Answer

CEO Wendy Barnes acknowledged that the cost-plus model did increase some consumer prices, viewing it as a necessary step to rebalance pharmacy economics. She also announced that a major brand refresh and marketing campaign, the first in three years, is launching in the coming weeks. CFO Chris McGinnis confirmed marketing spend will increase in the second half to support the brand relaunch and new growth initiatives like subscription offerings.

John Ransom inquired about the impact of PBMs shifting to cost-plus pricing models on GoodRx's legacy business and asked if the GLP-1 drug opportunity remains viable given manufacturers are striking direct deals.

Answer

CEO Wendy Barnes explained that a significant portion of GoodRx's business already operates on cost-plus rails and the company is largely indifferent to the pharmacy reimbursement model, noting it can even create more cash-pay opportunities. Regarding GLP-1s, she affirmed the opportunity is still significant and that GoodRx is in active dialogue with manufacturers like Novo and Lilly to embed their direct programs onto the GoodRx platform and to establish a true point-of-sale cash buydown price, which she believes will become more likely as more competing molecules launch.

John Ransom inquired about the impact of PBMs shifting to cost-plus pricing on GoodRx's legacy model and asked if the opportunity in GLP-1 drugs remains viable given manufacturers' direct-to-consumer deals.

Answer

CEO Wendy Barnes explained that a significant portion of GoodRx's business already operates on cost-plus rails, making the company somewhat indifferent to the pharmacy reimbursement model. Regarding GLP-1s, she affirmed the opportunity is still significant, stating that GoodRx is in continuous dialogue with manufacturers like Novo and Lilly to embed their direct programs onto the GoodRx platform, which would improve the consumer experience and leverage GoodRx's large user base searching for these drugs.

John Ransom from Raymond James Financial asked if management still stands by the previous 20% to 30% growth outlook for its Pharma Manufacturer Solutions business.

Answer

CEO Wendy Barnes affirmed her confidence in achieving approximately 20% growth in Pharma Manufacturer Solutions for the upcoming year, with potential for additional upside. She highlighted that the number of brands on the platform grew to over 200 in 2024, up from 150, and pointed to the strong ROI GoodRx demonstrates to partners, which drives deeper portfolio engagement, as seen with Pfizer.

John Ransom asked about Acadia Healthcare's long-term capital expenditure cadence beyond 2026, specifically if there would be a moratorium on new hospital construction and what the capital discipline strategy entails. He also questioned the current stage of the medical malpractice cycle and any indicators of it cresting.

Answer

CFO Todd Young highlighted a significant CapEx reduction in 2026, leading to free cash flow growth, and stated that future opportunities would be evaluated based on high demand and strict thresholds, considering M&A as an alternative. CEO Debbie Osteen emphasized focusing on existing facilities' performance, with bed expansions at current sites being the preferred capital use. Regarding medical malpractice, Todd Young noted that 2025 expenses were a significant headwind, but claims are consistent with prior expectations, and investments in training aim to reduce future incidents.

John Ransom asked about the long-term CapEx cadence beyond 2026 and Acadia's capital discipline strategy, including potential moratoriums on new hospital builds. He also inquired about the med mal (PLGL) expense cycle, asking if there are leading indicators suggesting it might crest soon.

Answer

CFO Todd Young highlighted a significant CapEx reduction in 2026, leading to free cash flow growth. He stated the company will continue to evaluate high-demand markets for bed adds, with a higher bar due to increased construction costs, and consider M&A. CEO Debbie Osteen emphasized focusing on improving existing facilities, with bed expansions at current sites being the best use of capital. Regarding PLGL expense, Mr. Young noted it was a significant headwind in 2025, with 2026 guidance consistent with December expectations. He mentioned investments in training and quality care to reduce future lawsuits, acknowledging it's an inherent industry cost.

John Ransom asked about the potential to accelerate the company's path to being free cash flow positive and sought more detail on the Medicaid volume pressures, including any differences between managed and non-managed Medicaid or specific denial rate data.

Answer

CEO Christopher Hunter stated that Acadia is re-evaluating its capital spending pipeline, including pausing two projects to save over $100 million in CapEx, which could accelerate the path to positive free cash flow. On Medicaid, he did not specify a difference between managed and non-managed plans or provide specific denial statistics, noting it's an evolving situation.

John Ransom asked about the future mix of bed additions between de novos and expansions, and questioned the viability of de novo returns given rising construction costs. He also inquired about the growth moderation in the MAT business.

Answer

CFO Heather Dixon stated that the future development pipeline remains heavily focused on de novo facilities and joint ventures in the acute space. She asserted that while construction costs have increased, corresponding rate growth has kept pace, ensuring that project returns remain attractive. Regarding the MAT business, she explained that its growth rate has normalized against difficult prior-year comps after a period of significant expansion, but underlying volumes remain at record levels.

John Ransom questioned the timeline for managing the referral issue, asking how long management would wait before considering the volume loss permanent. He also inquired about any additional pressure from the VA as a referral source.

Answer

CEO Christopher Hunter stated it was difficult to set a specific timeline for the referral outreach, calling it a daily focus, and noted no new pressure from the VA. CFO Heather Dixon added that the Q4 EBITDA impact should not be viewed as a future run rate.

John Ransom asked about the company's technology strategy, specifically regarding AI implementation in back-office automation and other potential long-term technology levers. He also questioned the differences in rate negotiations with Medicaid payers versus directly with states.

Answer

Brian Poff, EVP and CFO, Addus HomeCare, identified opportunities for AI in back-office revenue cycle management and personal care scheduling/logistics to automate processes and reduce manual interventions, noting an internal AI committee is exploring these. He explained that in most states, Medicaid payers act as TPAs with no rate negotiation power, but New Mexico allows direct negotiation with MCOs, where Addus leverages its size and continuum of care.

John Ransom asked about potential technology levers, specifically AI and back-office automation, beyond the caregiver app, and how rate negotiations differ between Medicaid payers and state agencies.

Answer

Brian Poff, EVP and CFO, identified opportunities in back-office revenue cycle automation and using AI for personal care scheduling and logistics to reduce manual interventions, noting an internal AI committee. He explained that most managed Medicaid payers act as TPAs with no rate negotiation power, except in New Mexico where direct negotiations with MCOs are possible and successful.

John Ransom of Raymond James Financial asked about the company's top public advocacy priorities beyond the home health rule and whether payer contracts were evolving to include more value-based components.

Answer

Chairman & CEO Dirk Allison stated that federal advocacy is almost entirely focused on combating the proposed home health rate cut, while state advocacy continues to be successful. President & COO Bradley Bickham added that while personal care contracts are structurally similar, discussions with payers are now focused on driving more volume into existing value-based arrangements. He also noted continued progress in securing episodic case rates on the home health side.

John Ransom from Raymond James asked for a retrospective on why the hospice business took longer than expected to recover from the COVID slump and what recent factors are signaling a turnaround. He also inquired about the home health M&A landscape, including the rate gap with MA plans.

Answer

W. Bickham, President and COO, attributed the slow hospice recovery to the 'excess deaths' dynamic during COVID, which has now normalized. He noted the discount to Medicare fee-for-service from MA plans has improved from ~40% to a more manageable 15-20%. CFO Brian Poff added that the home health M&A market is still dominated by smaller deals, with a regulatory overhang pending the next CMS rule.

John Ransom addressed the narrative that providers are gaining an advantage over payers with AI-assisted coding and claims resubmissions, asking if this is exaggerated, what stage the industry is in, and Tenet's position given its ownership of Conifer.

Answer

Saum Sutaria, Chairman and Chief Executive Officer, stated that Tenet's coding practices have always been appropriate and compliant, with no changes made. He emphasized success in increasing acuity, which supports net revenue per case, and noted that Tenet has not found itself in conflict over coding practices but rather over disputes, denials, and underpayments, for which systems are being set up with health plans for adjudication.

John Ransom asked about the narrative that providers are gaining an advantage over payers with AI-assisted coding advances, particularly for claims resubmissions, inquiring if this is exaggerated, what stage the industry is in, and Tenet Healthcare's position given its ownership of Conifer.

Answer

CEO Saum Sutaria clarified that Tenet Healthcare's coding practices have always been appropriate, compliant, and carefully audited, with no changes made over the past few years. He stated that Tenet has been successful in increasing acuity, which supports net revenue per case, and does not have heavy HOPD market drive. Mr. Sutaria noted that Tenet does not find itself in conflict over coding practices but rather over disputes, denials, and underpayments, for which they are increasingly setting up adjudication mechanisms with health plans to resolve issues more efficiently.

John Ransom from Raymond James Financial, Inc. first asked if the environment for hospital divestitures has stabilized, and after a deflection, pivoted to ask about Tenet's current legislative and lobbying priorities in Washington D.C.

Answer

Chairman & CEO Saum Sutaria did not comment on potential asset sales, stating the company is pleased with its current portfolio's performance. In response to the second question, he identified the top lobbying priority as engaging in dialogue to secure an extension of the ACA exchange subsidies, highlighting their critical importance to the industry and small businesses.

John Ransom asked if there is evidence that the Q4 seasonal uptick in elective procedures has diminished due to high deductibles and if 2025 represents a return to a 'normalized' year.

Answer

Dr. Saum Sutaria, Chairman and CEO, acknowledged that the Q4 seasonality for elective surgery has tempered somewhat, though it's hard to isolate the cause. He agreed that the 2025 guidance implies a return to a more normalized environment, but he also stressed that they are not yet seeing any change in the strong demand patterns that characterized 2024.

John Ransom asked for a quantification of the health exchange expansion's effect on USPI and whether same-store state directed payments are expected to increase in 2025 compared to 2024.

Answer

Chairman and CEO Dr. Saum Sutaria stated that Tenet has not made a forecast for 2025 state directed payments relative to 2024. EVP and CFO Sun Park noted that while exchange growth benefits USPI, the impact is "smaller, relatively speaking" than in the hospital segment, where exchange volumes grew 58% year-over-year in Q3.

John Ransom asked what percentage of Oscar Health's 3 million 'real' members work with a broker to tailor coverage versus passive renewals. He also questioned why a passively renewed member would pay the first premium only to drop off later, given the requirement for initial payment.

Answer

Mark Bertolini, Oscar Health Chief Executive Officer, stated that generally 90-95% of Oscar's members enroll through brokers, though custom plans like HelloMeno saw significant direct enrollment. He explained that the uncertainty this year stems from members realizing high out-of-pocket costs after paying the first premium, especially as healthcare becomes a major household expense. R. Scott Blackley, Oscar Health Chief Financial Officer, clarified that high non-payment rates are expected for those transitioning from $0 premium plans to out-of-pocket premiums, and members remain in a grace period until the end of the quarter even if the first payment is missed.

John Ransom asked what percentage of Oscar Health's 3 million "real members" work with a broker to tailor coverage versus those who are passive renewals. He also questioned the behavior of passively renewed members who pay their first premium but then decide to drop off.

Answer

Mark Bertolini, Oscar Health Chief Executive Officer, stated that generally 90-95% of Oscar's members come through brokers, though custom plans like HelloMeno saw significant direct enrollment. He explained that passively renewed members might drop off after realizing the high out-of-pocket costs associated with their plans, especially those transitioning from $0 premium plans, despite initially paying the first premium. R. Scott Blackley, Oscar Health Chief Financial Officer, clarified that high non-payment rates are expected for members going from $0 to some out-of-pocket premium, and they remain in a grace period until the end of the quarter.

John Ransom from Raymond James asked for an updated view on the individual market size if enhanced subsidies expire, how much of the 2025 medical margin decline can be recovered in 2026, and for clarification on whether "profitability" refers to EPS, EBIT, or EBITDA.

Answer

CEO Mark Bertolini projected that the market reduction without subsidies would be less severe than the 18% previously modeled. CFO Scott Blackley clarified that "profitability" refers to positive earnings from operations, which would also result in positive adjusted EBITDA. He added that MLR trends in H2 2025 are expected to normalize compared to the prior year's SEP-driven growth.

John Ransom from Raymond James asked for clarification on Oscar's Q1 ending membership of 2 million and the expected trend for the remainder of the year, questioning if it would decline to around 1.8 million by year-end.

Answer

CFO Scott Blackley confirmed that strong payment rates and Special Enrollment Period (SEP) performance led to higher-than-expected Q1 membership. He projected membership would trend up in the first half of the year but then decline in the second half due to the anticipated end of the continuous SEP for individuals below 150% of the federal poverty level. This trajectory aligns with the company's original full-year guidance, expecting to finish the year around the 1.8 million member mark.

John Ransom of Raymond James asked if the long-term 20% revenue CAGR target through 2027 would be calculated from the new, higher 2024 revenue base. He also questioned how to model the MLR impact from the high-cost SEP members against the year's revenue upside.

Answer

CFO Scott Blackley stated that while they are not updating long-term guidance at this time, the strong 2024 performance positions them well to achieve the 20% CAGR. CEO Mark Bertolini clarified that the SEP pressure is outsized this year and that absent this impact, the full-year MLR would have been lower by over one percentage point.

John Ransom questioned the Q3 EBITDA outperformance and the fiscal 2027 guide, considering seasonality and payroll taxes, and asked about the contemplated marketing spend growth in the guide.

Answer

CFO Balaji Gandhi explained that the Q3 EBITDA included a $900,000 tax benefit, while Q4 is burdened by payroll taxes. He indicated that the outlook leaves room for continued performance and margin improvement. He also stated that marketing dollars are expected to increase due to various growth initiatives.

John Ransom questioned the Q3 EBITDA outperformance and the fiscal 2027 guidance, considering seasonality and payroll taxes, and asked about the contemplated marketing spend growth in the outlook.

Answer

Balaji Gandhi (CFO, Phreesia) clarified that Q4 typically sees higher payroll taxes, while Q3 included a one-time G&A tax benefit. He indicated that the outlook aims for continued margin improvement and that marketing dollars are expected to increase to support various growth initiatives.

John Ransom asked about potential capital deployment strategies given Phreesia's strengthening financial position, which end markets are better suited for a 'buy vs. build' approach, and for a retrospective on past acquisitions.

Answer

CFO Balaji Gandhi stated that the company's 'buy, build, or rent' philosophy remains unchanged, and while they have more capital, they feel no pressure to alter their disciplined approach. He characterized past acquisitions as a portfolio with varied time horizons, noting only a time setback with the ConnectOnCall acquisition, which has since been resolved.

John Ransom asked about the revenue level Phreesia's current expense base could support, whether the company is targeting high-prescribing clients to boost pharma revenue, and how the virtual work model supports R&D productivity.

Answer

Executive Balaji Gandhi indicated the current quarterly expense base of around $79 million is not expected to increase much over the next couple of years. CEO Chaim Indig clarified that the strategy for higher revenue per client is to sell a more holistic suite of solutions upfront, not to target specific high-prescribing groups. He added that the virtual model allows Phreesia to attract top talent and is managed purposefully to foster collaboration.

John Ransom asked about the potential for RadNet to develop virtual radiology capabilities using EBCD technology for reads beyond its own centers, the market traction of DeepHealth Enterprise sales and specific modular solutions, and the status of core imaging M&A given the company's capital position.

Answer

Howard Berger, President and CEO, confirmed that virtual radiology is an inevitability, leveraging AI to assist radiologists with complex imaging data and improve diagnostic accuracy, extending beyond breast imaging. He explained that DeepHealth modules are still being rolled out internally, serving as a development lab, and that the DeepHealth operating system provides a unified platform for various solutions, differentiating it from point solutions. He reiterated that core imaging remains central to RadNet's strategy, with DeepHealth improving operating metrics and enabling growth with less capital intensity.

John Ransom asked about the future potential for RadNet to develop virtual radiology capabilities using its enhanced EBCD technology for external scan reads, following the iCAD acquisition. He also sought an update on where DeepHealth Enterprise is gaining traction in the market, given its modular solution approach, and inquired about the external growth model for the Core Imaging business.

Answer

President and CEO Howard Berger affirmed that virtual radiology is an inevitability, driven by AI's ability to manage vast imaging data and assist radiologists, extending beyond breast imaging. He noted that DeepHealth modules are still being rolled out internally within RadNet, serving as a development lab, with good internal adoption and plans for external adoption next year. He emphasized DeepHealth OS as a platform for various modules to streamline integration. Regarding Core Imaging, Howard Berger reiterated its central role, with plans for continued investment and robust growth, leveraging Digital Health to improve operating metrics and enable less capital-intensive expansion into new markets.

John Ransom of Raymond James Financial asked about the allocation of M&A capital between digital and traditional imaging, the potential long-term EBITDA margin improvement in the core imaging business from new technology deployment, and the current annual cost of the company's call center.

Answer

Mark Stolper, EVP & CFO, stated that more M&A capital is currently earmarked for traditional imaging services and revealed the company's call center costs are over $60 million annually. Howard Berger, Chairman, President & CEO, explained that margin improvement will come from modular deployments, such as a 10% reduction in call handling time, which would have a staggering impact. Full deployment of the DeepHealth OS is expected to be a gradual process over the next few years.

John Ransom of Raymond James Financial asked about the directional allocation of M&A capital between digital assets and traditional imaging assets. He also sought to understand the potential long-term EBITDA margin improvement in the core imaging business from deploying technologies like DeepHealth OS and remote tech, and asked for the annual cost of the call center.

Answer

Mark Stolper, EVP & CFO, stated that most M&A capital is currently earmarked for traditional imaging center services and revealed the call center costs over $60 million annually. Howard Berger, Chairman, President & CEO, explained that margin improvement will come from modular enhancements, citing a potential 10% reduction in call handling time as a significant driver of productivity. Mark Stolper added that the full financial impact of DeepHealth OS will be gradual over the next few years.

John Ransom of Raymond James requested a breakdown of the 2025 Digital Health revenue guidance, asked about the strategy for migrating legacy software clients to the new DeepHealth platform, and questioned the likelihood of deploying the company's significant cash balance for a major acquisition in 2025.

Answer

Mark Stolper (Executive) detailed the 2025 Digital Health revenue guidance of $80-$90 million, with $25-$30 million from AI and the remainder from software and technologies like SmartMammo and TechLive. Dr. Howard Berger (Executive) confirmed that legacy on-premise software clients will be migrated to the new cloud-native DeepHealth platform. Regarding acquisitions, Mark Stolper stated the odds are 'very, very high' that capital will be deployed in 2025 for acquisitions in either Digital Health or the core imaging business. Dr. Berger added that while they are actively pursuing opportunities, they will remain disciplined on price.

John Ransom asked for details on the GE HealthCare deal, including the primary sales targets, who is responsible for selling, and Walmart's potential role. He also inquired about the key puts and takes for 2025 financial models beyond Medicare headwinds, and asked to clarify the deal's financial structure.

Answer

CEO Dr. Howard Berger identified targets as hospitals, imaging centers, and non-traditional locations like OB/GYN offices, with Walmart being a key example. He described the sales effort as a dual role for both RadNet and GE's extensive sales force. Executive Mark Stolper outlined 2025 factors including labor costs, strong demand driving de novo center growth, a continued shift to advanced imaging, and growth from the Digital Health segment. Dr. Berger confirmed the GE deal is a software licensing arrangement, with flexible SaaS-based models also available.

John Ransom inquired about the seasonality of the vaccine program, the timeline for PBM negotiations related to the IRA, the intangible benefits of being a public company, and asked for modeling guidance on pro forma resident counts following recent acquisitions.

Answer

CFO David Morris stated the vaccine program is now at a steady state and that updates on PBM negotiations would likely come with Q4 guidance. CEO Fred Burke described being public as a significant positive for company visibility. Regarding modeling, Morris advised layering acquisitions onto the existing organic growth trajectory, while Burke confirmed the new pharmacies fit their typical 'sweet spot' of 2,000-3,500 residents.

John Ransom of Raymond James inquired about the financial drag from the Heartland acquisition, the potential impact of a recent executive order on PBM negotiations, and the timing for contract renegotiations related to Part D pricing.

Answer

Executive David Morris quantified the accelerated integration costs for Heartland at approximately $500,000 in Q1, noting these were already factored into guidance. Executive Fred Burke commented that the executive order's impact is currently unclear but expressed confidence in resolving IRA-related issues with PBM partners, agreeing that 2026 would be the likely timeframe for any new contract terms to take effect.

John Ransom inquired whether the company's new public currency and increased capital might accelerate external growth opportunities. He also asked if there was a notable increase in difficulty when executing 2025 Part D contracts given market turmoil.

Answer

Fred Burke, an executive, affirmed that while resources are available, the company will maintain its disciplined, 20-year operational track record. David Morris, an executive, added that the focus remains on growing market share with low leverage and that broad employee ownership will help drive growth. Regarding contracts, Morris clarified that their agreements are longer-term, so there were no specific obstacles for 2025, with the focus now on 2026 and 2027.

John Ransom asked about the discrepancy between Health Catalyst's cautious outlook and the more positive reaction of public hospital stocks to recent funding legislation. He also questioned the implied 2026 EBITDA run-rate and the reasons for the client's strong preemptive reaction to funding cuts.

Answer

CEO Dan Burton explained that the cautious outlook stems from their client base, which is heavily weighted towards not-for-profit and academic medical centers that are more conservative and significantly impacted by Medicaid and research funding cuts. He confirmed the Q4 2025 adjusted EBITDA run-rate of approximately $15M implies a $60M annualized figure entering 2026. CFO Jason Alger added that stock-based compensation is expected to decrease to the mid-to-high single digits as a percentage of revenue in 2026.

John Ransom of Raymond James asked about the current rhythm of customer engagement, how leads are generated and converted for new versus existing clients, and what capabilities the company wishes it had to sell.

Answer

CEO Dan Burton described a hybrid sales model with quarterly face-to-face reviews and regular virtual contact. He emphasized that the primary growth motion is cross-selling adjacent solutions to the large existing client base, which is more than twice as effective as new prospecting. Regarding capability gaps, he noted that security was a key area, which the recent Enterprise Health acquisition is intended to address.

John Ransom of Raymond James & Associates, Inc. asked about the long-term strategy for the front-end retail business, noting its historical competitive pressures and the company's recent move to acquire drugstores.

Answer

EVP & Group President, Prem Shah, described the front-end business as solid, highlighting a 2.7% comp increase and retail share gains. He outlined a strategy focused on delivering consumer value, reducing costs with vendors, and driving foot traffic through pharmacy adjacency and targeted marketing, expressing confidence in the turnaround.

John Ransom asked whether the Signify and Oak Street Health acquisitions are tracking in line with expectations and if that trend is expected to change next year.

Answer

CFO Tom Cowhey confirmed that Signify has had a great year with strong volume growth and Oak Street has performed in line with guidance despite market pressures. CEO J. Joyner reinforced their strategic importance, noting Oak Street's model is effectively managing costs and that Aetna membership has quadrupled at Oak Street and doubled in Signify's programs since the acquisitions, demonstrating successful integration.

John Ransom asked for a simplified clarification on the hurricane impact, wanting to confirm if guidance assumes that EBITDA from the affected Asheville and Largo markets will be flat in 2025 versus 2024.

Answer

CFO Mike Marks reiterated that the full-year guidance assumes a neutral year-over-year earnings impact from the hurricane-affected markets combined, not necessarily flat EBITDA for each individual market. He confirmed that in Q1, the year-over-year earnings changes in the West Florida (Largo) and North Carolina (Asheville) markets did largely offset each other, resulting in a neutral impact for the quarter as anticipated.

John Ransom from Raymond James asked about the evolution of value-based care elements, such as quality-based kickers, within commercial contracts and how HCA defines and utilizes its quality data.

Answer

CEO Sam Hazen stated that any value-based kickers in commercial contracts are 'very incremental' and not material to overall revenue. He emphasized that HCA's core commitment to improving quality is a key part of its value proposition to payers. He described their quality program as comprehensive, using a vast data set on metrics from mortality to service-line performance, and sees AI as the next frontier for advancing these efforts.

John Ransom of Raymond James asked about any changes in behavior from Medicare Advantage plans, such as in negotiations or pre-authorizations, given the cost pressures those plans are facing.

Answer

CFO Douglas Coltharp reported continued success in MA contracting, including a higher-than-expected price increase of around 5% in Q1, though he is not calling it a new trend. CEO Mark Tarr added that the pre-authorization process remains a challenge, with MA plans demonstrating a lower admit-to-referral ratio and longer decision times compared to fee-for-service, which negatively impacts patients and acute care hospitals.

John Ransom of Stephens Inc. inquired about the estimated pretax benefit from the general agency agreement and acquisition timing, the long-term algorithm for funeral pricing considering inflation and cremation mix, and the relationship between revenue growth and EBIT margin expansion.

Answer

Chairman and CEO Tom Ryan acknowledged the pretax benefit estimate was slightly high but reasonable. He explained that long-term pricing aligns with CPI, with the new general agency agreement providing an opportunity for future profitability growth. Ryan also projected that as demographic tailwinds materialize, funeral revenue growth will accelerate, leading to margin expansion, and suggested that the significant COVID pull-forward effects are now diminishing.

John Ransom of Raymond James & Associates asked about the core issues slowing the ramp-up of the Contessa business and later inquired about the progress of the connectRN investment for gig-based staffing.

Answer

Chairman and CEO Paul Kusserow attributed Contessa's slower ramp to implementation complexities with hospital partners and lengthy negotiations with payers, though he noted hospital pressures are now a tailwind. Regarding connectRN, Chief Strategy Officer Nick Muscato explained the focus has shifted to a pilot program using the platform to offer shift-based work to Amedisys's own PRN staff, aiming to boost productivity from this existing workforce.

John Ransom noted the significant increase in cost per visit and asked for a projection on where that metric might land in the upcoming year.

Answer

Executive VP and CFO Scott Ginn projected that underlying wage inflation would likely run around 4%. He emphasized that the keys to managing this metric are controlling the use of expensive contract labor, reducing employee turnover, and increasing visit volume over the company's fixed cost base.

John Ransom from Raymond James asked for an update on the performance and valuation of the Contessa acquisition and inquired about the expected timeline for finalizing new Medicare Advantage case rate deals.

Answer

President and CEO Chris Gerard stated that Amedisys still feels good about the Contessa acquisition, noting improved staffing conversion rates and a strong deal pipeline despite some implementation delays. Regarding Medicare Advantage, he expressed high confidence that new case rate deals, covering approximately 60% of the company's per-visit business, would be announced by the Q3 earnings call.

John Ransom of Raymond James & Associates requested a high-level overview of the structure of a potential new payer deal, asking if it would be a case rate, fee-for-visit with a kicker, or another model. He also asked what has changed to make MA plans more willing to engage in such partnerships.

Answer

CEO Chris Gerard clarified that the company is pursuing a case-rate, or per-admission, model. This structure would allow Amedisys to manage utilization effectively while guaranteeing quality outcomes and patient acceptance rates for the plan. He explained that this creates a compelling value proposition, offering plans a day-one discount and reliable access to care, while allowing Amedisys to improve margins on MA business from the low-20s to the high-30s or low-40s.