Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Privia Health Second Quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the conference over to Robert Borchert, SVP, Investor and Corporate Communications. Please go ahead. Thank you, Regina, and good morning, everyone. Joining me are Parth Mehrotra, our Chief Executive Officer, and David Mountcastle, our Chief Financial Officer. This call is being webcast and can be accessed in the Investor Relations section of priviahealth.com. Today's financial press release and slide presentation are posted in the Investor Relations section of priviahealth.com, and following our prepared comments, we will open the line for questions. So please limit yourself to one question only and return to the queue if you have a follow-up, so we can get to as many questions as possible. The financial results reported today are preliminary and are not final until our Form 10-Q for the second quarter ended June 30, 2024, is filed with the Securities and Exchange Commission. Some of the statements we will make today are forward-looking in nature, based on our current expectations and view of our business as of August 8, 2024. Such statements, including those related to our future financial and operating performance and future business plans and objectives, are subject to risks and uncertainties that may cause actual results to differ materially. As a result, these statements should be considered along with the cautionary statements in today's press release and the risk factors described in our company's most recent SEC filings. Finally, we may refer to certain non-GAAP financial measures on the call. Reconciliation of these measures to comparable GAAP measures are included in our press release and the accompanying slide presentation posted on our website. Now, I'd like to turn the call over to our CEO, Parth Mehrotra. Thank you, Robert, and good morning, everyone. Privia Health posted another strong quarter of financial performance as we are executing well operationally and continue to drive growth across all of our markets. This morning, I'll cover some key highlights and provide a business update. Then David will discuss our recent financial performance and provide an update to our 2024 guidance outlook, given our strong results in the first half of the year, before we take your questions. During the second quarter, Privia's momentum continued across all aspects of our business. We are making great progress towards our long-term vision to build one of the largest ambulatory care delivery networks in the nation. Implemented providers increased 16.4% from a year ago. This strength in same-store growth and new provider additions is reflected in our top-line performance. Q2 Practice Collections grew 4% year-over-year and increased more than 12% when you exclude the impact of the restructured MA capitation contracts at the beginning of the year. Adjusted EBITDA was up 14% as we continue to drive operating leverage while absorbing incremental new market investments. Our pipeline for both existing market growth and new market business development remains robust. We have $387 million in cash, no debt, and a strong conversion of annual EBITDA to free cash flow, which positions us well for durable long-term growth. Given our solid first-half performance across all metrics and high visibility into the rest of the year, we are increasing our guidance to the mid to high end for all metrics. The combination of our diversified value-based platform and strong underlying fee-for-service business, serving the entire physician practice, continues to be a key differentiator in attracting community providers to the Privia model in today's environment. Privia's national footprint continues to expand. At the end of Q2, we had 4,504 implemented providers caring for more than 5 million patients across 13 states and the District of Columbia. We are working diligently to expand into new states and increase our provider density across every state we operate in. Our aim is to build large-scale, high-quality, community-based medical groups that will become one of the most important assets in the healthcare ecosystem. We have very high patient satisfaction, as reflected in the Net Promoter Score of 85. Our gross provider retention has averaged more than 98% over the past three years. On a net basis, our provider retention is over 100%, given our same-store growth in existing geographies. We continue to expand our diversified value-based platform across reimbursement models. Privia now serves over 1.2 million attributed lives across 100+ commercial and government programs. Total attributed lives increased more than 10.5% from Q2 a year ago, which places Privia as one of the broadest and most balanced value-based care players in the industry. Our commercial attributed lives increased 11.6% from last year to reach 741,000. We earn care management fees and generate shared savings that are incremental to our predictable fee-for-service management fees. This offers a highly differentiated value proposition to our medical groups and is core to our long-term strategy to opportunistically increase our attribution in various risk arrangements over time to drive future earnings growth. We continue to perform well in our Medicare Shared Savings book of business and have taken proactive steps to navigate the challenging MA environment, as we discussed last quarter. Now I'll ask David to review our Q2 and year-to-date financial results and our updated 2024 guidance outlook. Thank you, Parth. Our strong operating and financial performance continued through the second quarter of 2024. ...Our implemented provider count grew 145 sequentially from Q1 to reach 4,504 at June 30th, an increase of 16.4% year-over-year. Solid ambulatory utilization trends, new implemented providers, and additional attributed lives led to Practice Collections increasing 4% from Q2 a year ago to reach $728 million. As we previously mentioned, the balance and flexibility of our operating model enabled us to shift attributed lives out of capitated agreements for improved contribution margin. Excluding second quarter 2023 revenue from our renegotiated Medicare Advantage capitation agreements, Practice Collections increased more than 12% year-over-year in the second quarter of 2024. Quarter-to-quarter variability in shared savings revenue was as expected due to accrual true-ups over 100+ value-based contracts. As we mentioned previously, it is most helpful to look at our shared savings revenue trend on an annual basis to smooth out the quarterly variances. Adjusted EBITDA was up 14% over Q2 last year to reach $22 million, as we continue to generate operating leverage despite investing in existing and new markets. For the first half of 2024, Practice Collections increased 5.7% to $1.44 billion. Care Margin was up 10.8%, and adjusted EBITDA grew 15.9% to reach $41.9 million. With strong first half performance and high visibility through 2024, we are raising our 2024 guidance. We now expect attributed lives to be at the high end of our initial guidance range, and all other metrics to be in the mid to high end of our initial ranges. Recall that our full-year Practice Collections guidance assumed a reduction of approximately $198 million from 2023, given lower risk exposure from MA capitation agreements. Our balance sheet and capital position continue to be very strong, with cash of more than $387 million and no debt. Given our capital-light operating model, we expect approximately 80% of our full-year adjusted EBITDA to convert to free cash flow. Consistent with past years, we expect to receive a significant portion of our shared savings cash payments in the second half of the year. Previous business momentum and diversified book of business has positioned us well to drive organic provider growth and increase operating leverage for long-term adjusted EBITDA and free cash flow growth as we build our national footprint. We would like to thank all our physician partners and employees for their continued dedication and hard work to help us achieve these results. We are now ready to take your questions. If you'd like to ask a question, simply press star, followed by the number one on your telephone keypad. We'll take our first question from the line of Josh Raskin with Nephron Research. Please go ahead. Hi. Thanks. Good morning. First question, maybe I'll sneak into the first question is, I know you've gotten this before, but, you know, you'll have safely over $400 million in cash by the end of the year with no debt. So how are you thinking about updated capital priorities? And then just secondly, maybe if you give us an update on utilization trends and if there were any differences as the quarter progressed or even maybe compared to the first quarter. Yeah, thanks for the question, Josh. Appreciate it. It's top of mind for a lot of our shareholders. So on the cash, look, I think broadly, a few, few big picture comments and then the framework. I think what's important to recognize is, a lot of our organic growth, is expensed fully on the P&L. So if you're looking to add, as we've said previously, 400-500 implemented providers each year, that growth is fully expensed in the P&L. So despite that, we are now converting 80%+ of EBITDA free cash over the past few years. I think if you look at it relatively, that conversion rate is 2x the next best comp in the industry. So you could almost double the EBITDA and still get the same free cash flow as our business, which is, which is pretty incredible. And as you rightly pointed out, if we don't spend any cash in business development activity or otherwise, we land probably close to somewhere between $425 million-$450 million by the end of this year. And so I think the framework that we are looking at is as follows: The first bucket we've always said is sleep well at night money, which is, just to make sure as we grow our risk book, if you have, one-off events like pandemics, hurricanes, et cetera, that can impact any year results, we have sufficient liquidity to support our medical groups. It's very dilutive to rely on external financing when something like that happens. And so, you know, approximately 25% of the cash balance plus our revolver, which is undrawn, about $125 million, we kinda keep, keep it in that bucket. Number two, our big priority will be to utilize the cash for you know, bigger business development transactions. So that'll be either new market entries. We're just in 13 states. Our aspirations are to be in many more states, become a national company. And so you should expect us to keep doing transactions the likes of which we've done in the past, either acquire tax IDs of medical groups, ACO entities, or MSO entities like we've done in Washington or Connecticut or California in the past few years. You have good examples of that. So I think that'll be the predominant use of cash, as well as doing transactions in our current existing states to build more density. And then finally, I think, a lot of the board and the management team have pretty high ownership. So we're obviously looking at, we can look at opportunities to return capital if the stock price materially deviates from what we think is intrinsic value. So I think that's the framework that we are using, but we'll do this, in a pretty judicious manner, in a thoughtful and patient manner, which is accretive to shareholders. And then on your second question on utilization, I think as we've bifurcated it before, between ambulatory and then, let's say, inpatient or downstream utilization, you can see from our results, the ambulatory utilization continues to be really high. We think that is good utilization. It really benefits our fee-for-service business. It's utilization for patients and our members to come visit their primary care doctors, and we think that's really good engagement. So that benefits us on both the fee-for-service as well as value-based book. And then I think we continue to see elevated utilization downstream on the inpatient side. Despite that, I think our value-based book is really balanced and really hedged in the nature of the programs we have. So you're seeing that in our accruals, and our updated guidance reflect that, but we continue to see good utilization trends. Thank you. Our next question will come from the line of Andrew Mok with Barclays. Please go ahead. Hi, hoping you can comment on the development pipeline and just the evolution of your sales process. You seem to be doing pretty well adding implemented providers, but a lot has changed over the last two years with respect to value-based care. So maybe just comment on how the sales process differs today in terms of pitch process and duration versus, say, three years ago. Yeah, to answer the question, Andrew, I think it's largely the same. I mean, we've had a very consistent sales growth engine, which is organic in our existing states. We are pitching the entire business model, which is very differentiated across all lines of business for any physician practice, every single patient, every single payer walking in the door for every single specialty. So I think that has truly differentiated us. I think the last couple of years with all the changes in the risk based environment and Medicare Advantage, I think, as we noted in our prepared remarks, physician practices are looking at us for a much more holistic solution rather than just a one-off solution for a particular risk contract. I think that truly differentiates Privia. I think on top of that, we are deeply embedded in the workflows of the practice, from our technology stack, and then revenue cycle and care management teams and value-based operations workflow perspective. So I think a practice joining Privia really is understanding all that value proposition, and you can see that in our results. We continue to focus on adding 400-500 implemented providers in our existing geographies and then entering many more new geographies. But the engine's pretty strong and it's running. Great. And if I could just follow up on the stock-based comp, it's ticked up another $2.5 million sequentially. It's now up 80% year to date. What's the full year expectation there, and what's driving the significant increase? I thought that line was supposed to moderate as we got further from the IPO. Thanks. Yeah. So, part of the change is effectively when we issued the equity each year. So last year, we issued our annual grants in the middle of Q2. This year, we issued them in the middle of Q1, so we're still getting a little bit of residual, I would say, impact from a stock comp perspective from just sort of the timing difference there. And we're looking at, you know, for on an annual basis, probably $55 million-$60 million in total stock comp expense. And then on a go-forward basis, you know, again, we're still sort of targeting the 1.5%-2% range. Got it. But I, I guess I'm still a little confused, like, what's driving that significant increase? You're saying it's all timing, or is it, is it something else? It's all just timing, so it's when in the period that we issued both grants. So the difference. It was the same explanation, if you remember back to Q1. So again, it's just when did we. So, like, for example, last year, we issued our annual stock comp grant in Q2. This year, we issued it in Q1, so there was a larger variance in Q1 than Q2 because there was a larger period where we didn't have both years of comp expense. This year, it's just a comp composition of half a quarter versus a full quarter in Q1. Our next question will come from the line of Jailendra Singh with Truist Securities. Please go ahead. Good morning, guys. This is Eduardo Ron on for Jailendra. Thanks for the question. Just curious if you could provide some color around, you know, the EBITDA margin progression and, you know, your long-term growth and margin targets. And maybe just piggybacking on Andrew's question, if we think about the current development pipeline, does it tend to skew more towards expanding in new states, or is it more building the breadth out in your existing markets? Thanks for the question, Eduardo. So, on the EBITDA progression, look, our long-term margin targets are 30%-35% EBITDA to Care Margin. That's been very consistent since we went public four years ago. As you can see from the first half results, we are about 22%, and so we're two-thirds of the way there. However, that number fully expenses all of the new market that we've entered in the last few years, and about $10-$12 million of expense in those new markets, which are still not close to EBITDA breakeven, as well as all the growth investments, organic growth investments for the sales team, sales and marketing line is about $30 million. So I think if you pro forma for that, you can see, you know, the company is already operating in the most mature markets at the long-term target profile, and we're very proud of that. You can see it's a very proven business model. The unit economics are proven, the flywheel is proven, so I think we see ourselves achieving those targets in all of our geographies and consistently progressing towards that long-term target profile. And then on your second question, I think it's gonna be a combination of both. We are acutely focused on building density in our existing states. That's what drives the flywheel. That's what drives EBITDA margin progression. That's, that's what makes our medical groups very important assets for all the payers. And so you will see us do transactions that can meaningfully increase density in the current geographies, and then obviously, we are looking to add and get into as many new states. So you'll see a combination of both. Our next question will come from the line of Elizabeth Anderson with Evercore ISI. Please go ahead. Hey, guys. Thanks so much for the question. I appreciated how the guidance is sort of you obviously give it on an annual basis. Can you talk about anything you can call out, even qualitatively, on the 3Q versus 4Q cadence for this year? Thanks. Yeah, thanks for the question, Elizabeth. So from a seasonality perspective, I think you should, you should see the same trend line as, as past years. It should not materially differ. The second half is a little bit stronger than the first half. We do get our MSSP results in Q3, or Q4. And so, I think from a shared savings perspective, and then utilization perspective on the fee-for-service book, you know, that, that same pattern would follow. At this point in the year... You know, we've sold and implemented every provider, you know, that'll impact, this year's results, so there's a very good visibility on the fee-for-service book. And then our accruals are reflected, based on all the data we've got across our value-based book. That's reflected in our updated guidance. But then again, we'll get our MSSP results in Q3, Q4, so we'll see how that plays out. But you know, we're hopeful, you know, that they'll be as, as expected. So that's reflected in our guidance. Our next question comes from the line of A.J. Rice with UBS. Please go ahead. Hi, everybody. Just a specific question. Obviously, on the commercial lives, you're up nicely year to year, and sequentially, you showed good growth there. I think government's up similarly year to year, but sequentially, it was more flat. Is that something about the new markets that they skewed toward adding more commercial lives, or any thoughts on sequentially the variance in growth there? And then I might just piggyback off some of the other questions. There's obviously a lot of disruption in the broad peer group, a lot of the people pursuing strategies different than yours. But given that disruption, among other physician-oriented companies, does that make you think about M&A any differently? Is there any opportunities that are presenting themselves that make you think maybe there's an opportunity to do a little bigger deal than you've done historically? Thanks for the question, AJ. So on the first piece, the commercial lives generally follow implemented provider growth, so that's across all our markets. As we add providers, we get commercial lives on day one, and they get included in the value-based arrangements we have. On the government lives, it's, I think it's just timing based on the data we get on some of the lagged attribution. So, I think it ticks up, and then if there's any true ups or true downs, I guess, you know, that's kind of reflected in some of the between MSSP and MA. But overall, we feel pretty good. You can see, you know, overall attribution is already at the high end of our original guidance. I think we've added what we expected to. You can see some more additions over the next couple of quarters as some lives bleed in, but we're already well ahead of our plan from that perspective overall, from an attribution perspective. And then on your second question, look, I think we're in a very strong position. You know, Josh asked a question on cash. We have a very pristine balance sheet. We have debt, debt capacity. We have pretty solid EBITDA free cash flow profile. So you can expect us to look at all kinds of assets. I think the key is to be really thoughtful and do deals that would be accretive to shareholders from a long-term perspective that are EBITDA and free cash flow accretive. I think we're gonna be very disciplined, but I think, our very consistent performance over the past 7, 8 years, you can see the data from our S-1 and being public for 4 years, the nature of our business model, serving the needs of the entire practice, I think that's truly differentiated. So I think physician practices, other entities looking to sell or transact, are looking at our balance sheet, are looking at our performance, and then our hope is they view us as a very strong, durable partner as this industry evolves, and I think we'll be opportunistic to take advantage of any dislocations. Our next question will come from the line of Jeff Garro with Stephens. Please go ahead. Yeah, good morning. Thanks for taking the questions. So I know it's a little early here, but as we head into fall, I was hoping you could discuss the current environment and previous appetite for growing exposure to upside/downside risk contracts next year. You know, some of the largest payers have discussed a better environment for value-based care contracts that are wins for all stakeholders. So I wanna check in whether you're seeing the same thing and how that's shaping your views over the next 12 to 18 months. Thanks. Yeah, thanks for the question, Jeff. So I think it's important to recognize, we today already do a fair bit of upside, downside and take downside risk. If you look at our MSSP book, 76% of our lives are in enhanced track with the maximum risk that CMS allows us. Thirty-eight plus percent of the commercial lives are in upside/downside track, and I think we're one of the very few companies that do commercial risk in that manner, in a very sophisticated manner. It's a very different value proposition to the payers. So if your questions mainly geared towards MA and capitated MA, we do, we do take downside risk in MA. We're just putting guardrails, given the current environment. I think we're just gonna continue to be thoughtful. I think you're seeing the payers adjust to obviously V28 utilization trends. Every single payer has commented on it, so I'm not gonna go into details. But I think that's a 2- or 3-year process, you know. We, you know, we've had this view on MA, which has been a little bit contrarian. We just don't think overnight the environment changes. You're gonna see the payers adjust the benefit designs going into 2025. We think V28 impact will continue through 2025 into 2026. And then we are downstream from the payers, so we are happy to take as much risk. The key for us, as we said last quarter, is we've got to be compensated to take that additional risk. You have to recognize that care delivery takes place in entities like ours. The payers, unless they're vertically integrated, don't, you know, the insurance arm does not provide care. So the doctors taking good care of patients across, you know, entire age cohorts, have to be compensated well to assume that risk. And I think, you know, we are fiduciaries from that perspective for our- on behalf of our physicians and our medical groups, to ensure that they are getting paid for doing all the good work. So I think as the payers adjust, hopefully, you know, we'll get into some normalization, and then, we're happy to dial up risk as long as we see a good risk reward, and we are well positioned to do so. The lives have not gone anywhere, the doctors are not going anywhere. We're just, you know, restructure some of the contracts from a financial perspective to protect unnecessary downside for the good work we're doing. Our next question comes from the line of Jack Slevin with Jefferies. Please go ahead. Hey, good morning. Thanks for taking the question. Wanted to ask a couple on MSSP. Maybe one, just as we're coming sort of to the end of the BD cycle for 2025, how that's shaping up? And then a couple, just to get your thoughts on some of the changes that CMS has announced, you know, this year and last year going forward, you know, specifically, sort of what benefits you could see from prepaid shared savings. And, you know, if the elimination of the negative regional adjustment opens up more BD avenues for you than what you thought about previously, or really anything else that stuck out of note to you on some of the adjustments they announced. Thanks. Yeah, thanks for the question, Jack. So, from a BD perspective, look, it's no different than any of the past years. When we add a primary care, you know, physician or a provider to our platform, the lives come in day one, and they get attributed into our MSSP program, even if we are adding providers during the course of the year. So, I think it's less governed by, you know, on, you know, a Jan one date, even though the program resets from a performance year perspective. But we continue to add lives, and you can see that in our reported numbers, you know, as they grow quarter over quarter. We do get a bump up in Q1, but then it normalizes. So I don't think from a sales perspective, it's any different. I do think back to some of the questions on BD, that we're taking advantage of the any dislocations in the industry and speaking to as many groups as we can ahead of the Jan 1 cycle, and this is a pretty strong sales quarters for us to kind of get ahead of those discussions. So but that's no different than past years. And then to the second question, look, I think we've been participants in MSSP with CMS for the past 7, 8 years. We've seen many changes over that period of time to the program. That is natural progression through different tracks of MSSP and then the enhanced track. So whether it is a new full risk version of MSSP, whether it's prepaying some of the dollars to do care management and such services, you know, we are ready for it. I think those are all positive changes. They make sure that adequate dollars are flowing to primary care community doctors to take good care of patients. You know, we saw that in the Maryland Primary Care Plus program, where, you know, three or four years ago, a version of that was implemented, and we did really well in that program. So we've performed in such programs over the years. So I think most of these changes, hopefully are beneficial to us. We'll obviously see the fine print if and when once they get implemented, but overall, with one of the largest MSSP books out there, and given our performance track record, I think we look forward to some of these changes, and we're excited about how the program progresses from here. Our next question comes from the line of David Larsen with BTIG. Please go ahead. Hi, can you talk a little bit about your discussions with health plans? I mean, obviously, all of the major plans seem to be under pressure with their MLRs increasing, V28 utilization. Are they introducing you to more, you know, physician practice partners in different states? And then part of that, can you talk a bit about how you measure outcomes on sort of a consistent basis and how you're feeding that information to the health plans? Are they looking at declines in inpatient utilization and costs on, like, a regular basis? Just any color there would be very helpful. Thanks, Parth. Yeah, thanks for the question, David. So on the first half, look, you know, we have a very differentiated relationship with the payers, whether it's the Blue plans or the national commercial payers. You know, they now understand our model much better than 7, 8 years ago. We've proven for them across our commercial book, across MSSP, across MA and then Medicaid, on what we can do and what we can achieve in a state once we get density. So I think the nature of the conversation is much broader for us. We are often speaking about commercial value-based contracts in addition to MA and Medicaid. So I think that broadens the conversation relative to some of the other payers players in the industry. I think, you know, what's changed fundamentally for us is if we enter a new state, oftentimes, we have case studies or good data from what we've achieved in our existing states today that we can take to the payer teams on a national basis, and they're willing to work with us in a new state that we might enter. So I think the path to getting into some of the value-based contracts, kudos to our healthcare economics team, you know, is much shorter, hopefully. Our ability to take risk is obviously market-specific, but in general, that timeframe is shorter as well as we get more confident. So I think we have good payer relationships across the board, and they're happy to work with us and enable us as an entity that keeps community low-cost community practices viable and save a lot of dollars for their members. And then I think on your second question, look, I mean, we get data across the board, across each of our different program types within value-based care, and it's not consistent data. So on the commercial book, it's very different versus MA versus Medicaid. That's a big reason why we take the level of risk we do take in each of these buckets. If you enter a new state and get an initial attribution, it's unlikely you enter with full risk mindset because you wanna establish a cadence with the physician practices, establish the best practices, start working with the payers. Lack of good data is a risk in the business. So if you're in the risk business like we are, you know, that's a risk you have to manage, and so we manage it very thoughtfully. Again, why we don't jump in with full risk day one. But overall, it'll, I mean, we continue to see utilization trends being elevated. I think the payers are adjusting the benefit designs. We just answered a question previously that adds to this. So, I think we continue to work with the payers and, you know, we'll see how it plays out over the next few quarters and keep evaluating our risk book. Our next question will come from the line of Richard Close with Canaccord Genuity. Please go ahead. Yeah, thanks for the questions. Congratulations on the quarter and guidance. Parth, I was wondering if maybe if you could provide an update on Ohio and North Carolina. Are those health system relationships performing in line with expectations now that we're, I guess, almost two years into them? And then can you talk about any variances in same-store growth across the different markets, or are they fairly similar? Yeah, I appreciate the question, Richard. So, on the first one, look, you know, both markets are progressing as planned. They never go in a straight line, but we have two really strong partners in Novant and OhioHealth. We're working very closely with them, and, you know, it's a long-term partnership. Our view is to develop those markets over the next 4, 5, 10 years, and build very large medical groups like we've done elsewhere. So, but we are pretty pleased with how it's going, and it's pretty much according to plan, and hope we can accelerate some of the flywheel. And that dovetails into your second question, which is, our business snowballs as we start getting density, because when we enter a state, pretty much nobody knows us. And once we get going, we establish an anchor practice or a partnership, and then as physicians join and start to perform better, that starts a very good flywheel, where a lot of our top-of-the-funnel, you know, sales referrals are coming from existing practices, and that leads to very high conversion rates. As we establish and start performing well, and there's empirical evidence, you know, we start to snowball. So you'll typically see the markets have some sort of an inverted S or some sort of an S-curve that it follows. You're seeing that in Mid-Atlantic and Georgia, where we continue to add despite being pretty dense. Despite being at, you know, our long-term margin profile targets, we continue to add a pretty good set of physicians every quarter. So, you know, we expect that to happen across all of our markets and... but no two progress in the same manner. Healthcare ecosystems are different, the payer dynamics are different, composition of the medical groups is different, so we just have to factor in all, all of that as we, as we progress these. Our next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead. Hi, guys. Thanks for taking the question. So it looks like MLR in the 2024 capitated book went from about 99% last quarter to 95% in 2Q. So hopefully you can just talk a little bit about the positive development in the margin on that book and how we should be thinking about MLR for the rest of the year in the 2024 capitated book. And then just wondering if you can address the prior year claims in 2Q. Thanks. Yeah, thanks for the question, Jess. So obviously, you know, that's a good positive indication for us. I mean, we restructured some of the MA contracts to protect our EBITDA margin, and the ones that remain, obviously, our hope was to continue to perform as well as we can, so you can see that in the results. David will comment on some of the prior period numbers impact on the numbers, but if you look at in-year, if we are doing capitation, we would like to, you know, save the payer money and therefore generate shared savings for our medical group, so that's our hope. And we'll only take risk, as we've said, if it's EBITDA and free cash flow accretive. So, you know, we'll see how the performance continues. You're seeing elevated utilization trends, et cetera, but we are working pretty diligently despite that, to continue to perform well. But, we'll see how it plays out, but so far we're pretty pleased. Yeah, and, and on the, the prior period development, we just got some updated payer data showing additional attributed lives for 2023. So although you can see the cost side of that, there was also an approximate revenue increase. That, so, from an overall perspective, there was sort of a de minimis impact from the prior year development to the bottom line. Our next question will come from the line of Ryan Daniels with William Blair. Please go ahead. ... Yeah, good morning, guys. Thank you for taking the question. Parth, maybe a different twist on the commercial risk question for you. A lot of the macro data indicates that employers are facing some of the highest cost trends they've seen in decades, and I'm curious if you've, in any of your more mature markets or hospital partnership markets, gone direct to employer to offer them value-based contracts for their workforce, given your kind of payer and patient-agnostic platform? Thanks. Yeah, I appreciate the question, Ryan. I think it's very underappreciated what we can do with the commercial book. You know, what we've done is, to answer it directly, we have a couple of pilots where we have gone directly to employers in markets where we have a lot of density. So the key here is to build density and have an adequate network that we can then offer directly to self-insured employers. So you can think about university towns, you can think about states where we have a very big density, and as we establish that, then we can go directly to self-insured employers. We also can work with health plans on the ASO book, where they're managing the network, but then we are a very preferred partner, where we can bring some sort of a narrow network product, and we've started to have some of those initial discussions with payers. But I think that is to come. I just don't think it's tenable for this level of inflation in the commercial book to persist before employers say they've got to do something about it. You're seeing some of the onsite models come up, as a way to at least have some presence on-site where employees can attend. But there are employers that are virtual, there are employers that are multi-state. I think we have a pretty unique model, which can offer the ability to do commercial risk for self-insured employers. So I think stay tuned. I think this will develop over the next few years, and we are really well positioned to pursue this. Our next question will come from the line of Michael Ha with Baird. Please go ahead. Hi, thank you. Just a quick clarification and then my real question. Understanding your- I understand you're expecting minimal year-to-year increases in shared savings. It looks like revenue came in a bit lighter than expected. It looks like typical Q2 cadence sees an increase sequentially. Is that mainly driven by, your MSSP lives dropping 6,000 sequentially? Is that the Delaware exit? And then my main question is... Yeah, Parth, you just mentioned, you're one of the few value-based care providers that take on commercial upside and downside risk. So I think you might have just answered my question, but is the secret sauce in managing those lives really, you know, building market density, having great networks, driving better sort of unit economics, or is there anything in the, like, clinical care, care management, approach that you need to do differently in order to manage commercial lives better? Yeah, I appreciate the question. So I'll let David go first on the first one, and I'll tackle the second one. Yeah. So for the first one, again, from a shared savings perspective, this was just kind of normal, normal quarter-to-quarter variability that we expect based on the timing over all of our contracts. So it's not MSSP, it's not one contract specifically, it's all of them. Again, you can see we've raised our guidance and have a diversified value-based care book, so, you know, if anything else, it shows our confidence in the future. And again, we have always remind people to look at this on an annual basis, so we're gonna get some quarterly fluctuations, but on an annual basis, it is very consistent, so. Yeah, we are performing pretty much according to plan, and that's reflected in the guidance. I think there's a reason we don't give quarterly guidance, because, you know, we're still not a really big player, and that you can have some of this quarterly variance, but overall, we feel really good, and that's reflected in the updated guidance. So on the second one, look, I think you have to start with the business model first. I think it's very underappreciated that we are actually building medical groups, which are very dense in the geographies we operate in, which are payer-agnostic for the entire patient population, entire specialty network that we are creating across the practice. I think it's pretty much Optum Care and us that do that at some scale on a multi-state basis. On top of that, we are deeply embedded in the workflows. So if you wanna do anything in commercial, it's very hard to do if you are not in the technology stack, in the RCM workflows, and influencing some of that. Otherwise, it's very difficult to take risk if you're just getting data from the payers on a 3, 6, 9-month lag basis, which is what happens with commercial from a downstream perspective. I think as we build that density, it allows us to start managing the population really well. We've demonstrated now that across many payers and many geographies, with close to three-quarters of a million lives, that we can get some care management fees and use those dollars to handhold some of these commercial patients much better across age cohorts, and I think that's also important. You can do commercial value within the pediatric population, the middle ages. You can do it just pre-Medicare age cohorts, call it 50+, and that, that's very valuable to the payers as those lives age in into Medicare Advantage or Medicare Shared Savings. So I think, the business model structure fundamentally differentiates us to allow us to do that. And as we've noted, getting care management fee and shared savings on top of fee-for-service management fees is a true differentiator. It really increases take-home pay for the providers. It's getting them their due share for the good work that they're doing with these lives. And I think it diversifies our book of business and our profitability and EBITDA profile and the stability in our results like you've seen. So if you look at the 7-year empirical data, from the time we issued our S-1, you know, we had cycles pre-COVID, during COVID, post-COVID, utilization down, utilization up, MA environment challenging, and you've seen every single metric, we progressed very consistently, on a very thoughtful basis and grown the business and grown all the way down to free cash flow. So I think, the commercial book plays a big part in that, in the stability of those results across cycles, and, and I think that truly differentiates us. Our next question comes from the line of Ryan Langston with TD Cowen. Please go ahead. Hi, good morning. Given, I guess, all the elevated trend commentary we've heard from some of the payers and even the providers, I guess, you know, combine that with the likelihood of probably broad MA benefit reductions and just general market dynamics, are you seeing any different behavior from your competitors in markets? Like maybe in terms of how aggressive or not aggressive they're going after capitated contracts or even competing with, you know, some of the physician affiliations you may be pursuing? Thanks. Yeah, look, I'm not gonna get into specific competitors, but generally, there's been a lot of disruption. We read the same news you all read. There are companies going bankrupt, companies facing challenging, you know, free cash flow situations and financing situations, as they've not managed the risk book really well. They're raising dilutive capital, so on and so forth. I think what's important to recognize is, sophisticated physician practices and community doctors have been around for a long time. They've been approached by private equity-backed entities, venture capital-backed entities, some of the new players, you know, for the last 20, 30 years, if you've been around. And, I think they see this differentiation much more acutely than the Street thinks they do. So I think, you can throw money in acquiring doctors' practices or signing them up, but ultimately, the business model and the performance matters. And I think we are seeing a lot of rationalization over the past couple of years. I think a few of the bigger entities had acquired assets, and they seem to be now shedding them or slowing them down. So I think any of this disruption naturally benefits a strong business model like ours, and that's reflective of some of the questions we just answered on the call earlier, where our flywheel continues to progress in existing states, good conversations in entering new states. We're just gonna continue to be very thoughtful and take advantage of the situation as we can. Our next question comes from the line of Daniel Grosslight with Citi. Please go ahead. Hey, guys. Thanks for taking the question, and congrats on a strong quarter here. I just wanted to go back on how you're thinking about new market entrants, not just this year, but over the next years. Your entrance into new entries has slowed from last year, but, you know, perhaps last year was a bit anomalous. But curious if there's been anything different in how you're thinking about new markets versus now, or perhaps if there's any macro change in the environment that shifts your preference to existing markets? Yeah, thanks for the question, Daniel. You were breaking up a little bit, but I think we got most of the question. So I don't think anything's fundamentally changed. Since the IPO, we've said our aim is to target 1-2 new states every year. These are obviously lumpy. You saw when we did that consistently, and then there was a period of 4-6 quarters where we added 5 new markets. I think BD deals happen when they happen. As we noted in our prepared remarks, our pipeline seems pretty robust. We're in 13 states. Our aspirations are to be a true national company, so you should expect us to keep adding. And you'll have periods where we add two or three or four pretty quickly, and then we add a little slowly, but that's just the nature of the nature of how we enter new markets on a thoughtful basis. Given our cash balance, as we noted earlier, on the call, I think we have the capital to pursue some of these opportunities more aggressively. But again, we're gonna be very thoughtful, do BD on a, you know, where it makes sense from an EBITDA and free cash flow perspective and building these large-scale medical groups. So I think, we're gonna keep pursuing these opportunities and keep doing what we've done consistently over the past few years. Our final question will come from the line of Adam Ron with Bank of America. Please go ahead. Hey, thanks for squeezing me in. So if I divide the fee-for-service Practice Collections by the number of implemented providers and come up with, like, my own billing per provider number, it seems like that has been somewhat flat over the past few quarters. And I'm just wondering, like, you know, I, I would think about that as should being up, like, 3%-5% with cost trend, plus you're trying to help the doctors recruit more patients. And so, like, is that a mix-shift dynamic? Like, are you recruiting maybe, like, lower, you know, revenue physician groups? And, like, over time, how should we think about that number? Thanks. Yeah, thanks for the question, Adam. So, yeah, I think that's an interesting metric, but, you know, we track that internally. It's not a big driver because, as you noted, it's mainly driven by new markets that come on when we don't have the full year collections number in for a provider if they come on mid-year. And then secondly, it's a mix between physicians and APPs or NPs. So obviously, APPs and NPs have much lower collections per provider versus physicians. And then there's also the specialty versus primary care, pediatrician, OBGYN mix, so that varies over time. But on a consistent basis, once a market is mature and more settled, you know, we see pretty consistent trends. We have annual inflators in our commercial contracts. We have pretty diversified books. So overall, you know, that metric should be fairly stable. But those are the factors that influence it, but we don't see any concern from that perspective. That will conclude our question-and-answer session. I'll turn the call back to management for any closing remarks. Thank you for joining us today. We appreciate your interest in the company and look forward to discussing our results next quarter. Ladies and gentlemen, that will conclude today's call. Thank you all for joining. You may now disconnect.