Good day, everyone, and welcome to today's Astrana Health Fourth Quarter and Full Year 2024 Earnings Call. [Operator Instructions] Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Today's speakers will be Brandon Sim, President and Chief Executive Officer of Astrana Health; and Chan Basho, Chief Operating and Financial Officer. The press release announcing Astrana Health Inc. results for the third quarter ended September 30, 2024, is available at the Investors section of the company's website at www.astranahealth.com. The company discussed certain non-GAAP measures during the call. Reconciliations to most comparable GAAP measures are included in the press release. To provide some additional background on its results, the company has made a supplemental deck available on its website. A replay of this broadcast will also be made available at Astrana Health website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook and will and include, among other things, statements regarding the company's guidance for the year ending December 31, 2025, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans and acquisition integration efforts. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ materially from those projected. There can be no assurance that those expectations will provide to be correct. Information about the risks associated with the investing in Astrana Health is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market condition or otherwise, except as required by law. Regarding the disclaimer language, I would also like you to refer to Slide 2 of the conference call presentation for further information. With that, I'll turn the call over to Astrana Health President and Chief Executive Officer, Brandon Sim. Please go ahead, Brandon.

Good afternoon, and thank you all for joining us today. Our fourth quarter and full year results reinforce the strong momentum we continue to build as we scale the nation's leading patient-centered payer agnostic healthcare platform. We are proud of what Astrana has accomplished this year, advancing our mission to deliver high quality, high value and accessible care to communities nationwide. In 2024, we expanded our footprint significantly, while delivering strong financial performance across both the top and bottom lines. Our ability to execute and sustain rapid growth, even amid a complex macroeconomic environment, challenging reimbursement dynamics and shifting utilization trends underscores the strength of our model and the discipline of our execution. Our success is built on the consistent execution of the four key pillars in the Astrana playbook quarter after quarter. First, we are sustainably growing our membership and patients served, expanding access to high quality care for more Americans. Second, we are deepening our alignment with patient outcomes through responsible risk progression in our value-based contracts. Third, we are delivering excellent patient outcomes and improving care quality, while effectively managing costs. And fourth, we are driving operational excellence across our organization through our proprietary Care Enablement platform. To bring our playbook to life, I'll begin by sharing a recent patient story. Then I'll highlight some of our financial results for the year, which reflect our success in executing on these four strategic pillars. After that, I'll provide a review of our progress and provide key business updates before handing the call to Chan, who will go into more detail on our financial performance and guidance outlook. While today's call is focused on our financial performance, the true heart and soul of our business, what drives everything that we do is the impact that we have on the…

Thank you, Brandon, and thanks, everyone, for joining us today. I'll dive into our 2024 financials in more detail. We delivered another year of strong performance, generating $2.03 billion in total revenue for 2024, an increase of 47% from $1.39 billion reported in 2023. This growth was fueled by gains across all three of our core business segments. Collectively, adjusted EBITDA reached $170.4 million reflecting a 16.2% rise from $146.6 million in the previous year. As Brandon discussed, new market and integration costs related to Astrana's strategic growth efforts resulted in approximately $13 million of drag to profitability in 2024. As for utilization, we experienced a mid-single digit total expense trend, which included a 2% to 3% change in unit cost and a 3% to 4% utilization trend in aggregate, with variations across lines of business. We closed the year with a solid liquidity position, ending with $288.5 million in cash and cash equivalents. This reflects our strategic initiatives, including the acquisition of CFC, CHS, as well as the buyout of the remaining equity interest in GMG. On the debt side, total debt, including lease liabilities, stood at $471.8 million compared to $475.8 million in the prior quarter. Our strong liquidity profile continues to support our commitment to long-term sustainable growth. In 2024, we announced the acquisition of the Physician Assets along with the businesses and assets of Prospect Health Systems. We remain enthusiastic about the potential for the Prospect acquisition to significantly expand our provider network and enhance our ability to offer high-quality accessible care to our members. On January 11, 2025, the non-physician assets within Prospect Health System filed for bankruptcy under Chapter 11. We're working closely with the Prospect team to ensure this filing does not impact our close timing. We still expect this transaction to close…

Thank you. [Operator Instructions] Our first question comes from the line of Ryan Daniels with William Blair. Please proceed.

This is Jack Senft for Ryan. Thanks for taking the questions and congrats on the strong year end quarter. First, maybe just on the adjusted EBITDA guide. It looks like the margin is down, but also kind of flattish on a dollar basis. Can you guys just dive a little bit deeper into this maybe on the bridge, just kind of what the puts and takes are and what kind of gets you to the low end of the adjusted EBITDA guidance range and maybe what the higher end? Thanks.

Thanks so much. In terms of our guide for 2025, we're assuming a consistent 4.5% trend. We're also assuming our continued investments next year. And then in terms of overall margin, the margin was down because of CHS next year.

Okay, perfect. Thank you. And then maybe if I can just add a quick follow-up in here too. You guys have a goal to delever to a little over 2x within the two years, I think you said nine months after the close of the acquisition. think a chunk of this was supposed to come from the free cash flow conversion. So can you just give us like high level comments on what you expect free cash flow to look like this year? And then kind of like what levers you have to kind of drive the increased cash flow this year and then post acquisitions as well? Thanks.

Yes. Free cash flow was a bit odd in 2024 due to some onetime items, one related to post CHS that there's some onetime related items probably in the $10-ish million range, which will be recouped in '25. So you'll see that bump in free cash flow there. There's also an item around some licenses around software that ran through one time also. So you will see that revert next year. And we've guided in the past, free cash flow comes in about 45-ish percent of adjusted. And you'll see that as a higher percentage in '25.

Okay, awesome. Thank you again guys and congrats.

Thank you. Our next question comes from the line of Michael Ha with Baird. Please proceed.

Hi. Thank you. So I understand your Medicaid trend has been running hotter this year. Think about 4% to 5% versus your original expectations. I think it's mainly driven by Proposition 35 and redeterminations. But then as we head into next this year, 2025 with Proposition 35 now past, redetermination headwinds subsiding as we get as states reflect better rates, wouldn't that imply a pretty visible, sizable EBITDA bridge component here as this excess trend declines? If so, how should we think about the magnitude of that benefit? Because optically, super high level, 5% excess trend on your Medicaid revenue, I'm getting something like $30,0 million of embedded earnings, which pretty significant. So wondering if this is baked into guidance at all or if it could represent an upside driver?

Hey, Michael. Thanks for the question on Medicaid especially. You're right. The Medicaid trend as we guided -- as we mentioned on the prepared remarks section of the call was a lot higher than it was in prior years. It was in the August to 9% trend. And certainly Medicaid reimbursement did not improve by that much year-over-year from 23% to 24%, which caused a much higher MLR in our Medicaid business, which did impact earnings from the Medicaid segment as you had mentioned. You're right that Prop 35 is now passed. The state is still in a negotiation in terms of how that's going to be resolved with the large MCOs and then downstream of that with us. None of that is -- no rate relief is contemplated in the guidance, which is intended to be conservative. We'll update given the flux of where Medicaid is today. We didn't want to bake in anything on Medicaid that we'd have to walk back later. So the intent there is to just assume a similar trend in 2025 as in 2024 without any renegotiations of contracts or additional reimbursement from Medicaid in the $170 million to $190 million guide.

Got it. Okay. So it sounds like it could be an upside driver once you're able to recognize it. And then I guess my next question would be a couple on costs. I think you mentioned CHS approaching break even late in the year. Curious what you have embedded in guide for full year CHS dilution, also the $15 million expected loss. I was wondering if you could help us sort of break out the buckets. And sorry, lastly, for prospect accretion, I know it's $94 million The closing mid-year, is it fair to assume half of that comes through? Or I know you mentioned ongoing cost per prospect. How much would we expect for you guys to be making on that? Thank you.

Sure. We expect around $5 million to $10 million of integration costs that we've assumed will be hitting our books, hitting our P&L and will be fully expensed regardless of if and when the Prospect transaction closes, whether that's in the middle of the year or slightly before that. And so I think these $170 million to $190 million guide includes those expenses, $5 million to $10 million integration and around $5 million to $10 million in automation and building out the platform and technology investments regardless again of when that closes. And we're booking those -- we're expensing those costs in the P&L in anticipation of the close of the transaction. In terms of the transaction itself, based on the audited financials and the unaudited financials for the sub period because their fiscal year ends is not aligned with the calendar year. That's where the $94 million of adjusted EBITDA comes from. We don't expect necessarily that a 2025 contribution will be $94 million. As we had guided before, we felt that $81 million was a better launch point. We wanted to share the $94 million number because it is based off of the audited financials that we've now received for Prospect, and we wanted to share that so that it's out there. On a go forward basis, assuming that it closes, let's say, at the end of the first half of the year, we would expect the run rate going forward to probably be closer to the $81 million number that we had formally guided towards, based on our accounting and how we would present the results to the investor community.

Thank you. Our next question comes from the line of Jailendra Singh with Truist Securities. Please proceed.

Yes. Hi, this is Jalendra Singh from Truist Securities. Thanks for the color on the Medicaid rate acuity mismatch you talked about, which could be a potential upside hopefully in this year. But I also want to talk about the Medicaid, like the new administration seems to be focused on reimbursement cut there. Any comments on how some of these discussed possible cuts could impact your business? Or does being in California insulate you like kind of protect you in any ways?

Hi, Jailendra. Thanks for the question. This is obviously an ongoing situation. A couple of weeks ago, we heard that Medicaid would not be touched. Obviously, that may or may not still be the case. We do believe that having almost all of our Medicaid membership in California does insulate us partially. Although, obviously, federal funding is still going to be an important part of the puzzle in terms of reimbursement in 2025 and go forward. I don't really want to comment or speculate at the moment given I think it's unclear probably to most what the administration will do in terms of the funding for Medicaid and Medicaid expansion. I think what we're going to do is ensure that we are taking care of the Medicaid patients that we do have. We're not assuming any reimbursement increases in our guidance. And we do believe that hopefully, we'll have to prevail at the end of the day and a very important part of the healthcare system is going to be preserved in terms of funding to Medicaid. In terms of California itself, again, we're not including any incremental reimbursement due to Prop 35 or including any renegotiations that may occur throughout the year of 2025.

Okay. And then my quick follow-up, clearly, very unfortunate events around California wildfires, but any sort of impacts you can talk about. Did you see in the business in Q1? Did that perhaps lead to any impact on utilization worth calling out, any cost? And then also on the flu activity, just maybe you can combine like what you're capturing in your Q1 comments?

Sure. Sorry, one last point on Medicaid. We do believe that the flexibility of the business model as it has in the past with other disturbances to Medicaid such as redeterminations will allow us to partially offset some of the impact, if any. But again, we're waiting to see how this plays out as well. In terms of the wildfires, and then we'll tackle the flu afterwards. Certainly, wildfires deeply affected our community, less than five miles away from our headquarters here in Los Angeles and displaced many families as well as families of our teammates. We had to close a few clinics, around six or seven clinics for a few days to a week depending on location, but we don't anticipate this to have a meaningful impact on carrier delivery revenues in Q1. In terms of utilization, we're not seeing material differences in inpatient utilization either related to the fires, thankfully. So I don't think there's going to be a material impact there either. In terms of the flu, some of you may remember that we called out a couple of quarters ago that we believed this flu quarter was going to be -- or this flu season rather would be quite bad. And it turns out it has been maybe one of the worst in recent memory. And at the time, we had thought so because of the very bad flu season in the Southern Hemisphere that we were seeing early on in their winter season. We accrued for some of this in our trends and we came in, as Chan mentioned earlier, around where we expected to come in. So given where we accrued and where we are continuing to accrue in 2025 in terms of our claims reserve, we feel comfortable with where trend will be related to the flu.

Thank you. Our next question comes from the line of Ryan Langston with TD Cowen. Please proceed.

Great. Thanks. Good evening. Just want to go back to the guidance. The midpoint seems to assume, I believe, a 6.9% margin and you guys finished the year with 8.4%, so $150 million Delta. I think the $15 million you called out might be worth around 60 basis points if we assume CHS is running around sort of a $10 million drag that might be another $40 million. So that leaves you another 50 basis points of decline. So if my math is right, can you maybe just give us a sense on what that other 50 basis points is or maybe just kind of an overall picture of what's driving that EBITDA margin decline year to year?

Hey, Brian, great to hear from you. Thanks for the question and the thoughtful analysis. I think the main item is that we have MedEx trend that is increasing faster than, I guess, our revenue. And so that's making up for that 50 basis points.

Okay, got it. And then just one follow-up if I could. I don't believe you were booking any profits on the MSSP side in 2024. Can you give us a sense on what's built into the guidance in terms of MSSP for 2025? And I'll hop back in the queue. Thanks, guys.

Thanks, Ryan. We did get further clarity around MSSP in terms of our data and we felt we were in a good place to book MSSP related revenues. So we did book $5 million in Q4. And so that $5 million was for $24 million and then for $23 million we booked another between $5 million to $6 million and then in terms of guidance for '25, we're booking $5 million to $6 million.

Very helpful. Thank you.

And sorry, just to clarify, we didn't book anything for '23. We weren't in the program in 2023.

Thank you. Our next question comes from the line of Adam Ron with Bank of America. Please proceed.

we were a little redundant, but I'm also going to ask about the guidance. So if I take out the new market costs you mentioned and integration costs you mentioned in 2025 and 2024, I come up with 5% EBITDA growth on a, let's call it, same market basis, even though revenue is up 28%. And so this is effectively the margin question, but it seems like a very, very wide difference between 28% revenue growth and 5% EBITDA growth. And I understand that probably the main factor is trend, but trend was really high in 2024 as well. And so that implies a lot of this new revenues coming in at like no margin. And so if you could just give more detail on what you're expecting for trends and the rate notice in LA is pretty strong for Medicare and it seems like alignment is talking about benefiting from that. So curious why you're not seeing more of the MA rate notice benefit and specifically why trend is coming in worse if there's anything outside of Medicaid, I guess? Thanks.

Hey, Adam. Thanks for the question. You're right. It's similar to the -- my answer might be similar to the margin question, which is that the two main drivers of revenue, which are the CHS acquisition continued movement to full risk, are fairly low margin revenue drivers. As we noted earlier, CHS is coming in essentially at zero, close to break even and the first year of full risk conversions typically don't add too much margin either because it takes time to renegotiate and improve the unit economics on the inpatient side of a forward risk contract. What we're focused on really is ensuring that we are doing enough. We'd rather do a little more than less frankly in terms of integration preparation for the anticipated close of the Prospect deal. And we're really assuming very similar trends from a cost perspective to 2024 in terms of the 4.5% to 5% trend here in 2025. We're not expecting rates to go up as much as we would like. If there are changes to that throughout the year based on renegotiations with payers or with the state or if there's clarity on Medicaid, we would update the Street as such. I think the final reminder is that we're really still reiterating the $350 million -- at least $350 million just EBITDA number in 2027. That hasn't changed at all. We're trying to be a little more conservative this year. And I would also note that because of our -- because of the base of adjusted EBITDA that we already had and reported in 2024, I would maybe just say that it's very different to improve off of a base that high relative to peers in a challenging macro environment and an uncertain macro environment than to go from a small number to a slightly larger number.

If I could follow on one thing you said, you mentioned rates. So if you could talk about, I guess, like capturing rates, so like on Medicaid, it has to do with like the state has to give you money. But in terms of like the payers, like are you talking about how they're under pressure and they don't want to -- and they're like cutting back on cap rates or something? Like if you can go into more detail what you mean by not getting rates that you need to offset trend, that would be helpful.

Sure. It's not necessarily cutting back on cap. It's more -- there are certain -- there are rates that we have locked in for a period of time that don't contemplate the extraordinary trend that we're seeing, especially in Medicaid, where trend is very high single digits percentage. The payer contracts that we have are not reimbursement is not going up anywhere near 8%, 9% a year. So every year that that continues on in terms of trends where reimbursement doesn't catch up, almost by definition margin declines as a result. So that combined with integration costs really make up some of the impact that you're seeing on the guidance.

Okay. That's helpful. Appreciate it.

Sure. Thanks.

Thank you. Our next question comes from the line of Craig Jones with Stifel. Please proceed.

Hey, yes. Thanks for the question. So, I was really hoping to get an update on the Houston and Las Vegas margins. I think you're exiting your two and entering your two -- or sorry, exiting your three in the middle of your two in those markets. Just wondering, yes, how they're trending? Thanks.

Hey, good to hear from you. Thanks for the question. On Slide 5 of our supplemental deck, we did provide a couple of updates on both Nevada as well as our Texas markets. They continue to ramp within expectations. For example, Nevada, I'll just provide some highlights. Care delivery visits year-over-year grew by 58%, right around $200,000 a month loss at the moment. And we expect to be break even to profitable in early 2025, probably in a couple of months here. In Texas, similar story, we maybe even a little faster, we're on track to break even already in 2025 and start turning a profit late 2025, early 2026. Non-California business will represent around 15% of revenue in 2025 and that number appears poised to grow given the rate of growth in those non-California markets.

Okay, great. Thanks. And then just to follow-up on an answer you just gave on the Medicaid contract. I think you said the rates are locked in for a certain period of time. How frequently are those renegotiated and how fast could you sort of try and adjust for the higher trend?

Typically, it really depends on the contract, two to three years typically and they're all kind of staggered. So it really is a continual process that we're engaged in. If trend were to abate, if we're able to get any kind of relief from the state, there's some of the regulatory overhang on Medicaid that that goes away. I think that really helps. But that's just an ongoing process that we're engaging in.

Okay, great. Thanks.

Thank you.

Thank you. Our next question comes from the line of Brooks O'Neil with Lake Street Capital. Please proceed.

Thank you very much. So Brandon, you just alluded to Slide 5. I want to ask you about Slide 6 in the supplemental deck. And you mentioned that the transition to full risk arrangements in year one has very little impact. But I see the increasing trend on Slide 6 and I guess it was my assumption that that would be a potentially very favorable transition for you guys. So maybe you could just talk a little bit about the underlying economics in those arrangements, maybe why you're pursuing those and what the longer-term opportunity might be?

Thanks so much for the question, Brooks. As you highlighted, we continue in our pathway to expanding to full risk contracts. We are focused on this because we truly believe that with these incremental dollars, we can differentially continue to invest in our members. As you can see, it's not an immediate impact in terms of year one. Over time through these investments, we will start seeing through high quality and access to care, we will see trend change. And that is why we're embarking on this journey for the last few years and that is why we'll continue to do so. And you can see in Slide 6 the improvements beyond that 2/3 level that we had discussed in the past.

The bottom line is you think over time you can reduce, I guess I'd say, utilization on the inpatient side of the business?

Yes. Through preventative care, we will be able to right size utilization and help members get care before it turns into a larger event.

Yes, great. Okay. Thank you very

much. Thanks, Brooks.

Thank you. Our next question comes from the line of David Larsen with BTIG. Please proceed.

Hi. Can you talk about the completeness of data for 2024? It looks like a 5.3% trend for the year and you're guiding like I think 4.5%. Quite frankly, that sounds very good to me. Some of your peers were like in the 7% to 9% range for the first three quarters of 2024. I guess I just worry about being surprised with additional claims files from health plans. Just any sort of comfort you can provide around that would be great. Thank you.

Hey, Dave. Thanks for the question. The claims reserves that we have -- the IBNR reserves that we have are not based just on our claims triangles necessarily, but also include some of the initial information that we have in terms of authorizations and other leading indicators of usage or utilization as we had mentioned before. So I think that's something that we feel fairly confident about. We also pay the vast majority of our own claims, which gives us quick visibility into how claims are developing. So we feel fairly confident that that trend is very close to what it will be. Going forward, again, I think this is maybe what you're getting at, which is that the trend seems decent relative to the industry and the challenges that are being faced. Keep in mind, this also includes V-28t impact, which still is phasing in 2025. And so I think the question is, why is there not a larger increase at the midpoint in guidance? And I really want to reiterate that there are some large integration costs we'd rather be safe than sorry on integration and do things correctly. There are investments we're making so that we can smash through the $350 million number that we put out in the medium term. Frankly, we're not trying to optimize for the 2025 year. We're optimizing for long-term value creation and we believe that this is what needs to be done to not only meet, but surpass the $350 million that we promised for 2027. The path there doesn't necessarily look up into the right, but it does mean that we are making investments now for the future, even if that means we're taking on relatively lower margin pockets of business. I would also argue that there are because of the trend that we're seeing, 5.3% in 2024, 4.5% to 5% maybe in 2025 in the guidance, that is why our adjusted EBITDA is where it is. And again, I think it's much more challenging to be growing at this space while putting up $170 million of adjusted EBITDA for 2024. I'm not sure if that answers your question, Dave, but I just wanted to mention that.

It does answer my question. Thank you. And then for Prospect at maturity, what would you expect the margin to be? I think you're being conservative with sort of break even. And I mean, what's interesting is fine, 93% of the revenue is capitated, but that's only 33% of members, which means you have a lot of runway to go to basically grow your fully capitated revenue book. So what would you expect the prospect margins to be at maturity, let's call it in three years?

Yes. I may have missed your year, so I apologize. But I think when you mentioned margins being close to break even, you may have meant CHS, and maybe that's what you said. But CHS is break even. We do anticipate that to be in the given the mix of ACO reach and MSSP members versus Medicare Advantage members, probably in the low to mid-single digit percentages at scale. For Prospect, which is coming in at mid-to-high single digits, we expect that to be 7%, 8% at scale, which is similar to our existing business, especially given the similarity of the delegated model and the similarity of the geographic regions of the members and where they live. And then in terms of the full risk conversion, you're right, even though 73% of the revenue comes from a full risk value-based contract, only a third of the members are in such a contract. And so your point is absolutely correct. There's still a lot of runway to go in terms of moving additional members into full risk arrangements. We continue to do that in cohorts even as we speak. There were additional members that went live one-one. There are additional members that will go live in February or in March and that's a continual process. Of course, the percentage of revenue that is associated with full risk is going to asymptotically kind of taper off over time, but the number of members will continue to grow probably into the 50%, 55% range. As I mentioned before, not all the members will end up in a full risk arrangement, just given dynamics around growth, not wanting to put members in a full risk arrangement day one, something we've never done, as well as commercial lines of business.

Okay, great. Thanks very much. I'll hop back in the queue. Looks like very good well managed trend. Congrats. I'll hop back in the queue. Thanks.

Thanks, Dave.

Thank you. Our next question comes from the line of Matt Gilmore with KeyBanc Capital Markets. Please proceed.

Hey, guys. This is Zach on for Matt. Just on the $10,0 million annualized AI savings, wondering if you could quantify that in terms of incremental benefit in 2025 and 2026 and maybe just your longer-term thoughts on that opportunity going forward, especially as prospect is integrated? Thanks.

Sure. Maybe I misinterpreted the question, so just let me know. We are spending around $15 million in integration and development for AI in 2025. We expect that to translate into approximately $10 million of savings in 2026 that will probably show up in the G&A line and that will probably continue to grow into 2027. So that would be the approximate magnitude of the investments and then the approximate value of the savings and all of that would flow through down to P&L or to EBITDA.

Okay. Thank you. And then just on the newer markets, can you maybe just speak to the operational playbook that you used to achieve break even in years one, two and then beyond that? Kind of what are the big factors that you need to work on to bring market to break even and move beyond that?

Yes. So it takes time to improve care margin in a population. It takes time to grow a population from zero to the scale that you need to support the infrastructure that you need to build to get into a new market. We typically think about getting to around 10,000 Medicare equivalent membership in a market. So you need some level of density, that would approximately the 10,000 comes from generating approximately $100 million of annualized premiums. You need to be able to operate in an OpEx level that supports that could be supported by $100 million of premium review. So if you assume 10% of gross margin, for example, you need to be able to keep OpEx below $10 million essentially to break even in a new market. And so those are really the levers that we're using. We have to go into a market, build enough density to attract membership, provide a differentiated product with the provider network and the technology platform, so that we can attract additional providers and therefore additional patients. We need to be able to then use that differentiated network and differentiated outcomes that we're driving to receive payer contracts. We need to be able to drive operating leverage in the technology platform, so that we can operate at that cost level. And over time, as we increase scale and get to that number, and if our OpEx is low enough, then you get to break even. Over time is when the preventive care that you provide, such as in the story of Amy that I mentioned earlier in the prepared remarks section, start to shine and you're starting to see decreases in MLR because of the longitudinal nature of the model and the length of time in which patients can be in the care model and be part of our risk bearing ecosystem. So maybe succinctly, first one and half to two years, it's really about growth and being operationally very efficient. Years two through five, you're starting to do that you're continuing to do that obviously and you're also really bringing down medical costs as a percentage of revenue as well.

Great. Thank you.

Thanks.

Thank you. Our last question comes from the line of Gene Mannheimer with Freedom Capital Markets. Please proceed.

Thanks. Hey, gentlemen, great year, great quarter. I appreciate the color around all the acquisitions. And did you or can you share the pro form a contribution to revenue from prospect this year? And secondly, just based on your experience historically driving EBITDA synergies through your acquisitions, what might you expect for Prospect, say, after this year given that it is has such a similar profile and geography to your current business? Thanks.

Hey, Gene, great to hear from you. Prospect has not closed yet. I'm thinking you may be thinking about CHS?

Well, I am asking about Prospect, but understood that it isn't closed. So maybe you're not comfortable talking about it from a synergy standpoint?

Yes. I think it's best to wait and see when close happens because that's really going to affect its run rate. And in terms of revenue and EBITDA, I would assume what we've shared the revenue run rate is about $1.2 billion and in terms of EBITDA, it's that $81 million that we have guided to historically.

Okay. Thank you.

Thank you. There are no further questions at this time. That concludes today's teleconference. [Operator Closing Remarks].