Oak Street Health's revenue jumped 47% to $297 million in the first quarter of 2021 as its patient volumes grew with seven new health centers opening.
The tech-enabled, value-based care primary care start-up specifically targets Medicare-eligible patients, particularly those in underserved communities. The company reported quarterly revenue of $197 million during the same period a year ago.
Despite widening losses in the quarter, Oak Street Health is projecting continued strong growth in 2021. The Chicago-based provider plans to open between 38 to 42 new health centers by the end of 2021 as it increases its pace of expansion, said Mike Pykosz, chief executive officer of Oak Street Health during its first-quarter 2021 earnings call Tuesday morning.
The company expects to operate at least 117 centers and up to 121 health clinics by the end of the year and bring in at least $1.3 million in full-year revenue, representing 47% growth over 2020 revenue.
Oak Street Health projects to bring in between $315 million and $320 million in revenue in the second quarter and grow its base of at-risk patients to at least 86,000.
The company has yet to be profitable and reported that its losses deepened during the quarter to $64 million, compared to a loss of $15.4 million in the first quarter of 2020, said Oak Street Health chief financial officer Tim Cook said
The losses were due in part to significant growth in operational expenses, including higher medical claims expenses and cost of care in the quarter.
Net earnings per share came to a loss of 29 cents.
The company's quarterly results missed Wall Street estimates on earnings but beat on revenue.
Oak Street Health 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 $52.
Oak Street Health now operates 86 clinics across 20 markets in 13 states, up from 54 primary care clinics a year ago.
The company served 75,500 risk-based patients, up 37% from the same period a year ago and representing 69% of its total patients. Oak Street Health aims to grow its base of at-risk patients to around 112,000 by the end of the year.
In the quarter, Oak Street's capitated revenue totaled $291 million, up 48% year over year.
Oak Street Health centers administered 150,000 COVID-19 vaccine doses during the quarter, predominantly to older adults from underserved communities.
The company also reported early traction with the Centers for Medicare and Medicaid Services (CMS) Direct Contracting program, enrolling approximately 6,500 participants for the April 1 launch.
"We are optimistic about the opportunity this program represents over the coming years. We remain committed to our mission and are excited about our growth opportunities," Pykosz said.
He said CMS' recent announcement of a moratorium on new applicants for the direct contracting program would not impact Oak Street Health's plan to add new markets to its current direct contracting footprint. He noted that the per-patient economics of that program will potentially be better than the company had initially estimated.
Oak Street Health announced in September a collaboration with Walmart to bring its clinics to three Walmart supercenters in the Dallas-Fort Worth area.
Pykosz said the company was "encouraged by the results so far" with that partnership.
"The hypothesis of why we're putting Oak Street Health centers in Walmart is strong and we’re still testing the hypothesis. It's not just about being equal to an Oak Street Health center, it has to be better. And it can’t just be better for the first couple of months; it has to be sustainably better than our centers, otherwise, we’d just do centers ourselves," he said.
The company is still assessing how aggressively it wants to expand that partnership, executives said.
"Walmart loves to go to rural markets and grow faster, but we don’t need that to be incredibly successful. We're not chasing a business opportunity. We’re being opportunistic and can take it to another level. We want to make sure we have a lot of conviction behind that," Pykosz said.