Now, everything else, that difference between say, $22 and $50, that is most certainly not a commodity and most certainly not low margin, right? So, the more we can – the more lives we acquire, the more higher margin ancillary products can be sold. The hook here in all of this is obviously paying claims and doing that very well, which we do, but the profitability really comes from all of the ancillary services. If you would kind of look three years into the future, I’m obviously expecting hundreds of thousands of lives on our platform, lives that we’re managing, essentially the health plan, meaning it’s not just paying claims, but we’re really following through on our mission, which is to get the employee populations that we serve a bit healthier.
And we’ve talked about our unique approach and doing that. And by doing that, we are delivering real cost savings and cost control for our employer clients. Remember that the $50 per employee per month that we’re charging, right, and including the ancillary services, that’s maybe about 5% of overall healthcare costs, right? And there’s a lot of discussion in the industry about this 5%, but that’s really the tail wagging the dog. What we should be talking about is the 95%, meaning the expenditures on medical claims, on drug claims, right, on getting those populations healthier because that 95% is huge. Not to mention, of course, the other piece that makes up the cost is the cost of reinsurance or stop loss insurance, right? But that’s all connected to the core driver, which is, how much did the actual healthcare cost, not the administration we’re a very small part of this overall pool, but how much did actual healthcare cost?
And we believe we have a very big role to play in controlling that cost, while providing healthier populations.
Allen Klee: That’s great. It’s very exciting. One last question. It’s maybe early to be asking this, but how do you think about just the potential pipeline or opportunities of M&A that might be out there, and when do you – well, I’ll just leave it at that. Thank you.
Edmundo Gonzalez: Yes, no, thank you for that. Yes. So, everyone should know that this market, the third party administrators, is fragmented. There is still a lot of market space to consolidate, especially in smaller TPAs. I’m talking with 3,000 to say 15,000 lives. We are looking. We continue to look. We’re obviously very focused on integrating this very kind of transformative deal with Maestro, but most certainly, we will be active there. The beauty of this whole strategy, I guess in rolling this up, really comes from the fact that we have a lot more to sell. So, one of our key items here is whether – can we acquire, let’s say 10,000 brand new employee lives at a fair price, but based on revenue that is say, $25, because that’s what TPAs charge, right?
That’s their admin fees. Can we do this? Absolutely, we can. But the second question is really, can we take that base to $50 because we have so much more product, right? That’s where the added value comes in. Now, obviously, we’re not paying for that block as if it’s $50, because that difference is ours, right? That’s what we bring to the table. But that’s really the trade here, Alan, and I think that’s what’s super exciting. So, definitely with everything we’re building, with the stabilization of operations, again, this was not a normal acquisition. This, obviously needed a lot of work, which we’re doing. It also came with a lot of cash, which is obviously very positive. This was definitely a one-off and very special opportunity, but I do expect other books of business here to be rolled up in the coming quarters and years for sure.
Allen Klee: Maybe just one other follow-up on that. I don’t know how much data points are publicly available, but just is there kind of a rule of thumb of multiples of revenue that TPAs get acquired for?
