Whit Mayo: Hey, thanks. Parth, you guys acquired that ACO in Connecticut a few months ago, and I’m just wondering, is that a strategy that you guys think you might plan on exploring further? I mean, I guess the question is, are you finding more inroads conversations after that transaction, just how willing you are to maybe put capital to work to move into new markets? I mean, you’ll probably have over $400 million of cash by year-end. So, just kind of curious as you think about capital deployment and growth, how willing you are to maybe pursue that as a strategy.
Parth Mehrotra: Yes, thanks for the question, Whit. So, the uniqueness of our business model is, as you well know, we are forming medical groups, risk or ACO entities, and then a full management services entity in every State. It’s a very integrated type model across fee-for-service and value-based care. The way we enter each market or grow a market after we enter, can be acquiring either of those three types of entities. And we’ve done that in the past, as you’ve seen with different entries in different States with – and putting capital, small amounts of capital to work. I think you should continue to expect that we’ll keep doing that. Entering Washington is another example. We bought the medical group entity there. And I think we’re on the lookout for more such opportunities to either enter into new States or expand and increase our density in existing States.
And I think that’s a great use of capital for us to keep growing our business. And so, I think you should continue to expect us to do that in the future.
Operator: Thank you. Our next question comes from Gary Taylor from Cowen.
Ryan Langston: Hi, good morning. This is Ryan Langston in for Gary Taylor. It looks like AR jumped up quite a bit sequentially into the second quarter. DSO looks like it’s up about 10 days, but this is pretty similar to what we saw last year. Can you just remind us what is driving this? And also, it looks like on the cashflow statement there was a $5 million repurchase of NCI. Can you just maybe give us some context and what that refers to? Thanks.
David Mountcastle: Yes. Hey, this is David. Yes, on the accounts receivable, so it was partially related to our new capitation-related accruals in 2023. We got some new contracts that increased revenue. But remember, on our value-based care side of the business, with the typical one-year annual payment in Q3 or Q4 of each year, AR bills in Q1 and Q2 each year. So, unlike fee-for-service that you get sort of more of a normal DSO churn for the value-based care stuff, it grows throughout the year, and then we get a payment in Q3, Q4, AR goes back down, and then it continues to grow back from there. So, and again, as you mentioned very similar, same pattern as our past couple of years. So, we expect this, and this is what we expect. On the $5 million on the cash flow, we purchased the remaining minority stake in an MSO that we own the majority stake in. So, it was just a small additional investment to own 100% of an MSO in one of our markets.
Operator: Thank you. Our next question comes from Sandy Draper from Guggenheim Partners.
Sandy Draper: Thanks very much. A lot of the questions have been asked and answered. Maybe just a quick housekeeping then my actual question. I think, David, you mentioned, you gave the percentages of fee-for-service and value-based care as a percentage of Practice Collections. If that’s true, could you just repeat that? And I guess my broader question, I know you guys don’t specifically comment on capitated margins and where you are, but just in light of all – what’s out there, and it’s sort of been talked about how you’re progressing in terms of, you feel like you’re progressing on your capitated revenue in terms of the margins, and again, how you think about the long-term trajectory about where eventual scale is there and targeted margins. Thanks.
David Mountcastle: Oh, okay. Yes. So, value-based care represents 37% of GAAP revenue in 2023 compared to 29.6% and Q2 of 2022, and Practice Collections value-based care was 24.9% in Q3 2023 versus 21.8% in Q2 2022.
Parth Mehrotra: Yes. And Sandy, appreciate the question. On the capitated book, look, our view is, you take increased level of risk if there’s significant earnings opportunity for taking that risk and us getting compensated and our doctors getting compensated. So, I think with close to 150,000 MA lives, the embedded opportunity is pretty huge for us to dial up risk. We are just taking risk on – downside risk on about 23% of those lives today. Over time, you should expect to see that number increase. Obviously, we try to do this very prudently, working with our payers, understanding where we’ve got the right density, making sure our providers are aligned. They share the risk with us upside and downside. We don’t backstop risk, as you know, and we think that’s the right long-term model to get all three entities aligned in such an environment.
