Marlow Hernandez: Yeah, let me take that, Andrew. So, the PMPM surprises negatively, because of less revenue per new patients than we had historically seen in new and existing markets. We also had more non-risk patients. And as a result of those factors, which Brian described, we’re taking a more cautious outlook into this year. What also compounded the issue was the rapid rise in inflations and interest rates, which €“ as a result of us serving more patients than anticipated in total, which also was a positive surprise, but we have to definitely make the investments that our patients expect from us in our differentiated care delivery. But then, you have the inflationary type cost and the higher interest expense that we have to burn.
We moved decisively to make operating adjustments that on the last call, I described that at a high level and we have now quantified for you taken out $70 million in SG&A through the negotiation with vendors and other operating efficiencies. We also moved to reduce headcount aligning it with growth, we renegotiated payor agreements, affiliate agreements, we optimized our affiliate network that improve the underwriting margin, we have also reduced our capital expenditures, and that’s a $35 million of year-over-year type of savings. So when you put all that together, combined with continued growth, great momentum in the business and the 3 items I described for 2023 is why I’m so confident and so excited about this year. So we had a growth that outstretched our liquidity to support it.
Therefore, we capitalize the business of more roughly double of the liquidity required for this year’s growth and operations. We continue to optimize our operations. And there’s further work to do there to gain efficiency. And, three, we’re going to fill existing capacity, which is significant, and leverage the scale and density that we have. So, I’d like to focus on the scarcity of primary care and the long-term fundamentals, and this year is going to start to unlock the value that we have intrinsically built over the last couple of years in particular.
Andrew Mok: Okay. And lastly, maybe can you provide more detail on the goodwill impairment charge of $323 million, there wasn’t a lot of detail or disclosure around that. Which assets specifically to write-down relate to? Thanks.
Brian Koppy: Yeah, I mean, I would say, we take a broad look at the overall organization. But the way to think about it is, the test is a fair value test and is heavily determined by stock price. Our stock price unfortunately declined from September when we would normally do this to December required an additional goodwill test to be formed at the end of the year. So, the $323 million just essentially represents the excess of that carrying value of the fair value, but it’s really a broad look of the enterprise.
Andrew Mok: But doesn’t it relate to the excess of the fair value of assets that you purchased?
Brian Koppy: Yeah. That’s correct. So, you kind of take a broad look at all of them.
Andrew Mok: Okay. Nothing specifically that you point out what’s driving the write-down?
Brian Koppy: No.
Andrew Mok: Okay. Thanks.
