One Medical inks deal with Hartford HealthCare as 2021 revenue surges 64% to $623M

One Medical is partnering with Connecticut's Hartford Healthcare to provide primary care services through its membership-based model.

It marks the 29th in-person market for the tech-enabled primary care provider. Hartford Healthcare operates 400 locations across 185 towns and cities in the state. The company plans to open 30 to 40 new offices this year in cities including Miami, Dallas and Milwaukee.

One Medical saw its membership grow 34% in 2021 to 736,000 members, with a little more than 700,000 enterprise and consumer members and 33,000 at-risk members, executives said during the company's fourth-quarter earnings call.

One Medical has about 10,000 direct contracting members as of year-end 2021, and that increased to13,000 by the end of January, executives said.

In June, One Medical acquired Iora Health, another primary care competitor focused on Medicare patients, in a $2.1 billion deal. The company is pushing more members into at-risk arrangements and expects that membership to reach between 37,000 and 38,000 members by the end of the first quarter of 2022, which at the midpoint would imply year-over-year growth of 76%, Chief Financial Officer Bjorn Thaler said during the call.

The company's fourth-quarter 2021 revenue surged 89% to $230 million compared to $122 million a year ago.

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The company's revenue fourth-quarter growth was driven primarily by its at-risk business, with Medicare revenues contributing $99.5 million, or about 43% of total revenue, during the quarter, Thaler said.

One Medical is projecting Medicare revenue for the first quarter to reach between $125 million and $130 million and to come in between $515 million and $535 million for full-year 2022.

Fourth-quarter total commercial revenue came in at $130.7 million, up 7% year over ear.

One Medical charted 2021 revenue of $623 million, up 64% from $380 million in 2020. But the company also reported a high medical loss ratio, at 94%, in the fourth quarter.

One Medical CEO Amir Dan Rubin said he expected the MLR to moderate in 2022.

"We continued to see declining medical claims expense ratios in all of our cohorts of at-risk patients, showing our ability to reduce avoidable costs and waste and improve health," Rubin said. He blamed costs related to COVID care for driving up the MLR in 2021.

During the fourth quarter, the company's losses widened to $95.4 million compared to a loss of $8 million a year ago. On a per-share basis, the company reported a loss of 50 cents per share, which missed Wall Street estimates of a loss of 49 cents.

For 2021, One Medical reported a loss of $255 million compared to a loss of $89 million in 2020.

Adjusted EBITDA for the fourth quarter was a loss of $40 million, and the company reported adjusted EBITDA for full-year 2021 of a loss of $35 million.

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Rubin said COVID-related headwinds would continue to impact the company this year, including through a lag in the return to more normal visit rates for non-COVID-related primary care, staffing outages and an increase in near-term medical expense ratios.

"Notwithstanding some of this overhang from these COVID-related factors, we believe we have never been better positioned to serve more people in more markets across every stage of life with better health, better care, better value and a better team environment," he said.

Along with health system partners, One Medical also is expanding its partnerships with employers and health plans. In 2021, the company added about 500 new employers, now reaching more than 8,500 employers. One Medical also works with 8,500 enterprise clients.

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"We have also continued expanding our health plan relationships in our senior health at-risk model, growing from just one major health plan partner at the start of 2020 to eight health plan partners in 10 different markets by the end of 2021," Rubin said.

One Medical expects to finish 2022 with a total membership count in the range of 830,000 to 852,000 and to deliver annual net revenue of approximately $1.045 billion to $1.085 billion.

Consumer and enterprise members are expected to range between 790,000 and 810,000, which implies 17% year-over-year growth. At-risk members are expected to range from 40,000 to 42,000 networks, growth of 23% over 2021 at the midpoint.

Adjusted EBITDA for 2022 is expected to range between a loss of $135 million and a loss of $115 million.

For the first quarter of 2022, One Medical is projecting net revenue to range between $240 million and $250 million.