Good morning. My name is Drew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the NeueHealth Q4 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I'll now turn the call over to our host, Emily Lombardi. You may now begin your conference.

Good morning and welcome to NeueHealth’s fourth quarter 2023 earnings conference call. As a reminder, this call is being recorded. Leading the call today are NeueHealth’s President and CEO, Mike Mikan and CFO, Jay Matushak. Before we begin, we want to remind you that this call may contains forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we filed with the Securities and Exchange Commission, including the risk factors in our current and periodic reports we filed with the SEC. Except as required by law, we undertake no obligation to revise or update any forward-looking statements or information. This call will also reference non-GAAP amounts and measurements. A reconciliation of the non-GAAP to GAAP measures is available in the company's fourth quarter press release available on the company's Investor Relations page at investors.neuehealth.com. Information presented on this call is contained in the earnings release we issued this morning in our Form 8-K dated March 6, 2024, and in the related presentation, each of which may be accessed from the investor relations page of the company's website. With that, I will now turn the conference over to NeueHealth’s Chief Executive Officer, Mike Mikan.

Good morning everyone, and thank you for joining NeueHealth's fourth quarter 2023 earnings call. As previously announced in January, Bright Health Group adopted NeueHealth as our corporate brand name to reflect our ongoing focus on a core and successful part of our company, our care delivery and provider enablement business. Today, we are pleased to announce strong fourth quarter and full year results in 2023 for NeueHealth. Laying a solid foundation for continued success in 2024. We believe NeueHealth is a business with much greater predictability and significantly less volatility as we expect to achieve adjusted EBITDA profitability in both our NeueCare and NueuSolution segments and at the enterprise level in 2024. Before we get into more detail on our 2023 financial performance, I would like to recognize the significant milestones we reached as a company to start the year. On January 1, 2024, we closed the sale of our California Medicare Advantage business, which consisted of Brand New Day and Central Health Plan to Molina. Concurrent with the close of the sale, we also announced that we made the final repayment on our amended credit facility with JP Morgan. This eliminated the company's secured debt. This was a significant step as it allows us to further focus on where we have proven to have the greatest impact through our value driven care delivery and provider enablement business. Although our business has evolved over the last few years, our core beliefs have not changed. Since our founding, we have been committed to uniquely aligning the interests of payers, providers and consumers to deliver a better healthcare experience for all. The healthcare industry continues to evolve and shift towards value-based care, we believe our differentiated care model and ability to serve all populations in performance-based arrangements puts us in a strong position to capture this growing opportunity in 2024 and beyond. On the call today, I'll start with a discussion of our two go forward business segments, NeueCare and NeueSolutions, and talk about why we are confident in the future of our differentiated value-driven care model. Then I'll turn it over to Jay to provide additional details on our financial performance. Our NeueCare segment is focused on delivering value driven, consumer centric care through our own clinics and partnerships with affiliated providers. Our model is unique and we believe that when we tightly align the interests of stakeholders clinically, financially and through data and technology, we can drive differentiated value and deliver a truly personalized care experience that's tailored to meet the needs of each consumer. NeueCare's positive momentum continued in the fourth quarter leading to strong full year results. NeueCare segment adjusted EBITDA was $42.9 million for 2023, excluding the impact of the goodwill impairment we discussed in the third quarter, NeueCare delivered operating income of $32 million for the full year and realized $169.7 million of gross profit for the full year. In 2024, we expect to continue to drive growth in our NeueCare segment, strengthening relationships with our existing payer partners, engaging in new payer partnerships and continuing to attract and retain consumers through our value driven model. We see our ability to effectively manage a diverse population mix agnostic and product category as a key differentiator that will fuel future growth. In 2024, we expect to serve between 330,000 and 345,000 value-based consumers through our owned and affiliated clinics, an increase of approximately 17% over 2023. Turning now to our NeueSolutions segment. This is our provider enablement business focused on partnering with independent providers and medical groups to enable them to succeed in performance-based arrangements. NeueSolutions also supports our NeueCare business with care management, referral management and other population health tools and capabilities. This business reflects our core and overarching focus on aligning interest to maximize value for all and represents a significant growth opportunity as more providers look to enter risk-bearing arrangements. We believe NeueSolutions provides a strong platform for our company to continue to grow, enter new provider partnerships and manage a diverse population base. Specifically, we see growth opportunities to serve additional Medicaid consumers in partnership with federally qualified health centers and other provider groups. In our ACO REACH business, we encountered some headwinds that impacted our results in 2023, including Babylon’s bankruptcy filings and the impact of CMS adjustments to financial benchmarks, notably, the coding intensity factor, which Jay will discuss more in a moment. Excluding these factors, our REACH ACOs delivered strong performance in line with our expectations. For 2024, we reevaluated the participating providers in our ACOs and did not renew the contracts of certain underperforming groups. We also added new strategic provider partners more closely aligned with our goals. As a result, we expect overall margins to improve with greater insight into the returning population of Medicare beneficiaries we are managing and a more optimal partner mix. We are seeing strong growth opportunities on the provider enablement side of NeueSolutions. During the fourth quarter, we secured new partnerships with provider groups, increasing the lives we are serving to over 106,000. This growth is significant and shows the value providers see in our partnership, and deep experience in managing diverse populations in performance-based arrangements. We see our provider enablement and ACO REACH businesses as complementary with each driving future growth opportunities for the other. I'll now hand it over to Jay to provide additional details on our fourth quarter and full year performance and our 2024 outlook.

Thank you, Mike, and good morning, everyone. I'll start with a discussion of our fourth quarter performance and full year results for our consolidated NeueHealth business as well as each of our NeueCare and NeueSolutions segments. And I'll provide an update on the wind down of our ACA Insurance business and go over our balance sheet. Finally, I'll provide an overview of our 2024 outlook. Before I begin, I would like to note that I will be focusing on the 2023 financial results of our continuing NeueHealth business in each of our NeueCare and NeueSolutions segments. GAAP financials are included in our press release and 10-K that will be filed in the coming months and contain results that include our discontinued operations. NeueHealth’s consolidated revenue for the fourth quarter was $292.9 million. Full year consolidated revenue was $1.2 billion, representing 55% growth year-over-year on a comparable basis. Our fourth quarter gross margin was $28 million and $164.2 million for the full year. NeueHealth's adjusted EBITDA loss for the fourth quarter was $10.4 million and full year adjusted EBITDA loss was $8.5 million. When excluding the impact of non-recurring bad debt write-off in our NeueCare segment, as well as the impacts of the CMS benchmark adjustments in our ACO REACH business, NeueHealth adjusted EBITDA was approximately breakeven for the full year. In 2023, we grew the number of consumers we serve across our NeueCare and NeueSolutions segment considerably to 461,000, which represents growth of 294% over the prior year, excluding the consumer served in partnership with the former Bright HealthCare Commercial segment. In the NeueCare segment, revenue was $71.3 million in the fourth quarter and $267.2 million for the full year, in line with expectations and resulting from increased attributed members to our clinics. We continue to be prudent on the level of risk we are taking in our contracts. We recognize that there's opportunity for greater revenue and margin expansion as we look to take on greater risk sharing and participate in more fully capitated models in the future. Operating costs were favorable for the full year with medical costs moderately higher. Fourth quarter operating income was $3.7 million with full year operating income of $32 million, excluding the goodwill impairment recognized in the third quarter. Additionally, NeueCare segment adjusted EBITDA was positive $42.9 million for the full year. Through our clinics in 2023, we serve consumers across the ACA marketplace, Medicare and Medicaid tooling approximately 293,000 value-based consumers. In 2024, we expect our NeueCare segment to continue to drive growth and deliver differentiated value to providers, payers and consumers. This year, we will continue to focus on enhancing our value-driven consumer-centric care model, built upon long-standing relationships with existing payer partners, prioritize engagement and growth with new payers. Turning now to our NeueSolutions segment. In 2023, performance in NeueSolutions was largely driven by our ACO REACH business. We are now entering our third year participating in ACO REACH and continuing to see strong alignment between the goals of the program and our commitment to allowing interest to make high-quality health care, more accessible and affordable. Through ACO REACH, we contract with CMS to assume the full performance risk of the Medicare fee-for-service beneficiaries aligned with our provider partners and contract separately with provider partners to share in the performance risk of their aligned beneficiaries. We've grown significantly over the years we participated in the program. In 2023, we partnered with 11 provider groups and over 3,000 affiliated providers to serve 62,000 Medicare beneficiaries across the country. NeueSolutions revenue was $220.9 million in the fourth quarter and $899.4 million for the full year in line with expectations. Operating costs were in line with expectations with medical costs higher for the full year. The NeueSolutions segment operating loss was $14.6 million for the fourth quarter with operating loss of $42.5 million for the full year. As we mentioned in our third quarter earnings call, our NeueSolutions results have been significantly impacted by our relationship with Babylon Medical Group within ACO REACH. Due to Babylon's bankruptcy, we established a reserve against our receivables in the third quarter, creating a bad debt charge of $22.4 million for the quarter. We also retain full responsibility for the deficit of their attributed members for the balance of 2023. This negatively impacted gross margin by $14 million in 2023. In addition to Babylon, our ACO REACH performance was also negatively impacted by CMS benchmark revenue adjustments, most notably the coding intensity factor. NeueSolutions adjusted EBITDA for the full year was a loss of $6 million, which excludes the bad debt expense and the additional Babylon deficits as these are onetime items that don't reflect the ongoing expectations for the business. Aside from Babylon, our REACH ACOs performed well and continued to be a source of stable top line growth. When excluding the Babylon impact, our NeueSolutions segment revenue for the full year was by $591.7 million, which represents a 49% increase over 2022 and full year operating loss was $6 million, excluding Babylon. In 2023, we served over 42,000 Medicare beneficiaries, a 50% growth over 2022, not including Babylon. In 2024, we have diligently embedded providers we will partner with as part of the ACO REACH program based on historical performance relative to regional benchmarks. It's a carefully selected group of high-performing providers, we believe we are well positioned to drive strong performance in ACO REACH in 2024. This year, we expect to serve 45,000 Medicare beneficiaries slightly above 2023 when excluding Babylon and expect revenue of between $690 million and $700 million for the full year. As Mike mentioned, in addition to ACO REACH, our NeueSolutions segment offers enablement services to both our own clinics and to independent providers and medical groups. We are starting 2024 with new provider partnerships in this part of our business serving over 106,000 consumers. We share our enablement business as a strong platform to expand our relationships with provider groups and leverage our expertise in managing all populations and performance-based arrangements. Turning to the ACA Insurance business wind down. We continue to make significant progress in the wind down in the fourth quarter. As of today, we believe we are more than 99% complete on medical claims in the ACA Insurance business. At the end of the fourth quarter, our ACA Insurance business had approximately $150 million in excess cash surplus after reserving for expected medical costs and other anticipated wind down expenses not including risk adjustment obligations due under our repayment agreements with CMS. Additionally, subject to adjustments in the conditions in the MA sale agreement, we expect to receive an additional $110 million from escrow. We intend to use these funds if and when received to offset liabilities in our discontinued ACA Insurance business, such as the obligations under the CMS repayment agreements, which come due on or before March 14, 2025. Overall, we believe the remaining liability related to this business is substantially less and more certain heading into 2024. Now looking at our balance sheet. As of December 31, 2023, we had $411 million in total cash and investments, including amounts in our regulated entities. Our non-regulated cash and short-term investments were $94 million as of the end of Q4. As Mike mentioned earlier, we made the final repayment on our amended credit facility at the beginning of 2024, which eliminated our secured debt. Throughout the year, we are in a significantly stronger capital position and we believe we are well positioned for the future. In 2024, we expect consolidated revenue of approximately $1 billion. Specifically, we expect between $310 million and $320 million from our NeueCare segment and between $690 million and $700 million from our NeueSolutions segment. We expect enterprise adjusted EBITDA to be between $15 million and $25 million. In 2024, we expect to serve between 475,000 and 500,000 consumers across both our NeueCare and NeueSolutions segment, serving between 330,000 and 345,000 value-based consumers in our clinics and between 145,000 and 155,000 consumers in NeueSolutions, including approximately 45,000 through ACO REACH. Finally, we expect our adjusted operating cost ratio to be between 15% and 16%. As I mentioned earlier, it is important to note that there is substantial opportunity for revenue growth as we look to take on greater levels of risk sharing in our contracts. Considering the total number of lives we served in 2023, our total revenue opportunity is over $2.5 billion. In the future, we will look for opportunities to take on greater risk sharing as appropriate. In 2024, we believe a few key factors will drive improved profitability. First, growth in consumer served specifically through our clinics as well as through the enablement side of our NeueSolutions segment. Our differentiated value-driven model has proven to deliver strong consumer satisfaction scores and we expect to continue to attract and retain consumers in our clinics and through provider partnerships. Second, we expect to continue to build on long-standing relationships with our payer partners while also prioritizing growth with new payers as we continue to demonstrate differentiated performance and managing populations across the ACA marketplace, Medicare and Medicaid. Third, we expect to drive improved performance in ACO REACH by optimizing our partner portfolio and leveraging our past experience in the program to effectively manage the Medicare population. And finally, we are continuing to take steps to reduce operating expenses and rightsize our business for long-term sustainable growth. We are confident in our go-forward business and the value we will drive for stakeholders across the health care ecosystem. I'll now turn it back over to Mike for some closing remarks.

Thank you, Jay. This is an exciting time for our company as we focus on our care delivery and provider enablement business, where we have proven to drive the greatest value for payers, providers and consumers. Our value-driven consumer-centric care model is unique and in combination with our ability to align the interest of key stakeholders clinically, financially and through data and technology. We believe we can transform health care and create a better experience for all. As the industry continues to shift towards value-based care, we are well positioned to take a lead and we see significant future growth opportunities in both our NeueCare and NeueSolutions segments. I would like to thank the entire NeueHealth team for their continued hard work and dedication over the past year. I have great confidence in our people and the differentiated value-driven care model we have built. Thank you for joining the call and for your interest in NeueHealth. We'll now take the first question.

[Operator Instructions] Our first question today comes from Joshua Raskin from Nephron Research.

I wanted to start, I guess, just a balance sheet question. So first is could you just confirm what the total actual proceeds from Molina were in early January? And then how much is pending in escrow? And what are the variables that escrow depends on?

So the proceeds received from the Molina transaction in January were $390 million. What was the second question, Josh?

How much is pending in escrow? And what are the -- what's the timing and what are the milestones for that to come in? Is that just claims and adjustments there?

Yes. It's $110 million, $100 million of it is tied to CMS pending approval of the consolidation of Brand New Day and Central Health Plans age contract or if we achieve a three-star in the Part D B&D business. So either way -- either of those being achieved would be the return of the $100 million. The other $10 million is related to indemnity. We expect that the $100 million to come in later this year, probably Q4 of '24 and $10 million related to other indemnity items likely in early '25 sometime.

So you had $87 million at the end of the year, you got to $390 million. You paid off of the $390 million, you paid off the $304 million. And then you've got another $110 million coming. And so I guess the last piece of the puzzle is what's cash flow from operations? If you're going to do, say, $20 million of EBITDA, what does that translate into cash flow from ops this year?

It's about half. So we're free cash flow positive. But the way I kind of think about the capital position, Josh, is we've got -- as Jay mentioned, we've got about $90 million at the end of the year of non-regulated cash. We -- after you netted out from the gross proceeds and netted out the payments to the bank repayment transaction costs, we put $30-plus million on the balance sheet. So we started the year with about $120 million of non-regulated cash. As Jay mentioned, we've got about $150 million of cash and surplus that we expect to get back from entities that were in the surplus position. And then we've got the $110 million that we expect assuming CMS approved the consolidation from the Molina transaction. And so those are kind of the cash and capital that we are relying on today. And then offsetting that is the CMS repayment agreement, which is $290 million which will be accruing interest, depending on when we pay it down based on the surplus return, which we're working on right now, that's the obligation that remains out there. So we're in a meaningfully stronger cash capital position today and feel good about the future.

Yes, that's what I was getting at $380 million of total cash, $290 million of total CMS repayment and free cash flow, let's call it, $10 million. That's kind of the math that I was going with. And then I guess, just more importantly, can you talk about ACO REACH and sort of the re-evaluation of partners and sort of what gives you comfort that the existing partners are strong partners and that these are going to be positive income generators in 2024?

Yes, I'll start and maybe I'll ask Tomas Orozco, who is our Executive Vice President and runs our day-to-day operations to maybe add in if he has something to add. But we've taken a detailed look at all of our provider partners. And let's start with a core set of our provider partners are our owned and employed providers within our organization, and they performed very well. So we feel very confident that within our organization and our provider base that we've got strong performance that understand how to manage population risk, use our tools and provider enablement capabilities. And so we've got a strong foundation of those. Obviously, in '22 and '23, we had partnerships with the likes of Babylon, which unfortunately, while we weren't taking significant downside risk as a contractual matter, unfortunately from -- with them going bankrupt, it came back to us in terms of their losses. And so that was a big impact. We don't have anywhere near that level of concentration. That was a big part of our ACO book of business. We will no longer take any -- that type of concentration risk going forward. So as we look to the future, we look to providers as Jay said, where we can see historical performance strong against the benchmarks. And I don't know, Tomas, do you have anything to add to that?

I think Mike's point is the right one. In terms of how we selected our partners going into 2024, their performance in 2023, which was favorable, new partners that we've added, I think we feel great in terms of network composition. But I think the piece that I'd highlight is how we're deploying our capabilities and supporting these providers and their performance on the ACO REACH program. I think this being our third year, just how we're coordinating those capabilities, how we're partnering with the providers just gives us a tremendous amount of confidence in terms of our performance and us being able to support their underlying performance. So I think the third year models evolve, network composition, far more favorable and just the connectivity between us and our affiliate partners and how we're deploying key capabilities, i.e., care management, chronic care management, patient engagement capabilities, I think is going to make all the difference.

And Josh, I would just add to that. And just to be clear, while we believe in the ACO REACH program, we really view it as very much aligned with our provider enablement business. We're partnering with providers who are moving to managed care population risk, taking downside risk. And so it very much aligns with our business. And so we're excited about the long-term prospects. But the critical element is to make sure you're partnering with providers who are committed to managing population risk. And so that's something that we've been very focused on. We're not focused on growth just for growth. We're focused on growth where we know we can not only provide high-quality care but provided on a profitable basis.

And if I could just sneak in one more, just on the exchanges -- on the individual exchanges, I'm curious about utilization trends into the fourth quarter. And whether you saw any increases in utilization towards the end of the year, if you're seeing anything in January or February in the run out of claims that would suggest that there's been some pickup in utilization.

No, we really haven't, Josh. We've seen stable trends, and we haven't seen anything. In the Medicare business, it's been noted that we saw some elevated trends especially with elective procedures and outpatient care in the later part of the year, but that's stuff that we've seen typically in the fourth quarter. So we don't have any noteworthy utilization changes in the fourth quarter and the ACA exchanges.

[Operator Instructions] We have no further questions at this time. I'll now hand the call back over to Mike Mikan for any closing remarks.

Well, great. Thanks for your interest in NeueHealth, and we look forward to updating you again shortly. Thanks.

That concludes today's NeueHealth earnings call. You may now disconnect your lines.