Good day and thank you for standing by. Welcome to the InnovAge First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ryan Kubota, Director of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon and thank you all for joining the InnovAge 2024 Fiscal First Quarter Earnings Call. With me today is Patrick Blair, CEO, and Ben Adams, CFO. Dr. Rich Feifer, Chief Medical Officer, will also be joining the Q&A portion of this call. Today, after the market close, we issued an earnings press release containing detailed information on our fiscal first quarter results. You may access the release on the Investor Relations section of our company website, innovage.com. For those listening to the rebroadcast of this call, we remind you that the remarks made herein are as of today, Tuesday, November 5, 2024, and have not been updated subsequent to this call. During our call, we will refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings press release posted on our website. We will also be making forward-looking statements, including statements related to our 2025 fiscal year projections, future growth prospects, and growth strategy, our clinical and operational initiatives, Medicare rate increases, executive leadership transition, the status of current and future regulatory actions, and other expectations. Listeners are cautioned that all of our forward-looking statements involve certain assumptions and are inherently subject to risks and uncertainties that can cause our actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our Form 10-K annual report for fiscal year 2024 and any subsequent reports filed with the SEC, including our most recent quarterly report on Form 10-Q. After the completion of our prepared remarks, we will open the call for questions. I will now turn the call over to our CEO, Patrick Blair. Patrick?

Thank you, Ryan. And good afternoon, everyone. I want to begin by expressing my continued appreciation to our colleagues, participants, government partners, and the investor community who support InnovAge. Today, I will discuss several topics: financial results for our first fiscal quarter, an update on our organic growth and drivers, a California regulatory compliance update, recent progress in our clinical and operational value initiatives, and affirmation of our annual targets. Let me start with our first quarter performance. Earlier today, we reported total revenues of $205.1 million, a center level contribution margin of $34.5 million, and adjusted EBITDA of $6.5 million for the first fiscal quarter. When compared to the first quarter of fiscal 2024, revenues have increased by approximately 12% from $182.5 million and adjusted EBITDA has increased by approximately 500% from adjusted EBITDA of $1.3 million. When you compare to the fourth quarter of fiscal 2024, revenues increased by approximately 3% and adjusted EBITDA increased by approximately 25%. Census increased to approximately 7,210, which represents a quarter-over-quarter improvement of approximately 3%. Building on our strong fiscal year 2024 performance, our first quarter reflects continued momentum and execution of our strategy to deliver high-quality care with strong stewardship of internal and external costs while continuing to enhance our margins. On the leadership front, we welcome Michael Scarbrough this week as our new President and Chief Operating Officer. Michael comes with three decades of experience building, scaling, and managing government healthcare programs. Most recently, he served as the CEO of Optum at Home following the acquisition of Prospero, a physician-led home-based medical care model that Michael co-founded and sold to UnitedHealthcare in 2022. In approximately three years, Prospero grew to serve 50,000 members in 28 states. Prior to that, Michael served as a senior vice president at both Anthem and AmeriGroup. Given the uniqueness of PACE as both a provider and payer, we're thrilled to have a leader with Michael's experience and track record join the company at this pivotal inflection point. At the same time, Chris Bent will be leaving the organization. I want to personally thank Chris as a partner and friend for her leadership. She will be missed. Staying a moment longer on the people who deliver on InnovAge's mission every day, I'm excited to share that our recent employee satisfaction and engagement survey demonstrated strong quarter-over-quarter performance with an Employee Engagement Score of 79%. Our recently completed Net Promoter Score survey, which measures participant satisfaction, loyalty, and enthusiasm, reached a new high of 56, well above the comparable survey score of 50 in the first quarter of fiscal 2024. Fostering a highly engaged workforce is a key priority for our company. When employees are engaged and invested in the company's success, they are more motivated to deliver exceptional service and go the extra mile for our participants. This translates to higher participant loyalty and stronger word-of-mouth referrals that drive incremental growth. Before turning to growth, I do want to take a moment to recognize the tremendous efforts of our teams in Tampa and Orlando, who went above and beyond to support our employees, participants, and local communities during the recent hurricanes. Despite facing significant personal and professional disruptions, our teams demonstrated remarkable resilience, teamwork, and a steadfast commitment to our mission. They worked tirelessly to ensure our facilities remained open, participant care was uninterrupted, and critical resources were provided to those in need. What makes this response even more remarkable is that the teams are simultaneously navigating the complexities of newly opened centers. To demonstrate such resilience, managing both a natural disaster and the day-to-day challenges of scaling operations speaks volumes about their commitment and capabilities. Their actions embodied our core values and I'm incredibly proud of how they represented our company during this difficult time. On the organic front, we're off to a solid start in fiscal 2025. Census increased to approximately 7,210, which represents approximately 10% year-over-year growth compared to the first quarter of fiscal 2024. Our sales and marketing teams have made significant strides in their ability to identify and engage new prospective participants. By leveraging advanced market data and analytics, they have developed a more nuanced understanding of our target customer segments and their evolving pain points and preferences. This intelligence has allowed our teams to craft highly personalized, channel-specific messaging that resonates more effectively with potential leads. For example, our digital marketing campaigns now leverage sophisticated audience targeting and dynamic creative to serve prospective customers with ads tailored to their specific needs and behaviors. Similarly, our enrollment representatives are armed with deeper insights to enable them to have more meaningful consultative conversations with prospects. The results of these data-driven strategies are evident in our Q1 performance, which saw a 7% improvement in qualified lead volume compared to the same period last year. Additionally, our inside sales team is now contributing over 20% of our enrollments, which is more than double where it was a year ago. This increased pipeline provides us with greater visibility into future revenue potential and strengthens our ability to efficiently convert prospects into loyal and long-term participants. Lastly, you'll recall previous discussions regarding state processing delays in some of our key markets. I'm pleased to report that we're now beginning to see small but steady signs of improvement in application processing times, thanks to our continued collaboration with state agencies to reduce bottlenecks that have contributed to delayed enrollment and access to paid services. As we enter the Medicare annual enrollment period in the second quarter, we typically experience some seasonal variations in enrollment patterns. However, we are more optimistic about our competitive position this year, particularly given the broader financial pressures affecting the Medicare Advantage sector. These factors position us for stronger comparative performance relative to this period last year. Regarding regulatory performance, as disclosed in our 10-Q, CMS has closed its audit process for Sacramento while the state audit processes remain open in Sacramento and San Bernardino. We intend to provide updates as they become available. As such, we have no updates regarding the timeline to open the Bakersfield and Downey locations. On the operational front, we continue to systematically address medical costs, labor efficiency, administrative expenses, and risk score accuracy through our dual-track approach of clinical value initiatives, CVIs, and operational value initiatives, OVIs. Through the first quarter, we're pleased with our progress. Importantly, we look at these as a portfolio, as some initiatives produce more value than we expect, and some produce less value or delayed value. Ultimately, we depend on these initiatives to counteract the natural inflation in medical expenses and to aid rebuilding profitability. With our first group of CDIs now in place for over a year, we believe they are contributing to improvement in our center level margins. And like our CVIs, we expect OVIs to contribute incremental margin lift over time. External provider cost PMPM increased by 1.6% on a sequential quarter-over-quarter basis, which is a commendable result given the prevailing environment of higher medical service utilization we're observing more broadly in other programs serving our ill seniors. Our inpatient admissions rate decreased to 5.1%, below where we ended fiscal year 2024 at 5.5%, and we're pleased that our short-stay nursing utilization of 1.8% continues to remain at our target. And while we were encouraged by these results, managing utilization requires constant vigilance and is subject to some volatility on a quarterly basis. Our clinical and operational teams are driving more consistency across our centers in the areas of utilization management, high-acuity care management, re-contracting high-cost external providers, ancillary services network management, claims payment integrity, and chronic condition documentation. We are also looking at pharmacy costs. Last fiscal year, we spent $88 million on net pharmacy costs, and it is growing proportionally with our census. We conducted a routine market pricing check last year, and we're taking a close look at the options available in the market, as well as how we're organized to efficiently and effectively deliver these critical services to our participants. We continue to pursue opportunities to improve the participant experience while also reducing costs in this area. We also continue to invest in tools and technologies to enable our clinicians to remain focused on participant care and practice at the top of their license. Last fiscal year, we piloted a new e-consults initiative that enables our primary care physicians to get a specialist review within 24 hours and can often prevent the need for an in-person specialist visit, which can sometimes take months to schedule and complete. After a successful pilot, we're scaling the solution nationally. We believe this is essential for further empowering our physicians, who due to their extensive geriatric training, manage a significant amount of routine specialty care that would otherwise be referred to specialists by other primary care providers. Lastly, we remain committed to strong administrative cost controls in our centers and in corporate services. We continue to push ourselves to find new ways to be more efficient and productive, and we're beginning to see fixed cost leveraging translate into margin. As we conclude the first quarter, our strategic initiatives are delivering measurable results across key metrics. Based on our performance and leading indicators, we are reaffirming our annual guidance. Our disciplined approach to enrollment growth, combined with robust cost management and enhanced quality and compliance programs, has yielded tangible improvements in organizational effectiveness, participant satisfaction scores, and financial performance. At our core, we remain focused on operational excellence in our centers, the foundation of our business, where continuous incremental improvements drive sustainable long-term value for our participants and stakeholders. With that, I'll turn it over to Ben to walk through our quarterly financial performance.

Thank you, Patrick. Today, I will provide some highlights from our first quarter fiscal year 2025 financial performance and insight into some of the trends we are seeing in the current quarter. Starting with census, we served approximately 7,210 participants across 20 centers as of September 30, 2024, which represents annual growth of 9.4% and sequential quarter growth of 2.7%. We reported 21,380 member months in the first quarter, an increase of approximately 9.4% compared to the first quarter of fiscal year 2024 and 2.8% over the fourth quarter, representing a strong start to fiscal year 2025. Total revenues of $205.1 million increased 12.4% compared to $182.5 million in the first quarter of fiscal year 2024, primarily driven by an increase in member months and capitation rates. The increase in capitation rates was primarily driven by higher Medicaid rates in connection with our annual state contract increases and higher Medicare rates as a result of increased risk scores and county rates. Compared to the fourth quarter, total revenues increased 2.9%, primarily due to the sequential increase in member months as rates were flat. Rate activity included an annual increase in Medicaid capitation rates effective July 1. This was offset by a Medicare Part C risk or true-up recorded in the fourth quarter, coupled with a change to our reporting methodology addressed on the last call, where effective July 1st, a portion of what was recorded as bad debt in previous years is now recorded as a revenue reserve or contra revenue. We incurred $107.2 million of external provider costs during the first quarter of fiscal 2025, an increase of approximately 7.9% compared to the first quarter of fiscal year 2024. The increase was primarily driven by an increase in member months, partially offset by a decrease in cost per participant. The decrease in cost per participant was primarily driven by a decrease in permanent nursing facility utilization and a decrease in external hospice care associated with the transition of this function to internal clinical resources. This was partially offset by an increase in pharmacy costs and an annual increase in assisted living and permanent nursing facility unit costs. Compared to the fourth quarter, external provider costs increased 4.4%. The sequential increase was primarily driven by the increase in member months and an increase in cost per participant. The increase in cost per participant was due to pharmacy expense timing coupled with an increase in assisted living and nursing facility unit costs, partially offset by lower inpatient utilization and costs per admit. The cost of care excluding depreciation and amortization was $63.4 million, an increase of 14.7% compared to the first quarter of fiscal year 2024. The increase was primarily due to an increase in member months coupled with an increase in cost per participant. The increase in cost per participant was primarily driven by higher salaries, wages, and benefits associated with increased headcount and higher wages, increased software license fees, an increase in contract provider expense in California associated with growth, contract provider recruiting, and de novo occupancy and administrative expenses associated with opening centers in Florida and the Concerto acquisition. These costs were partially offset by a reduction in contract transportation costs associated with the transition of services to internal transportation resources. Cost of care, excluding depreciation and amortization, increased 5.4% compared to the fourth quarter. The increase was due to higher salaries, wages, and benefits costs associated with an increase in member months, as well as recruiting costs in California for primary care physicians. Center level contribution margin, which we define as total revenues less external provider costs and cost of care, excluding depreciation and amortization, which includes all medical and pharmacy costs, was $34.5 million for the quarter compared to $27.9 million for the first quarter of fiscal year 2024. As a percentage of revenue, center level contribution margin of 16.8% increased by approximately 1.5% compared to 15.3% in the first quarter of fiscal year 2024. Sales and marketing expenses of approximately $6.5 million increased 20.7% compared to the first quarter of fiscal year 2024, primarily due to increased headcount to support growth. Sales and marketing expenses decreased slightly by approximately 70 basis points compared to the fourth quarter. Corporate, general and administrative expenses of $27.5 million decreased 4.9% compared to the first quarter of fiscal year 2024. The decrease was primarily due to a reduction in insurance expense, lower consulting expense associated with improving organizational capabilities, including the transition to a new electronic medical record system and a reduction in consulting costs associated with SOX compliance and internal audit. These costs were partially offset by an increase in employee compensation and benefits as a result of greater headcount to support compliance and bolster organizational capabilities. Corporate, general and administrative expenses decreased by approximately 6.9% compared to the fourth quarter. The decrease was primarily due to the change to our reporting methodology we announced last quarter coupled with lower third-party legal expenses. Effective July 1st, a portion of what was previously recorded as bad debt expense is now recorded as a revenue reserve or contra revenue. This decrease was partially offset by higher salaries, wages, and benefits associated with higher wage rates and an increase in contract services. Net loss was $5.7 million compared to net loss of $11 million in the first quarter of fiscal year 2024. We reported a net loss per share of $0.04 on both a basic and diluted basis, and our weighted average share count was approximately 136 million shares for the quarter on both a basic and fully diluted basis. Adjusted EBITDA, calculated per our revised methodology previously described, was $6.5 million for the quarter compared to $1.3 million in the first quarter of fiscal 2024. Our adjusted EBITDA margin was 3.2% for the quarter compared to 0.7% in the first quarter of fiscal year 2024. We do not add back any losses incurred in connection with our de novo centers in the calculation of adjusted EBITDA. De novo center losses are defined as net losses related to pre-opening and startup ramp through the first 24 months of de novo operations. For the first quarter, de novo losses were $4.1 million and primarily related to our Bakersfield and Crenshaw centers that we acquired in fiscal 2024 and our Tampa and Orlando centers in Florida. This compares to $1.6 million of de novo losses in the first quarter of fiscal 2024 and $4.2 million of de novo losses in the fourth quarter. Turning to our balance sheet, we ended the quarter with $39 million in cash and cash equivalents plus $46.7 million in short-term investments. We had $81.3 million in total debt on the balance sheet, representing debt under our senior secured term loan, convertible term loan, and finance leases. For the first quarter, we recorded negative cash flow from operations of $7.5 million and had $2.2 million of capital expenditures. We repurchased approximately 801,300 shares of our common stock for an aggregate of approximately $4.8 million under the company's share repurchase plan during the quarter. In September, our board increased the size of our share repurchase program by an additional $2.5 million. Our first quarter performance was in line with our expectations, and thus we are reaffirming our fiscal 2025 guidance, which we laid out last quarter. Based on the information as of today, we expect our ending census for fiscal year 2025 to be between 7,300 and 7,750 participants, and member months to be in the range of 86,000 to 89,000. We are projecting total revenue in the range of $815 million to $865 million, and adjusted EBITDA in the range of $24 million to $31 million. Finally, we anticipate that de novo losses for fiscal 2025 will be in the $18 million to $20 million range. In closing, we are off to a solid start to the year, and we believe we are continuing to improve and strengthen the business every quarter. We remain focused on day-to-day operational execution and are mindful that our participants are at the core of our work. We believe that the comprehensive and personalized model of care PACE requires positions us to provide a level of service that is unmatched in traditional Medicare Advantage and enables us to have greater visibility and consistency in medical cost trends despite the level of frailty in the population we serve.

Our first question comes from Jamie Perse of Goldman Sachs.

Patrick, maybe you can start just giving us a little bit of color on what you're seeing in some of the different states with respect to enrollment. Colorado and Sacramento, in particular, would be interested to hear what the enrollment trends look like in those markets, how much you're still being held back by some of the enrollment delays that you discussed. And then more broadly in the rest of your markets and new states, how are the Florida markets contributing to that? Just some color on enrollment trends by state would be great.

I would start with, we're pleased with the momentum we're seeing in every market. When it comes to the demand for our services, we're feeling very good about the demand. As you mentioned, we have had a handful of situations in our states where we're encountering some bottlenecks as it relates to enrollment processing. Oftentimes, that's related to getting a level of care assessment completed before the enrollment can kind of move through the process. That's typically the primary issue that we deal with. As I said in the remarks, I think where we are starting to see some progress, we're working with the states and the state’s third-party partners very closely, and we're starting to see small signs of reduced backlog and faster throughput. That's true in each of the states. So you mentioned Colorado and that is a market we've been working closely with the state and we've started to see some signs of improvement. California, same situation, slightly different underlying issues, but similar impact. And then in Florida, the same, and some of the maybe the channels in Florida are more linked to some of the disaster activities we've been facing down there. But I think overall, we're seeing signs of improvement. I don't think we have seen the consistency that we want to see before we can claim to have this in our rearview mirror. So there's still work to do. I think we've got to string together a couple of quarters of consistent progress in each state, and then we'll feel more like we're kind of back to a run rate. But even with the setbacks, the demand is strong, and we're still pleased with the progress that we're making from an enrollment perspective. I think that's the key message, is that we're staying vigilant and, despite the delays, we're turning around net enrollment numbers that I think meet our expectations.

Maybe two for Ben on the P&L. I'll sneak them in together here. First, just what's your assessment on where we are in the rebalancing of the risk pool across the patients that you serve, and as that progresses, how should we think about that impacting margins? And then secondly, just on the de novo losses in the two Florida facilities. What's your latest perspective on just timing to profitability, how those should progress over the course of the year? And then obviously, the California ones are a little bit behind, and I'd love any color on the breakdown between the California, which I think are going to take a little bit more time given the audit situation, versus the Florida ones that can probably ramp some this year.

On the first question about sort of the mix in the portfolio, I would say that's something that's going to change gradually over time. So while we are seeing some mixed shift in the right direction, you probably won't see that really begin to ripple through the income statement for a bit longer, but we are making progress on that. The changes are sort of subtle period to period. When we think about the de novo centers, I guess what I would probably say just in general is when you think about Florida, they're new, they've been up and running for a relatively short period of time. They're tracking kind of as we thought they were going to track, maybe a little bit slower than we'd originally hoped, but certainly in line with what we thought when we put together our internal budgets. So I think we feel pretty good about what's going on in Florida. I think it was a little bit encouraging that we didn't see a big disruption to our business when the hurricane rolled through Tampa. And so, even though the center was relatively young, it seemed to have made it through there okay. So I think we're feeling pretty good about how those businesses are progressing.

Jamie, I might just punctuate, I think he said it accurately that we're probably in the gradual stages of impact on risk because we enrolled maybe 200 net in Q1 and on a 7,000 member book of business, plus maybe what we grew net last year. It's still early for net new growth to have a material impact on mix. I think the progress we're seeing from a medical cost perspective, I think, is very much expected and a testament to the good work our clinical operation teams are doing to manage medical cost trends, to make sure our CVIs are beginning to take shape and have the impact that we anticipated. And the team is just doing a much better job at, I think, managing controllable utilization. And we've got a lot of different initiatives focused on that, and we're feeling really good about the impact we're having, especially in this inflationary environment that I think others are feeling.

And our next question will be coming from Jared Haase of William Blair.

Maybe just another one on the guidance here. Appreciate you affirming the outlook. So I'm going to give some additional color just on how we should be thinking about the assumptions for the balance of the year. And I'm thinking specifically about the low end of the census guidance, which I think would reflect very little sequential growth from Q1 over the rest of the year. And obviously, I think you typically run maybe 2% to 3% would be more normalized. So how should we think about that? Is that sort of more conservatism or anything else you call out relative to the assumptions there?

I would say, look, I think we're happy with the guidance where it stands right now. When you think about the top line progression for our business, the way I tend to think about it is the first and second quarters have pretty good growth. The third quarter is sort of seasonally slow growth because of some of the competitive factors we've talked about before. And the fourth quarter is pretty good. We expect essentially sort of linear progression over the course of the year, with, albeit, slightly slower growth in the third quarter. But I think the progression that we have this year will be hopefully more indicative of what a normal progression looks like for the business and a little bit more consistent than what we had in the prior year.

Obviously, the financial impact of those compounding member months will see that pull through in the back half of the year. So the financial impact is a little weighted towards the end of the year.

Maybe just a follow-up from the prepared remarks. Nice to hear the improvement both in employee and engagement, employee and member engagement surveys and the satisfaction there. I was just hoping to hear a little bit more about what factors you think have been, I guess, the most impactful in driving that, whether that's on the employee side or on the member side. Obviously, there's been a lot of investments in workflows and operations and different technology tools and things like that, but just curious if there's anything that you call out specifically in terms of the improvement there.

I think it starts with ensuring every employee in the company has a clear view of what we're trying to accomplish and what's most important to the organization. I think I've talked about the notion of our five-pillar performance model before, where we start with people, service, quality, growth, and financials. And it's in that order for a reason. We're a big believer that, especially in this healthcare business, if you can attract and engage really caring people, they're going to deliver great service and great quality. If you do those three things right, the company is going to grow heavily by word of mouth. We're a big believer in just the core unit economics of PACE. And so, financially, you should do well also. I think we put a lot of effort into making sure all of our employees feel heard, they feel engaged, they understand what the company's objectives are at a local level as well as the enterprise level. We do our very best to recognize employees that are going above and beyond. I think some of my remarks around the Florida centers, just the miraculous job they've done to keep the business open, serving patients while at the same time serving their community. We have that happening every day in every center. I think all of our employees just have a deep passion for the work that they do and for the impact that we can have. We're quick to highlight these heroic efforts. We're quick to recognize and share that across the company. I think the organization really wants to grow and serve more people. I think that's a big driver to keeping people engaged. And then from a participant satisfaction perspective, we use NPS as our primary sort of proxy to get at that loyalty and enthusiasm. We're just seeing it go up every quarter. We're seeing caregiver satisfaction go up every quarter. So I think we just got a fantastic employee base who really cares about our patients and participants and feels recognized and rewarded for their work. And it's really showing in those. But I really appreciate you asking that question because it sometimes gets lost in an earnings call, but it's at the heart of what we believe will impact our financials is a great workforce.

Our next question will be coming from Matt Gilmore of KeyBanc.

Patrick had mentioned the portfolio of clinical value initiatives and operational value initiatives with some progressing faster, some progressing slower, but it sounds like good overall progress. Can you just give us the flavors for the things that are progressing faster and having an impact versus the things that will have an impact in future periods?

I think that's maybe a great one for Dr. Feifer to take. He spends every waking moment on providing leadership to the teams that are executing the CVIs. And maybe I'll have Ben say a little bit about the OVIs.

Many of us spend our waking hours on this. The CVIs that are progressing faster are the ones that you would expect because they're reflected directly in some of the utilization results that Ben reviewed earlier during the prepared remarks. These are the CVIs that focused on inpatient reduction and the focus on short stay, skilled nursing facility utilization, finding other better ways to provide care for people, safer ways to provide care, in many cases at a lower cost. So we have a lot of work around that. They've been remarkably successful this year, in some cases, surpassing expectations. Areas where we're challenged on the other side are getting all of our participants to call us for care before seeking care in an emergency room when they don't need to be in an emergency room and they don't need to be admitted. So we continue to work on that, but the portfolio itself is right now very successful and we continue to look for opportunities to add to our CVIs during the year. For example, right now, we're considering one around dental care, which is not something that's often in the spotlight. But every opportunity is worth considering and adding to the portfolio.

On the OVIs, I guess I would say this is a new initiative that we undertook this year to sort of mimic the success that we had on the CVI side. A lot of these are things that are really focused on just improving the core operations of the business. So these are focused on things like improving our fleet because we actually have a large fleet of vehicles. That's an important part of our business, making sure we're optimized from a fleet perspective. Focusing on food service contracts and ensuring we cater to the needs of our participants and our centers to make sure we're getting them the best quality nourishment at the most reasonable cost, and then other things around contact centers and scheduling. So there's a whole portfolio of them. They're relatively new initiatives, and I think we're sort of one quarter into it. I think we feel like they're tracking pretty well. A lot of these things tend to be back-end loaded in the back of the year as the impact becomes more significant as you flow through the back of the year. So something we're encouraged about, we're watching carefully, and we think it's going to have a meaningful impact on the business.

I might just add on to what Ben said. I just mentioned that Michael Scarbrough, as you know, has joined the company as the president and chief operating officer. There's no doubt he's a leader who's got a proven track record of scaling large cost containment initiatives, whether they relate to medical costs or they relate to operating costs. He's really going to bring a fresh perspective to both the CVIs and the OVIs, and I think will position us well to scale very efficiently and effectively as we go forward and make sure that we've got the right mix of services at the right unit cost and delivering the right value. I'm really excited about the impact that he's going to have in that regard.

As a follow-up on the EMR implementation and the opportunity to improve documentation and accurately capture risk scoring, can you just update us where you are on that journey? And then with your business, is there an offset in terms of the activity you're doing now that impacts future periods like it does in MA and just sort of what that cadence looks like?

We are well on our way in leveraging EPIC, leveraging our electronic health record to optimize and improve our chronic condition recapture rate. The chronic conditions that year over year need to be recoded in order to ensure an appropriate risk score for Medicare. We have seen chronic condition recapture rates improve period over period, and that's in a large part because we have alerts that are being triggered within the electronic health record at the point of care for our providers, asking them whether or not a condition is still accurate if it hadn't been coded in the prior year to ensure that they consider coding it again if it's appropriate. We have a number of other initiatives also to address risk adjustment appropriately, but EPIC is being leveraged in a very meaningful way in that regard. There still are future opportunities for data mining, for example, for un-coded information, free text, but right now we're already seeing a lot of the value coming out of that.

Well, I might just add to what Rich said by saying, in addition, that the importance of chronic condition capture is not only important for revenue accuracy, it also becomes a really important input to our quality programs, to our care management programs, and our high-risk cost management programs. In some ways, it allows us to better segment our population and tailor our interventions to meet this. EPIC's really, I think, giving us a multifaceted kind of positive impact in this regard because, yes, it helps to ensure we're paid appropriately for the risk that we bear, but it's also feeding our clinical programs and helping us target populations and individuals and conditions where we can have the greatest impact on their lives. I think this is just one area where EPIC has the potential to bring a lot of value to the company. Again, I'll just refer back to one of Michael's key objectives as he joins the company is to really look at EPIC at sort of this phase that we're in and ensure we're getting the most from our investment and helping our employees operate more efficiently, helping make their jobs easier from a documentation perspective, and making sure that everything's being documented appropriately for our compliance audits. It really is a multifaceted system that's going to help us in a number of ways. We're excited about the potential.

Thank you. This does conclude today's Q&A session. And thank you for all of your questions. You may all now disconnect. Thank you for participating in today's conference call.