Welcome to Cano Health's second quarter 2023 earnings call. Currently, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Joining us on today's call will be Mark Kent, Interim Chief Executive Officer, and Brian Koppy, Chief Financial Officer. The Cano Health press release, webcast link, and other related materials are available on the investor relations section of Cano Health's website. As a reminder, this call contains forward-looking statements regarding future events and financial performance. Investors are cautioned not to unduly rely on forward-looking statements, such statements should not be read or understood as a guarantee of future performance or results. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. We caution you that the forward-looking statements reflect our best judgment as of today, based on factors that are currently known to us, and such statements are subject to risks, uncertainties, and assumptions that could cause actual future events or results to differ materially from those discussed as a result of various factors, including, but not limited to, risks and uncertainties discussed in our SEC filings. We do not undertake or intend to update any forward-looking statements after this call or as a result of new information, except as may be required by law. During the call, we will also discuss certain financial measures that are not prepared in accordance with GAAP. A reconciliation of the GAAP and non-GAAP results is provided in today's press release and on the investor relations section of our website. With that, I'll turn the call over to Mark Kent, Interim CEO of Cano Health. Please go ahead. Thank you, and good evening, everyone. I appreciate you joining us to hear how Cano Health is turning the page to create a sustainable business for all our stakeholders. We are accelerating our strategy to enhance operational efficiency and executing our plan to improve the management of our medical costs to realize the embedded value within our business. Since becoming Interim CEO in June, I have worked with the team to conduct a thorough review of all aspects of our business. While our mission and vision remain the same, the strategy and tactics needed to realize the profitability embedded in our business requires a refreshed approach built upon a stronger operational foundation. By now, you may have seen our press release and know that today we announce Cano Health is pursuing a comprehensive process to identify and evaluate interest in a sale of the company, or all or substantially all of our assets. We have already been working with advisors and are encouraged with the progress made so far. While there is no timetable for a conclusion of this process, we expect to share more information at a later date and time when necessary. As a note, we will not be commenting further on this process during our Q&A session after our finished remarks. This step is important for Cano Health's success. Joining with the right strategic partner is an opportunity to accelerate the value generated from producing favorable health outcomes for our patients and reducing medical costs within our communities. In the rest of my prepared remarks today, I plan to walk through the progress we have made in just a few short weeks to refocus our strategy on Medicare Advantage and ACO REACH, and to accelerate decisions and actions designed to support the organization's long-term success. I'll discuss key dynamics impacting our business and how we will address some of these headwinds. First and foremost, our core operating strategy is now focused on providing primary care services for Medicare Advantage and ACO REACH members in our core Florida market through both our medical centers and our affiliated networks. Our evolving management team has a long and proven track record of operating successful primary care facilities and affiliate networks in Florida that improve health outcomes for Medicare Advantage and Medicare ACO REACH populations. The team has a long-standing, solid relationships with our payer partners. We are leveraging their experience, technical knowledge, and relationships to streamline and improve our performance across the enterprise. We are now implementing a new plan to flatten our operational structure, rigorously prioritize projects in our Florida operations to improve the speed and quality of the care we deliver, and create a smaller brick-and-mortar footprint to optimize our core Medicare Advantage assets. This new, smaller footprint and more focused business required us to realign and reduce the size of our workforce, which we did just last week. While it is difficult to see team members go, the reduction was necessary to allow us to align with this new strategy. We thank those employees who are leaving us for their dedication and service. In order to focus on Medicare Advantage and ACO REACH operations in Florida, we launched processes to divest certain non-core assets. While we cannot assure investors that a transaction will be consummated, we have received second-round bids to divest the majority of our Florida Medicaid operations. While valuable, the Medicaid business diverted critical physician capacity and care management resources within our existing medical centers away from our core Medicare Advantage business. We found it was inefficient for our care management teams to serve both Medicare Advantage and Medicaid members who have very different needs. We also made important strategic decisions for our markets outside of Florida. By the fall of 2023, we expect to fully exit our operations in California, New Mexico, and Illinois by selling or closing in those markets. We began notifying members, physicians, employees, and our payer partners about our decisions over a month ago. This decision impacts approximately 5,000 total members across 17 medical centers. We also expect to fully exit operations in Puerto Rico by January 1, 2024, which currently has approximately 8,000 members cared for by our affiliates. Cano Health remains committed to supporting our members as they transition to new providers to ensure they receive the highest possible quality of care. In addition to exiting operations in those states, we are consolidating medical centers in Texas and Nevada, while simultaneously evaluating offers, allowing us to divest these assets. The consolidation plan is intended to improve the economics of these markets, whether they remain part of Cano Health or are divested. We plan to reduce our footprint in Texas and Nevada by closing about half of our centers in those markets to improve their profitability and cash flow. With such actions, our Texas and Nevada medical centers will be highly attractive, with a capacity to efficiently and effectively serve the growing Medicare Advantage population. Further, we review taking actions on other non-Medicare lines of business in Cano Health, such as Medicaid, behavioral health, pharmacy operations, and occupational health. Each of these lines of business is attractive on a standalone basis. We have received interest from multiple parties for these assets, are engaging in active discussions, and of course, we cannot assure investors that any particular transaction will be consummated. Our exits from California, New Mexico, Illinois, and Puerto Rico, coupled with the consolidations in Texas and Nevada, and the potential divestiture of Medicaid, will allow the organization to be laser-focused on delivering high quality, high access, and high member engagement for our Medicare Advantage and ACO REACH members. Now, moving on to the current business environment and the trends we are seeing. First and foremost, we are in the care management business. The quality of care that we deliver remains market-leading and a source of pride for all of us. Unfortunately, we have had several emerging process issues that have affected our ability to project our performance. However, these issues can and are being remedied. In our core Medicare Advantage business, capitated revenue in the second quarter of 2023 was well below our expectation. This was primarily due to a shortfall in the Medicare Risk Adjustment revenue, or MRA, collected versus what was expected and accrued for in prior periods. As the second quarter of 2023 closed, we received the quarterly service funds from our health plan partners, which reflected their reconciliations of the actual and estimated MRA revenue from CMS for our members. These reconciliations resulted in a reduction to our final 2022 and mid-year 2023 estimates during the second quarter. Upon stepping into the Chief Strategy Officer role in April of 2023, I asked our team to perform a cross-functional review and audit of our clinical documentation, billing and coding, and estimation methodologies, and to suggest ways to enhance our practices. Our review found that while our clinical documentation, billing, and coding followed nearly all internal policies, we have clear opportunities to implement simpler, scalable, and more effective protocols designed to enhance our performance. The largest gap we found was attributable to back-end processes and the ways that data from those processes inform our MRA estimates. The prior processes were overly manual, and our back-testing analysis demonstrated that they provided limited predictive power. During my time at Humana and during my time operating independent value-based care primary facilities and a hospital. I learned that the value-based care model succeeds best when physicians have every tool necessary to make informed decisions. To enhance our data capture, this quarter, we quickly began revising our approach to limit data variability and to ensure we close gaps in real-time data reporting. I believe our estimates going forward will reflect a more accurate view of these MRA projections that will result in a higher realized and appropriate MRA revenue. We were also impacted by higher utilization than expected in the quarter. This was primarily due to the utilization of health plan supplemental benefits, such as OTC FlexCards, and higher utilization across outpatient and pharmacy services. As you recall from our first quarter earnings call, we received information from payers about higher utilization of OTC FlexCards very late in the quarter. Prior to receiving actual card utilization data, we assumed that the trend would be in line with historical patterns. The new payer information made it clear that in the second quarter, utilization of the cards was significantly higher than in prior years, and in several cases, we realized that service fund OTC FlexCards impacts in 2023, which were not present in 2022. Moreover, health plan data received in the second quarter of 2023 included retroactive adjustments for OTC FlexCard claims dating back to January 1, 2023. As a result, not only did we experience higher OTC FlexCards utilization in the second quarter of 2023, but we also received unfavorable prior period development from the first quarter of 2023. These OTC FlexCards became more prevalent in the 2023 annual enrollment period among health plans, particularly in Florida. While they provide an enhanced benefit for our members, at-risk value-based providers like Cano Health are unable to influence or manage these costs, which we recognize in our third-party medical costs. Given these unsustainable burden OTC FlexCards place on our third-party medical costs, we are intensely negotiating with several payers to mitigate these costs in 2023 and making reduced OTC FlexCards costs a top priority in our negotiations for 2024. In the second quarter of 2023, we also saw higher-than-expected utilization, partially attributed, attributable to pent-up demand for outpatient procedures. Pharmacy utilization was also higher than expected in the quarter and remained elevated due to higher branded drug costs, primarily related to certain diabetes medications. We expect this to continue in the second half of 2023 and are closely monitoring the claims data we receive. To mitigate these costs, we have a number of action items that are underway, and I will discuss these momentarily. Clearly, these headwinds mean it's imperative that we position ourselves to better facilitate, manage, and influence care delivery in our medical centers and affiliate networks. Focusing on Medicare Advantage and ACO REACH provides Cano Health with the opportunity to rebuild its foundation in a market we understand very well. It also allows us to implement and scale critical operational changes across our footprint, giving us greater leverage over time. Now, let me highlight a few actions we've already taken to simplify our operations and refocus our core capabilities. First, we have successfully right-sized our payer agreements to reflect the size, scale, and impact of our organization to position Cano Health as a true partner with our payers. Actions taken include developing broader master agreements with payers to replace multiple complex agreements with the same payer. This is intended to allow us to manage our payer relationships more effectively and to yield the best economic impact for our enterprise, not just in a particular region or for a single plan. Second, we are using our scale to negotiate with specialists and hospital systems, which should enable us to reduce our third-party medical costs and support our ability to focus on improving the overall health outcomes of our patients. Third, as part of our restructuring, our Cano at Home program relaunched with a renewed focus on increasing engagement with high-risk patients. The goal is to improve our delivery of primary care in the home setting to avoid costly ER visits and hospital admissions. We previously mentioned that this program can generate a 5%- 10% reduction in preventable ER visits and increase our ability to treat high-risk patients outside of the hospital. Simultaneously, our member engagement teams have increased contact with high-risk patients to control adverse medical outcomes. For example, in the first half of 2022, we engaged with approximately 800 high-cost members. In the first half of 2023, as part of the actions, action plans that have been implemented, we have engaged with nearly 49,000 high-cost members. Clearly, this level of engagement will have multiple benefits for the organization, including the recognition of higher MRA scores and lower medical costs as we engage and manage these members, and better member engagement, and better increased member satisfaction. Fourth, we are making operating enhancements to improve our insight into and influence over our medical costs moving forward. This includes reorganizing certain functional areas and adding new positions to strengthen core capabilities. To that end, we have added a leader of value-based care optimization, who is responsible for evaluating the various patient touchpoints along the patient care continuum to ensure that our physicians, specialists, pharmacy services, Cano at Home, and care management teams are all seamlessly connected. We are implementing several new predictive services to improve our ability to provide proactive reporting and analysis of value-based care. Utilizing integrated data about our care touchpoints will ensure that we have the means to quickly assess and identify gaps in care while caring for our patients. Fifth, we have thoroughly reviewed and strategically aligned our referral networks to ensure that we have the right referral partnerships, with a focus on patient health outcomes and offering the right care in the right setting at the right time. Sixth, we have a number of initiatives to identify and leverage our patient population data to determine where generic alternatives represent the greatest opportunity. This includes identifying whether prescriptions are prescribed by our own Cano Health physicians or originate with outside specialists. This insight will help us make quick and appropriate actions to reduce our pharmacy costs without sacrificing the quality of care or efficacy of medications prescribed. Finally, we remain committed to operating as efficiently as possible and reducing our SG&A expense. As I mentioned, to adapt to new business footprint, we made the difficult decision to realign and modify the size of our workforce to improve our cost structure. It goes without saying that these initiatives are critical for our success and for our future as a value-based care company. Redirecting Cano Health's strategy to focus on the highly profitable and scalable Florida Medicare Advantage market and the capital-light ACO REACH business will put Cano Health on a path towards improving our profitability and cash flow. There is still a significant amount of operational work to be done in our medical centers and our corporate functions, but we are encouraged by the potential and the great progress we've seen so far. Systems, initiatives, partnerships, and relationships all need to work and communicate in unison to maximize value from each decision we make. In the coming months, our organization will demonstrate its focus on optimizing our operations to generate greater efficiency, build better relationships with our payers, and improve health outcomes for our Medicare Advantage and ACO REACH members to ensure the organization's long-term success. Now I'll turn the call over to Brian Koppy, our Chief Financial Officer, to take you through the financials. Thank you, Mark. Thanks, everyone, for joining us today. It certainly has been a challenging and disappointing quarter for us and our various stakeholders. We are working relentlessly to execute the initiatives Mark has laid out and to accelerate the organization's path to significantly improve financial performance. Starting with the results of the quarter, total membership increased 35% year-over-year to approximately 381,000 members in the second quarter of 2023. This represents an increase of approximately 100,000 members from the second quarter of 2022. Total Medicare Advantage membership grew approximately 14% versus the prior year, but was about flat sequentially, as continued membership growth in our medical centers was partly offset by planned terminations of our affiliates. Membership also declined sequentially in ACA and Medicaid, which were impacted by contractual changes and redeterminations, respectively. Total revenue for the second quarter of 2023 was approximately $767 million, up from approximately $689 million a year ago. Total capitated revenue in the quarter was approximately $743 million, an increase from $655 million in the second quarter of 2022. In the second quarter of 2023, capitated revenue was lower than expected, primarily driven by Medicare risk adjustment, or MRA revenue, which is approximately $58 million lower than previously estimated in our most recent full year, 2023 guidance. This lower MRA revenue reflects our updated view of the final 2022 and mid-year 2023 MRA revenue estimates. Of the approximate $58 million shortfall versus our expectations, approximately $44 million was out of period or related to services provided in 2022 and the first quarter of 2023. The Medicare Advantage revenue PMPM was $1,027 in the second quarter of 2023, down 13% sequentially from the first quarter of 2023, primarily driven by the lower than expected MRA revenue. The Medicare ACO REACH revenue PMPM was $1,309, down 12% sequentially from the first quarter of 2023, also lower than expected, and was primarily driven by revised benchmark data we received from CMS related to the 2022 and 2023 performance years. Additional information about our membership mix and our PMPM is available in our second quarter earnings release and second quarter financial supplement posted on our website. Our Medical Cost Ratio, or MCR, in the second quarter of 2023 was 103.5%, compared to 82.6% in the second quarter of 2022. Excluding ACO REACH, the MCR was approximately 108.6% in the second quarter of 2023, compared to approximately 81.8% in the second quarter of 2022. This increase was primarily driven by an increase in our Medicare Advantage MCR. The year-over-year increase in the MCR was primarily driven by lower capitated revenue due to the reduction in MRA revenue discussed previously, and higher third-party medical costs due to higher utilization and higher costs associated with OTC FlexCards offered by our health plan partners. The higher utilization contributed to unfavorable prior period development of third-party medical costs during the quarter of approximately $44 million, primarily related to medical service utilization of approximately $26 million, and OTC FlexCards of $18 million. The higher utilization of OTC FlexCards occurred across nearly all our health plan partners. In the first quarter of 2023, Cano Health recognized approximately $13 million of OTC FlexCard costs, while the second quarter of 2023 recognized approximately $51 million, of which approximately $18 million was unfavorable prior period development from the first quarter of 2023. What we see now is the aggregate cost from these OTC FlexCards was approximately $33 million per quarter in the first half of 2023. This compares to approximately $12 million per quarter in the first half of 2022. As a result, greater use of OTC FlexCards by our Medicare Advantage members is projected to add $84 million of third-party medical costs in the full year 2023, compared to the full year 2022. direct patient expense in the second quarter of 2023 was 7.4% of our total revenue, below the 7.6% in the second quarter of 2022. SG&A expense in the second quarter of 2023 was approximately $99 million, down approximately $6 million compared to the second quarter of 2022. The total SG&A expense, as a percentage of revenue, was approximately 13%, which was above our expectations, primarily due to lower capitated revenue and headwinds to our cost reduction initiatives related to higher professional and legal fees. Net loss in the second quarter of 2023 was approximately $271 million, compared to a net loss of approximately $15 million in the prior year, primarily driven by a higher operating loss, the change in fair value of warrant liabilities, and higher interest expense. Operating results in the second quarter of 2023 also included a $62 million increase in the reserve within other long-term assets on our balance sheet, resulting from the full write-down of MSP Recovery Class A common stock. Adjusted EBITDA in the second quarter of 2023 was negative, approximately $150 million, compared to positive approximately $10 million in the prior year. This was primarily driven by higher medical costs and lower MRA revenue, as I previously described. It's important to note that we recognized $88 million from two large out-of-period items that are not expected to recur in the back half of the year. To summarize, the $88 million of out-of-period items: First, MRA revenue was $58 million lower than expected and included $44 million unfavorable out-of-period adjustment for lower MRA revenue, while approximately $14 million is expected to recur in each the third and fourth quarter of 2023. Second, as I mentioned previously, there was $44 million of unfavorable prior period development related to utilization of third-party medical services and OTC FlexCards. We are withdrawing our full year 2023 guidance provided on May 9, 2023, as our management team continues to evaluate strategic interests, assess the divestiture of non-core assets, and accelerate changes to Cano Health's operating structure. These factors are dynamic and outcomes vary widely. While we expect to continue to provide you with updates to our outlook as warranted. However, there are some factors to consider as you think about the remainder of the year. First, as I mentioned, we recognized $88 million of out-of-period items and unfavorable prior period development in the second quarter of 2023. As such, this amount is not expected to recur in future periods. Second, we still expect our financial performance to improve in the second half of 2023, despite higher utilization of OTC FlexCards and medical services through the end of the year. The improvements in the second half of the year are driven by operational activities, which Mark highlighted, benefits from third-party medical cost recoveries, such as stop loss and Part D rebates, and traditional seasonality, which typically benefit results in the second half of the year. Third, we recently made the decision to reduce our workforce by approximately 700 people or 17% during the quarter. About 20% of these reductions are due to exiting operations in California, New Mexico, and Illinois, with another 20% due to consolidations in Texas and Nevada, and the remainder attributed to other operational functions. These actions are expected to yield approximately $50 million of annualized cost reduction initiatives beginning in the third quarter of 2023 and through the end of 2024, partially offset by an approximate $4 million restructuring charge that we expect to record in the third quarter of 2023. Fourth, we currently expect to reduce our medical center footprint from 169 as of June 30, 2023, to approximately 136 medical centers by year-end, after our market exits and consolidations are completed. The remaining centers will include approximately 123 centers in Florida and 13 centers in Texas and Nevada. It is important to note there are approximately 23 centers in Florida, predominantly related to our Medicaid operations. Fifth, the California, New Mexico, and Illinois markets we are exiting have year-to-date Adjusted EBITDA losses of approximately $14 million as of June 30, 2023. For these markets, there will be costs remaining for 2024, which are primarily related to certain leases that we have yet to sublease or fully exit of approximately $7 million. In regard to Puerto Rico, which we are exiting effective January 1, 2024, the year-to-date Adjusted EBITDA losses were approximately $9 million. Let me turn to our cash flow and liquidity. At the end of the second quarter of 2023, cash used in operating activities was approximately $45 million year to date and was primarily due to unfavorable operating results. Cash used in operations was also impacted by the change in working capital, which reflects lower accounts receivables, including lower estimates for MRA revenue compared to prior periods. We ended the second quarter of 2023 with approximately $15 million in unrestricted cash and $110 million of capacity remaining in our revolving credit facility, providing us with approximately $125 million in total liquidity at such time. For the test period ended June 30, 2023, the company was not in compliance with its financial maintenance covenant under the Side-Car Credit Agreement, which relates to the 2023 term loan we closed earlier this year and requires our first-lien net leverage ratio to be tested quarterly. At such date, the company's first-lien net leverage ratio exceeded the maximum limit of 5.8 to one, primarily due to the lower capitated revenue and higher third-party medical costs. We have successfully negotiated with our creditors, on August 10, 2023, the company has obtained a waiver and amendment of the Side-Car Credit Agreement through September 30, 2024. The company's current liquidity as of August 9, 2023, was approximately $101 million, which consists of unrestricted cash and reflects the full draw of the Credit Suisse revolving line of credit. Our expectation that having secured the 2023 Side-Car Credit Agreement amendment, we will repay a significant portion of the CS revolving line of credit. The full draw was prudent capital management while we negotiated the Side-Car Credit A greement. As the company achieves its various divestiture objectives, the immediate use of those proceeds will be to repay the revolving line of credit, and then within 18 months, the intent is to use the net proceeds to reinvest back into the business, with the balance being used to repay debt. Given the operational headwinds we're facing in 2023, and the fact that the company's current liquidity is not expected to be sufficient to cover our operating, investing, and financing uses for the next 12 months, management has concluded that there is substantial doubt about Cano Health's ability to continue as a going concern within one year. That is why the company is pursuing a comprehensive process to identify and evaluate interest in the sale of the company, or all, or substantially all of its assets, while pursuing multiple initiatives to streamline and simplify the organization to improve efficiency and reduce costs. These initiatives accelerate our shift to focus on our core assets in Florida to improve profitability and cash flow. We expect our focus on Medicare Advantage and ACO REACH to result in more efficient operations and lower medical costs, while helping our patients live their healthiest lives. In conclusion, the company is committed to strengthen our financial footing and implementing our operational and strategic initiatives to improve patient health and deliver for stakeholders. Now, I'd like to turn it back to Mark for a few closing comments. Thanks, Brian. In conclusion, as Brian and I have just walked through, the company is committed to strengthening its financial footing and implementing operational and strategic initiatives to improve patient health and deliver value for our stakeholders. As discussed, the company is working with its financial advisors to evaluate and develop the inbound inquiries we have already received, as well as to engage with other potential buyers. We have a good company and a strong plan to address the headwinds facing the company, and there is, and we believe will continue to be, strong interest in this company. As you would expect, we will not get further into the details of our strategic review process, but we are laser-focused on achieving a value-maximizing transaction for our stakeholders. We expect that our current liquidity and available options are sufficient to complete such a process. With that in mind, we ask that you focus your questions on the substance of our second quarter 2023 financial results. I will ask now the operator to open the call to your questions. Operator? Your first question comes from the line of A.J. Rice with Credit Suisse. Please go ahead. Hi, everybody. Thanks for all the detail. First of all, on the liquidity comment, you said that August ninth, you had $101 million of liquidity. You had fully drawn down on the credit line at that point. You got the waiver the next day, and you expect to pay that credit line, which I guess is about $110 million, substantively backed by end of September. Would that amount of money still be completely available to you, or would that limit the $101 million to some lower amount, once you pay that back? Yeah, no, that's right. You know, the revolving line of credit is still available, and we'll access it as needed. Now that we've kind of cleared certain hurdles, we'll repay that back and kind of use that as needed throughout the quarter. I think you said you were negotiated on the Side-Car Credit Agreement through September 30th. Will you then revert out of compliance again post-September 30th, or will you be still okay? Are you talking about September 30th, 2024? Yes, I would- Ask your question again. I, I had the September 30th. Is that in 2024 that you've extended it to? We- Okay. Yes. Yes. All right. Okay, that's, that's good. Just one other area to ask question about: the stop-loss agreements have traditionally, you know, built up to the point where in the back half of the year, they give you some help. Obviously, with where you guys are running year to date, I would assume that that would be a factor in thinking about the back half, that those stop-loss agreements might be kicking in quicker, how have you factored that into your thinking about the back half? Obviously, there's prior period adjustments you're making. Do you have the ability to go back and say, "Hey, that should have triggered some of these stop-losses coverage from prior periods, and we, we should have some recovery there"? If you've been able to do that, any sense of the size of that? Yeah, no, it's, it's a great question, and, and that's part of the assessment that we're doing, given the higher first half utilization. You're right, you're gonna expect a, a certain level of increased stop-loss on that. That is factoring into the comment that, yes, we not only will, will have the traditional recoveries from stop-loss in the third, primary fourth quarters, but now we would expect that number to be a little bit higher than it's historically been. You know, we, we're not providing specific guidance on that, but you're, you're right on in the thinking, and, you know, that's part of how we're thinking about it, too. As we look forward, you know, we're, we're not being, you know, taking any of those items in advance. We're not gonna pull those, if that information, that, that, those recoveries forward, we're gonna let them play out as they happen in the back half of the year. Okay. Thanks a lot. Your next question comes from the line of Josh Raskin with Nephron Research. Please go ahead. Hi, thanks. I've got a couple, so I apologize upfront, but just first, just on membership, how many members do you have left? Do you expect in the centers that you have left, so Nevada, Texas, and Florida? That's the first part of the membership question. Then how many are core Medicare Advantage or ACO REACH in Florida? I would say a majority... I'll start with the ACO REACH. A majority of the members in ACO REACH are in Florida. That's, that's pretty standard. From a membership perspective, what we say, there's, in total, there's about 5,000 members in California, New Mexico, and Illinois, that we're exiting. Okay, we can figure out the rest. I know we've gone through this before because you've had the issue in prior years, but can you just remind us the process on recording risk adjusters for MA Lives and how you record the revenue seemingly before confirmation from CMS or even your health plan partners? Are you giving data to your health plan partner saying, "This is what we think the MRA is, and this is what we're going to record," or is there some confirmation from the plan? I'm curious how this is now the second time you guys are off by a large amount in this process. Yeah. A majority of the MRA change was due to the final 2022 MRA. This is when it comes in as, as the final, and this comes from the health plan, so it's their final reconciliation. Now, now, given that we're midyear in the year, you start getting your first insights into the midyear 2023. The, the prior year, the prior adjustments I referenced was due to the final 2022, which we started that in 2022. That's why that, that pulls forward from prior year, where the midyear or is starting with the 2023 numbers. I, I guess my question is, are you looking at a specific member and saying: "We think there's two specific, you know, risk codes that are going to get tripped. We think it's an incremental $600, you know, per member, per month, and that's what we start accruing as revenue, all based on internal Cano decisions?" Or are you relying on the health plan to say, "Hey, the totality of that member in terms of other sites of care and prescription drugs and all that sort of stuff is..." and the health plan is giving you that data? Yeah. Let me jump in here. This is Mark. You know, historically, I'll put it this way, it was a very tedious and manual process, and as you can imagine, that process can be fraught with all kinds of errors. The new process is one based upon where we are predicting, based upon the data submissions. We are correlating and corroborating that information with respect to what is received by the health plan and what is received by CMS, and then we are then assigning an overall score to that with a probability predictive analysis to it. This is what is now in place, is a very automated process, where prior to, it was extremely manual. As you just alluded to in prior periods and in prior years, that's what causes the miss. Being able to predict that going into, you know, next year as we approach planning for 2024, we have a much more reliable process, and we've already begun testing that, and we back tested it. We have successfully been able to do that for the month of May 2023 and successfully for the month of June 2023. We are very confident of how we move forward. The issue is that all of this transpired in setting this budget, in setting this guidance last year in 2022. That's perfect. That's perfect. Just the last one. I won't ask about the specifics of the comprehensive process of the sale of the company, but I'm curious about the feedback. It sounds like you've made notifications in the market of your change in strategy and, and some of the exited markets, et cetera, and then I guess in some of Florida. I'm curious, the feedback from your largest health plans, are they worried about care for their patients and continuity? Have they started to look for alternatives to delegate their members to other value-based care companies, or is that all part of the, you know, inbound strategic interest in sort of creating a catalyst for you? Yeah. You know, the, the awesome thing, we have great, This is Mark again. We have really, solid and sound relationships with our health plan payer partners, such that they recognize the extreme value, and the way in which we wrap ourselves around our patients and our members adds tremendous value in the market. I think you can there's even been, I think, the Secretary of Health and Human Services was in our Nevada market very recently, commending us on the care that we provide, we, we are very thankful for that recognition. We work hand in hand with them, especially during this, you know, I would say, this concerning time, if you will, whereby we are exiting markets, and, and, and divesting. We're working through the process where we are selling in many places, with the, the buyer in these areas. The health plans understand, and we signaled with them and have been working hand in hand to ensure that their member, our patients, there is no lack, no gap in the continuity of care and or the level of care in which they're receiving through this process. There, there hasn't been any concerns there, and so we've been working very closely with them. All right. I'll leave it there. Your next question comes from the line of Andrew Mok with UBS. Please go ahead. Hi, thanks for the question. Can you help us understand these OTC FlexCards benefits a bit more? What's the typical dollar spend, by member and the spending patterns associated with these cards? And how exactly does the accounting treatment work for them? When are they expensed on your income statement? You want to take the first part of it? Okay, yeah. It's, it's really interesting. Each health plan, this is Mark again, each health plan administers it a bit differently. The dollar amount, depending upon the plan, is also very different. We're seeing swings anywhere from $250 per month up to $1,000 in a quarter. Part of the problem with this, as you can imagine, was that in 2022, most of the health plans did not put that in the service fund. Then in 2023, you know, we, there were a few blips in what we would call maybe settled data around about the March time frame. When you're looking back historically in March and you compare it to the prior year, you're like: Well, maybe this is a blip, don't necessarily know what we're seeing. Come May of 2023, not only did you see it fully, but it retroed all the way back to January. That caught us very flat-footed, as you could imagine, because there were several plans who did not offer it in 2022, but offered it fully at an increased rate in 2023. That is, and, and so that's what caused a lot of that noise. I'll allow Brian to address the- Yeah, and I'll just, I'll just add to that comment is, is our, our, our payers use a third-party vendor to reconcile it on their end, and then that comes through in the service funds. We recognize it as it comes through each month within those service funds, which we receive from the payers. As Mark said, a lot of them were catching up their activity in their second quarter service funds that we received, and as a result, that's where we realized that $18 million, what we're calling a prior period development on just these OTC FlexCards, so drove the significant impact in the quarter of around $33 million. Pretty, pretty substantial. Got it. This is a supplemental benefit that's essentially priced by the health plan in their bids, but then you wind up taking the risk on it. I guess, how do you ensure that something like this is priced correctly in the future? Yeah, I mean, that, that, you, you got it right. I think Mark mentioned, this is part of the negotiations that we're undertaking right now for 2024. Giving our market size, our membership scale in, in certain geographies, now knowing fully, how these things, how these plans benefits are rolling through, we're negotiating hard, and a number of these payers won't, won't be in our lineup, so to speak, if there's not changes to the, to the, call reimbursements or, or, or, or the service funds that we receive in 2024. Yeah. Got it. I'll add a little more color. We really expected the economics in the filings, you know, so that to bear themselves out, meaning, you know, you're, you're, you're providing this benefit, and so you would actuarially adjust the, you know, your benefits to account for that. What we are seeing is it hit our service fund. It's causing, and or has caused us to renegotiate the economics of our agreement, and in some places, to terminate some plans. Got it. Okay, I just wanted to follow up on the Medicare risk adjustment. It sounds like you're pinning the issue on a very manual process previously, but when I hear that, it sounds like that it would just take longer to arrive at that MRA estimate, but that doesn't necessarily explain why that estimate was so off. Was it an underlying issue in the data itself, or was it a shortcoming in the manual estimation process? Thanks. Yeah, I think I would say it's a combination of factors that you can refer back to kind of how things work. There's some operational, and I would say there's... It then it ties into how does that information flow into making the estimate. You know, they're both related to the estimates, but the estimate has to be based on kind of your view of the new information that's coming in, and is it up to date, is it the latest latest scoring or latest MRA related to the engagement of those members and the charts that are being looked at? That's where there's been a significant look back as to call it, the root cause analysis on some of that information that's, that's being corrected going forward. Got it. Does that data flow through the CanoPanorama system? Yeah, it's all, it's all, it's all data enhancements and information that, is being, reviewed and reports that are being looked at to make sure that as Mark said, there's unison in information flow and communication of activity, so all the various departments are aware of the activities of the members. Great. Thank you. Your next question comes from the line of Parker Snure with Raymond James. Please go ahead. Hey, good afternoon. This is Parker on for John Ransom with Raymond James. I appreciate some of the detail you gave on the non-core markets, EBITDA, year- to- date. I was just hoping you could give some detail or just an update on the year-to-date performance from the core Florida Medicare Advantage assets that you plan to maintain. Just trying to get a sense of, hey, what could this business look like if you guys get on, you know, on the other end of, you know, getting, shedding some of these non-core assets that you wish to get rid of? Yeah, I mean, I think the easiest way to just, to kind of take, take the, the, the markets that we talked about, you know, that underperformance. We know we've talked in the past about the rest of the non-Florida markets, which would really be the Texas and Nevada. Then you also have Puerto Rico and D.C. in there. If you look at Texas and Nevada, they're, they're clearly pressured this year, and that is why we're undergoing the consolidation, and that's going to help improve that performance and that asset going forward. Clearly, when you look at Florida, Florida is the biggest operating market. It has a disproportion of the pressure that we're seeing in this quarter and year- to- date. You know, when you think about looking forward, a lot of those-- you, you kind of take those one-timers out. You look at the improvement on the cost reduction efforts just on the SG&A, but then you get the enhancements from the operational activities around reducing medical costs. You know, we believe there's substantial upside of the just the, the core Florida market, core Florida Medicare and ACO REACH business. That's really the long-term view and structure that we're putting together around how we want to think of this business going forward in terms of our scale density, scale density, and position within the market, particularly the high-value Florida market, where we, you know, we continue to believe that that asset alone is going to be highly profitable as we go into 2024 and beyond. Okay, if I can just get 1 more follow-up. I mean, just going back on 1 of the prior questions on the OTC FlexCards, I mean, what kind of leverage do you have in those negotiations where you're able to kind of insulate yourself from some of the upstream plan design? Are you just at the whim of whatever, you know, kind of members you get and whatever plans and certain plan design that they're in? Or, you know, are you able to carve out certain areas and certain kinds of types of care that you don't want to be exposed to? And, you know, outside of the OTC FlexCards, are there other areas that you would wish to kind of insulate yourself from? I know you called out higher pharmacy costs. Maybe just talk about kind of your ability and your leverage in those negotiations. Yeah, I'll, I'll start a little bit, Mark, and add any color if I don't, hit it fully. I, I would say, you know, the supplemental benefits are being looked at across the board from the payer side as they go into 2024 in general, just given the, the, the new, the new rating, the new rates for 2024. I think all, all payers are pulling back on those broadly. What we're doing is having discussions specifically on the ones that we see predominantly in the South Florida market here as well, where we can influence that and find those payers that are, are reasonable. We understand these, these supplemental health benefits are attractive to members, and we want to work collaboratively with the payers to grow membership. There is a mutual beneficial discussion to be had because they need us to help them grow their membership, but we also need them to ensure that it's a, you know, call it, favorable financial terms as we serve those members. That, that's kind of how, you know, we're looking at these supplemental benefits for particular plans that we're negotiating with. All right. Thanks so much. Your next question comes from the line of Gary Taylor with Cowen. Please go ahead. Hi, good evening. A couple questions. One, on the revenue that you expect to exit Medicaid, I guess we know the Medicaid revenue, assuming that's mostly in Florida, but California, New Mexico, Illinois, Puerto Rico, half of Texas, and Nevada. Can you give us some sense of what the revenue, annualized revenue is on that block of business that you will, will look to exit? Yeah. Illinois, you're talking about Illinois, California, New Mexico, you know, year- to- date, maybe, I'm going to say $9 million-$10 million of revenue. That's, most of that's still fee for service? It's not, most of that isn't capitated yet, or some of it is? Some of it is. Yeah. It's a small portion of it, but yeah, non-risk. Yeah. So. The Puerto Rico loss is similar as the revenue, similar on the revenue there? Yeah, Puerto Rico's got, you know, pretty decent revenue. Revenue is relative. We've been in that market for a while. You know, we said, what, 8,000 members, you know, you're up to, call it $35 million-$40 million of revenue year- to- date. Okay. Then on the MRA revenue, $58, you said $44 is out of period. Some of that's 2022, some of that's first quarter of 2023. Do you have, do you have at hand, what it was for first quarter of 2023, if we're just trying to somehow build to a normalized first half of 2023? I would say the way you think about it is kind of, you know, $14 million a quarter or so, is the way, the way it kinda normalizes out. Okay. From that perspective. The $44 million of prior period expense development negative, is that, is that truly PYD as in prior year related to 2022, or is some of that also related to first quarter? Yeah, significant majority, almost all of it's related to first quarter. Oh, first quarter. Okay. Yeah. Then last one. I'm sorry, Gary. EBITDA I'm sorry, Gary, I've just, I, I don't mean to cut you off. Just want to like I said, you know, we talked about $18 of that is for OTC FlexCards, so that's all first quarter. Then the balance of $26 of that $44, and most of that is still first quarter as well. Okay. Last one. I saw in the EBITDA add-back $62 million reserved for other assets. I'm wondering, is that, is that writing down that MSP receivable or what is that? Yeah. Oh, yeah, yeah, yeah. Okay. I was gonna look to see what you're looking at, but yes. You'll see that as a, as a called out-- a line that we called out. It's written down to 0, apparently? That's correct. That's correct. You know, you think about, you know, you know, I think you're very familiar with the MSP, but as we looked at it... Yeah ... there's been a number of unfavorable developments related to MSP since our last earnings call. We, you know, we did a complete review of that, and, you know, we used a third-party specialist to, to, to review that valuation and decided to write that down. Well, okay. Thank you. Thanks, Gary. Your next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead. Hi, thank you, guys, for the detail, and thanks for the question. I think, Brian, you suggested that you guys expect about $100 million of total 2023 claims expenses related to the OTC FlexCards. I just want to make sure that we got that correctly, and then that implies, like, about $500 of expense for every single capitated MA member. Is that accurate? Yeah, I think we, I think I said around $84 million is the full year impact. It varies, it varies by plan. I'd have to... Some plans are $500, some are $250, some are $350. You know, if I take your $100 down to $84, you're gonna get below $500, probably on average. It's, it's a, it's a, it's a very rich benefit, for sure. Okay, got it. I guess the way I understood it was $84 million of incremental expense in 2023, that is $84 million... Oh Of total expense in 2023 related to these benefits? Okay. Yeah, so if you're looking for the... Yeah, that's right. The incremental was that. Let me just make sure, but, yeah, if you look at the expectations for 2023, yeah, you're gonna be, what? $33 million a quarter. So, yeah. Okay. The 84 is incremental or total? Incremental, right. Yeah. Yeah. Perfect Versus what we thought, what we thought in 2022. If you, the 2022 was about $12 million a quarter, now we're up to $33 million a quarter. Got it. Very helpful. Okay, great. That's pretty helpful. Just in terms of two more. In terms of the MSP Recovery, is that your primary vendor of stop loss insurance? I guess just, given the write-down year -to- date, is there any change in the terms or extent of your stop loss coverage in 23 relative to 2022? Yeah, no, just to be clear, I need to be super clear. They are nothing to do with our stop loss at all. They traditionally handle third-party recoveries related to other types of benefits that you may have if there's an accident, whether it's workers' comp or some other benefits. Okay. It's completely separate from our stop loss. Got it. Was that $40 million in 2022 related to medical costs, or was that below the, the, gross margin line? I just want to make sure we answer properly. Can you refer back to the $40 million? Like, was just the expense benefit related to MSP, did that hit at the medical claims expense line, or was that below, the gross profit? Yeah, it was the medical expense line. Got it. Just last question is, To what do you attribute, the kind of, inability to scale in California, New Mexico, Illinois, and Puerto Rico? Just what makes you all confident that you can consolidate Nevada and Texas and still succeed in those markets? Thanks. I appreciate the questions. Yeah. No, thanks, Jess. I would say it's, it's not a, it's not a function of we don't believe we can scale in those markets. It's a determination as to our, I'll call it, our financial liquidity position, that we don't have the luxury of waiting for those centers in those markets to fully mature. We had to make the difficult decision to exit those markets now, and before they can fully mature. That, that's, that's the way I would view it. That's. Now I'll, I'll get to the second half of your question, which was, what do we do in Texas and Nevada? Well, all we're doing in Texas and Nevada is consolidating to enhance the profitability of that market to ramp faster. We, we do believe, they're on the right trajectory. We're just gonna give them a boost and reduce the cost structure, send, consolidate the membership into this, the, I'll call it, the highest return centers that we have there, which will then get more members in those centers, and that J-curve will significantly ramp. Got it. Thanks again. Thanks. Ladies and gentlemen, that will conclude today's conference call. We thank you all for joining, and you may now disconnect.