One Medical expands reach with employers, plans to grow to 22 markets in 2021

Staff and executives at One Medical ring the Nasdaq opening bell January 31
One Medical CEO Amir Dan Rubin rings the Nasdaq opening bell on Jan. 31, 2020, when the company went public. One Medical plans to grow to 22 markets by the end of 2021. (One Medical)

Tech-enabled primary care company One Medical is quickly expanding to new markets and inking more health network partnerships.

The provider will enter the Dallas-Fort Worth market through a partnership with Baylor Scott & White Health, the largest not-for-profit health system in the state of Texas.

The Dallas-Fort Worth region is One Medical’s 19th planned market entry and third Texas market entry, following its recent arrival in Austin and planned entry in Houston. Other previously announced anticipated market entries include Raleigh-Durham, North Carolina; Columbus, Ohio; Milwaukee; and Miami.

"With the addition of these new markets, we are on track to go from nine in-person markets at the time of our IPO last year to 22 in-person markets," said Amir Dan Rubin, chair, and CEO and president of One Medical, during the company's first-quarter 2021 earnings call Wednesday.

"These 22 markets provide us an opportunity to deliver multimodal longitudinal care in markets representing nearly 40% of the U.S. commercially insured population," he said.

One Medical reported $121 million in revenue for the first quarter of 2021 compared to $79 million a year ago, a 54% increase.

RELATED: One Medical CEO refutes claims that clinics gave COVID-19 vaccines to ineligible clients

The company's membership jumped 31% in the first quarter to reach 598,000 members compared to 455,000 members in the same quarter a year ago.

The San Francisco-based company,  which went public in January 2020, also recently inked a tie-up with employee benefits solutions company ParetoHealth. The partnership will offer One Medical’s primary care to ParetoHealth’s rapidly growing customer base of over 1,400 small and midsized employers with more than 440,000 lives covered nationwide, Rubin said.

As part of the partnership, One Medical will expand its in-person presence in the Midwest and Southeast to serve some of Pareto's clients in Alabama and Kansas City.

"One Medical is, if you will, taking over their sites in Alabama and Kansas City. We will run them. They will be branded as One Medical. They will be run in our model, and that's how that part fits in," Rubin said.

The company's losses deepened during the quarter, as One Medical reported a first-quarter loss of $39 million, or 29 cents a share, worse than losses of $34 million a year ago. Analysts on average expected a loss of 14 cents per share, so the company missed Wall Street's earnings estimate by 15 cents, according to MarketBeat.

One Medical shares fell 8.4% in after-hours trading following the release of the results, according to MarketWatch.

One Medical's revenue for the quarter beat Street forecasts of $116 million.

Adjusted EBITDA was $4.8 million for the quarter.

One Medical's first-quarter membership revenue was $20 million, growing 33% year over year, and net patient service revenue was $44 million, up 30% year over year. This growth was driven in part by our continued strong membership growth, One Medical Chief Financial Officer Bjorn Thaler said during the earnings call.

The company's partnership revenue of $54.9 million increased 86% year over year, driven by strong membership growth, the shift from fee-for-service revenue to partnership revenue and strong demand for the company's Healthy Together workplace reentry program, he said.

One Medical has seen an earlier-than-anticipated reduction in COVID-19 testing volumes, reporting a "meaningful drop" in testing beginning in April.

"We had initially expected COVID-19 testing volumes to decline meaningfully in the second half of 2021," Thaler said. "As we look at the rest of the year, certainly we don't expect those numbers to come back."

The drop in COVID testing will be a financial headwind for One Medical in the second quarter, Thaler said.

RELATED: Pent-up demand, return-to-work market boosts One Medical's membership

However, the potential need for COVID-19 booster shots as well as routine flu vaccines will open up opportunities for One Medical in the markets where it has clinics and with employers, Rubin said.

"Whether it's with testing or whether it's return to the workplace or whether it's this fall with flu campaigns or if there are booster campaigns for COVID, we believe we'll be well-positioned to serve employers across that," he said.

For the second quarter, One Medical is projecting membership to grow to 610,000 to 620,000 members and net revenue to come in between $111 million to $118 million.

The company expects to end the year with 660,000 to 680,000 members and net revenue to hit $465 million to $485 million.

One Medical is projecting full-year 2021 adjusted EBITDA in the range of a loss of $20 million to breakeven as the company plans to ramp up investments in its service offerings, technology and operations.