Oak Street Health Reports Fourth Quarter 2020 Financial Results
Oak Street Health, Inc. (NYSE: OSH) (the “Company”), a network of value-based, primary care centers for adults on Medicare, today reported financial results for its fourth quarter ended December 31, 2020.
“We are incredibly proud of the impact the Oak Street team made on our patients and communities in 2020 and the accompanied operational and financial results, and we could not be more excited to continue our performance in 2021 and beyond,” said Mike Pykosz, Chief Executive Officer of Oak Street Health. “In 2020, we delivered record revenue of
Mr. Pykosz continued, “Our prospects for 2021 are equally appealing. Our center cohort performance continues to improve over time, with newer vintages ramping faster than the already strong center ramps from our earlier vintages. Based on our continued and consistent strong unit economics in 2020, we will accelerate our pace of new centers even further in 2021, with a goal of opening 38-42 additional centers, an increase from the expectations of 25-30 that we communicated following our initial public offering. As our communities continue to reopen, there is a tremendous opportunity to re-energize our community outreach model, which we believe positions us well to deliver a strong year of patient growth. While 2020 was a remarkable year, we are enthusiastic about all that we intend to accomplish in 2021, further enhancing our leading position in the value-based, primary care market.”
Fourth Quarter 2020 Financial Highlights
-
Total revenue was
$248.7 million , up43% year over year. -
The Company cared for approximately 64,500 risk-based patients, representing
66% of its total patients. -
Loss from operations1 was
$(90.7) million , compared to$(44.0) million in the fourth quarter of 2019. -
Platform contribution2 was
$12.1 million , up397% year over year. -
Net loss1 was
$(90.7) million , compared to$(45.9) million in the fourth quarter of 2019. -
Adjusted EBITDA3 was
$(43.5) million , compared to$(36.2) million in the fourth quarter of 2019. - As of December 31, 2020, the Company operated 79 centers4, compared to 51 centers as of December 31, 2019.
__________________
1 Includes stock based and unit-based compensation of
2 Platform contribution is a non-GAAP financial measure that is presented as supplemental disclosure, defined as total revenues less the sum of (i) medical claims expense and (ii) cost of care, excluding depreciation and amortization. This measure is reconciled to loss from operations as the most directly comparable GAAP measure as set forth in the accompanying “Platform Contribution Reconciliation” section.
3 Adjusted EBITDA is a non-GAAP financial measure that is presented as supplemental disclosure and is reconciled to net loss as the most directly comparable GAAP measure as set forth in the accompanying “Adjusted EBITDA Reconciliation” section. We define adjusted EBITDA as net loss, excluding other income (expense), taxes, depreciation and amortization, stock-based and unit-based compensation and transaction/ offering related costs.
4 Our 2020 year end center count includes the three locations associated with our Walmart partnership.
Outlook for First Quarter and Fiscal Year 2021 |
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Three Months Ending |
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Twelve Months Ending |
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March 31, 2021 |
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December 31, 2021 |
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Low |
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High |
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Low |
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High |
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(dollars in millions) |
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(dollars in millions) |
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Centers |
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84 |
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85 |
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117 |
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121 |
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At-risk patients |
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74,500 |
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|
75,000 |
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|
|
105,000 |
|
|
|
110,000 |
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Revenue |
$ |
|
280 |
|
|
|
285 |
|
$ |
|
1,275 |
|
|
|
1,325 |
|
Adjusted EBITDA |
$ |
|
(25 |
) |
|
|
(20 |
) |
$ |
|
(215 |
) |
|
|
(165 |
) |
We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for net loss, because of the uncertainty around certain items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably predicted. However, for fiscal year 2021, depreciation and amortization is expected to be
Webcast and Conference Call
The Company will conduct a conference call Wednesday, March 10, 2021 at 8:00 AM Eastern Time to discuss these results and management’s outlook for future financial and operational performance. The conference call can be accessed by webcast or by dialing (833) 529-0224 for U.S. participants, or +1 (236) 389-2153 for international participants, and referencing participant code 6163985. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call at https://investors.oakstreethealth.com.
About Oak Street Health
Founded in 2012, Oak Street Health is a network of value-based, primary care centers for adults on Medicare. With a mission of rebuilding healthcare as it should be, the company operates an innovative healthcare model focused on quality of care over volume of services and assumes the full financial risk of its patients. Oak Street Health currently operates more than 80 centers across Illinois, Michigan, Ohio, Pennsylvania, Texas, Indiana, North Carolina, Rhode Island, Tennessee, New York and Mississippi. To learn more about Oak Street Health’s proven approach to care, visit oakstreethealth.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for the fourth quarter and fiscal year 2020. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance.
Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key customers or partners; (v) the impact of COVID-19 on our business and results of operation; and (vi) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to the final Registration Statement filed with the SEC on August 5, 2020 and the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 expected to be filed with the SEC on March 10, 2021. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.
Condensed Consolidated Balance Sheets (in thousands) |
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As of December 31, 2020 |
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As of December 31, 2019 |
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ASSETS |
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Current assets: |
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Cash |
$ |
|
409,309 |
|
$ |
|
33,987 |
|
Restricted cash |
|
|
10,416 |
|
|
|
8,266 |
|
Other patient receivables, net |
|
|
7,598 |
|
|
|
729 |
|
Capitated accounts receivable |
|
|
248,902 |
|
|
|
167,429 |
|
Prepaid expenses |
|
|
6,765 |
|
|
|
1,382 |
|
Other current assets |
|
|
4,187 |
|
|
|
8,028 |
|
Total current assets |
|
|
687,177 |
|
|
|
219,821 |
|
|
|
|
|
|
|
|
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Long-term assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
78,791 |
|
|
|
67,396 |
|
Security deposits |
|
|
1,339 |
|
|
|
1,494 |
|
Goodwill |
|
|
9,634 |
|
|
|
9,634 |
|
Intangible assets, net |
|
|
2,965 |
|
|
|
3,352 |
|
Other long-term assets |
|
|
1,072 |
|
|
|
125 |
|
|
|
|
|
|
|
|
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Total assets |
$ |
|
780,978 |
|
$ |
|
301,822 |
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY/MEMBERS' EQUITY |
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Current liabilities: |
|
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|
|
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Accounts payable |
$ |
|
8,816 |
|
$ |
|
10,757 |
|
Accrued compensation and benefits |
|
|
31,969 |
|
|
|
28,610 |
|
Liability for unpaid claims |
|
|
262,092 |
|
|
|
170,629 |
|
Other liabilities |
|
|
12,612 |
|
|
|
11,001 |
|
Current portion of long-term debt |
|
|
- |
|
|
|
18,507 |
|
Total current liabilities |
|
|
315,489 |
|
|
|
239,504 |
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|
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Long-term liabilities: |
|
|
|
|
|
|
|
|
Deferred rent expense |
|
|
13,532 |
|
|
|
12,901 |
|
Other long-term liabilities |
|
|
28,739 |
|
|
|
10,816 |
|
Long-term debt, net of current portion |
|
|
- |
|
|
|
62,840 |
|
|
|
|
|
|
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Total liabilities |
|
|
357,760 |
|
|
|
326,061 |
|
|
|
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|
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Redeemable investor units |
|
|
- |
|
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|
320,639 |
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Stockholders' equity/members' deficit: |
|
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Members' capital |
|
|
- |
|
|
|
4,192 |
|
Common stock |
|
|
241 |
|
|
|
- |
|
Additional paid-in capital |
|
|
971,781 |
|
|
|
- |
|
Accumulated deficit |
|
|
(555,843 |
) |
|
|
(354,355 |
) |
Total stockholders' equity/members' deficit allocated to the Company |
|
|
416,179 |
|
|
|
(350,163 |
) |
Noncontrolling interests |
|
|
7,039 |
|
|
|
5,285 |
|
Total stockholders' equity/members' deficit |
|
|
423,218 |
|
|
|
(344,878 |
) |
|
|
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Total liabilities, redeemable investor units and stockholders' equity/members' deficit |
$ |
|
780,978 |
|
$ |
|
301,822 |
|
Condensed Consolidated Statements of Operations (in thousands, except per share data) |
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Three Months Ended (unaudited) |
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Twelve Months Ended |
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|
December 31, 2020 |
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|
December 31, 2019 |
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|
December 31, 2020 |
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|
December 31, 2019 |
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Revenues: |
|
|
|
|
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|
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Capitated revenue |
$ |
|
234,899 |
|
$ |
|
168,453 |
|
$ |
|
851,275 |
|
$ |
|
539,909 |
|
Other patient service revenue |
|
|
13,803 |
|
|
|
5,147 |
|
|
|
31,490 |
|
|
|
16,695 |
|
Total revenues |
|
|
248,702 |
|
|
|
173,600 |
|
|
|
882,765 |
|
|
|
556,604 |
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|
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Operating expenses: |
|
|
|
|
|
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|
|
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|
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Medical claims expense |
|
|
175,536 |
|
|
|
126,376 |
|
|
|
617,845 |
|
|
|
385,998 |
|
Cost of care, excluding depreciation and amortization |
|
|
61,025 |
|
|
|
44,783 |
|
|
|
187,510 |
|
|
|
140,853 |
|
Sales and marketing |
|
|
26,764 |
|
|
|
14,259 |
|
|
|
64,211 |
|
|
|
46,189 |
|
Corporate, general and administrative expenses |
|
|
72,942 |
|
|
|
29,965 |
|
|
|
185,495 |
|
|
|
79,592 |
|
Depreciation and amortization |
|
|
3,166 |
|
|
|
2,215 |
|
|
|
11,225 |
|
|
|
7,848 |
|
Total operating expenses |
|
|
339,433 |
|
|
|
217,598 |
|
|
|
1,066,286 |
|
|
|
660,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(90,731 |
) |
|
|
(43,998 |
) |
|
|
(183,521 |
) |
|
|
(103,876 |
) |
|
|
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Other income/(expense) |
|
|
|
|
|
|
|
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|
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|
|
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|
Interest expense, net |
|
|
24 |
|
|
|
(1,962 |
) |
|
|
(8,712 |
) |
|
|
(5,651 |
) |
Other |
|
|
4 |
|
|
|
25 |
|
|
|
156 |
|
|
|
84 |
|
Total other expense |
|
|
28 |
|
|
|
(1,937 |
) |
|
|
(8,556 |
) |
|
|
(5,567 |
) |
Net loss |
$ |
|
(90,703 |
) |
$ |
|
(45,935 |
) |
$ |
|
(192,077 |
) |
$ |
|
(109,443 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interests |
|
|
3,589 |
|
|
|
1,429 |
|
|
|
4,087 |
|
|
|
1,581 |
|
Net loss attributable to the Company |
$ |
|
(87,114 |
) |
$ |
|
(44,506 |
) |
$ |
|
(187,990 |
) |
$ |
|
(107,862 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undeclared and deemed dividends |
$ |
|
- |
|
$ |
|
(7,649 |
) |
$ |
|
(27,220 |
) |
$ |
|
(29,371 |
) |
Net loss attributable to common stock/unitholders |
|
|
(87,114 |
) |
|
|
(52,155 |
) |
|
|
(215,210 |
) |
|
|
(137,233 |
) |
Weighted average common stock outstanding - basic and diluted5 |
|
|
219,003,572 |
|
|
N/A |
|
|
|
218,825,324 |
|
|
N/A |
|
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Net loss per share – basic and diluted |
$ |
|
(0.40 |
) |
|
N/A |
|
$ |
|
(0.55 |
) |
|
N/A |
|
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__________________
5 The Company analyzed the calculation of earnings per unit for the periods prior to the IPO (completed August 10, 2020) and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per unit information has not been presented for the three and twelve-months ended December 31, 2019. The basic and diluted earnings per share for the three and twelve-months ended December 31, 2020 is applicable only for the period from August 10, 2020 to December 31, 2020, which is the period following the IPO and related restructuring transactions and presents the period that the Company had outstanding common stock.
| Condensed Consolidated Statements of Cash Flows
(in thousands) |
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|
|
December 31, 2020 |
|
|
December 31, 2019 |
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Cash flows from operating activities |
|
|
|
|
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|
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|
Net loss |
|
|
(192,077 |
) |
|
|
(109,443 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
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|
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Amortization of discount on debt and related issuance costs |
|
|
4,432 |
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