Oak Street Health saw its revenue jump 57% to $218 million in the third quarter as its patient volumes grow despite the turbulent financial environment facing physician practices.
The company reported quarterly revenue of $139 million during the same period a year ago. The company's third-quarter revenue beat Wall Street estimates of $213 million during its first quarter as a public company.
The tech-enabled, value-based care primary care start-up specifically targets Medicare-eligible patients, particularly those in underserved communities. The company went public in August, raising $328 million. At its IPO, Oak Street Health's shares began trading at $21. The company's shares opened trading Tuesday at $55.
The company has yet to be profitable and reported that its losses deepened during the quarter to $59 million, compared to a loss of $33 million in the third quarter of 2019. Net share per share came to a loss of 15 cents.
Oak Street now operates 67 centers serving around 90,000 patients with about 66% of those patients are under capitation agreements.
Oak Street Health continues to expand its national footprint and opened 13 new health centers during the third quarter, Oak Street Health chief executive officer Mike Pykosz said during the company's third-quarter earnings call Tuesday morning.
In October, the company opened its first New York City clinic in Brooklyn.
Oak Street Health announced in September a collaboration with Walmart to bring its clinics to three Walmart supercenters in the Dallas-Fort Worth area. The first Texas Walmart Community Clinic opened in Carrollton in October. Oak Street Health said it will open two additional Texas Walmart Community Clinics in Arlington and Benbrook by the end of 2020.
Chief Financial Officer Tim Cook said during the earnings call that the Walmart clinics represent a small part of the company's business. "The pilots will help us better assess what the numbers could be and how aggressively we want to expand that partnership or not," he said.
During the third quarter, the company reported it served 59,500 at-risk patients, up 38% from the same period a year ago. At-risk patients represent 66% of Oak Street Health's total patient population, the company said.
The company plans to participate in the Centers for Medicare & Medicaid Services (CMS) latest value-based care model, called direct contracting, which starts next April.
“Since the end of the third quarter, we have opened four additional standalone centers, including our first locations in New York City and Mississippi, as well as the first of three Walmart pilot locations in Texas. Looking ahead, we continue to be excited by the ample opportunity to drive continued de novo expansion across both new and existing markets, as well as the complementary growth opportunities presented by our Walmart collaboration and CMS’ Direct Contracting program," Pykosz said.
The company now plans to operate between 73 and 75 health clinics by the end of 2020 and estimates its population of at-risk patients will grow to 63,000.
Oak Street Health kept all of its health clinics open throughout the COVID-19 pandemic to serve patients with the highest clinical needs, Pykosz said. Health centers used shift-based staffing to minimize the number of team members in their centers. The company also ramped up telehealth visits to serve patients.
Unlike some healthcare technology companies that benefitted from the shift to virtual care during the pandemic, Pykosz said COVID-19 has been a "huge challenge" for the primary care provider.
"Our teams have done an amazing job and put us in a position where we can effectively and safely operate our model," he said.
Oak Street Health reported that capitated revenue totaled $211.8 million, up 59% year over year from $133 million.
Net losses include stock and unit-based compensation of $30 million and $1.4 million as of the third quarter of 2020 and 2019, respectively, the company reported. Much of the year-over-year increase is due to the modification of vesting terms related to equity converted as part of the IPO and is not due to incremental grants of equity in the quarter, Oak Street Health executives said. Adjusted EBITDA came to a loss of $23 million, compared to a loss of $28.1 million in the third quarter of 2019
Looking ahead, the company projects full-year 2020 revenue between $854 million to $858 million.
Adjusted EBITDA is expected to be a loss of between $99 million and $93 million for the year.