All right, deck's up. I'm gonna go ahead and get started introducing our speaker today. Thank you all for joining us for the Astrana Health presentation. We've got the company's Chief Executive Officer, Brandon Sim, here with us today. For those of you whom I've not yet met, my name's Ryan Daniels. I'm the Healthcare Services and IT analyst here at Blair. My great pleasure to cover the company. As this is the final presentation in the room, we'll just do the breakout here, and I'm also required to inform you that our disclosures are on our website at williamblair.com. I'm really excited to have Brandon here, and I believe on the webcast. We think this is really a great asset in the value-based care market. We had dinner last night and had the opportunity to chat, and it's an underappreciated asset in our view.
It's a company that if you look at their profit profile, it's more than double anyone else in the market. And if you probably take my entire VBC coverage universe, this company in the last few years probably generated more profit and cash flow than all other entities combined. Doing a great job managing patients and driving care, driving down cost, expanding value for providers, so we really think a unique asset. It's also a company that's invested a ton in its technology platform over the years, which is something Brandon will probably dive into. We hear a lot of buzzwords on AI, automation, et cetera, and this is a company that's been leveraging that for a number of years now to drive results for their providers and those providers' patients.
So again, really pleased to have him here today to go through the deck, and with that, I will turn it over to Brandon. Thank you.
Thank you so much, Ryan. I appreciate the kind words. Thank you for having us here in Chicago, and thanks for those of you who are staying for the last presentation of the day. I'm sure it's a long day for all of us, so greatly appreciate it. As Ryan mentioned, I'm the—my name is Brandon. I'm the CEO and President at Astrana Health. We are a healthcare delivery company, with a mission to transform healthcare and make it a better proposition for all Americans, including regardless of, you know, what type of insurance coverage, geography, age, et cetera, that you belong to. And the company's been growing at a rapid clip. This is the growth conference after all. Over the last four years, we've been growing at around a 26% revenue CAGR.
I joined the business for around five years, joined in 2019, and have grown from just over $500 million of revenue to guiding towards $1.75 billion of revenue for the year. So we've tripled over the last four or five years, and we'll plan to continue to do that going forward as the guidance. Backing up a little, maybe for the generalist audience, if we can go to the next slide, please, or let's see, do I have? Oh, I do. Astrana, as Ryan mentioned, is a healthcare delivery platform. The business operates by partnering with insurance companies, you know, large commercial payers, the government, state Medicaid programs, really the whole gamut of payers, in order to help them better manage the total cost of care for the patients that they serve.
Today, we serve around 1 million Americans across all lines of business. We serve patients who are on Medicare, both Original Medicare as well as Medicare Advantage. We serve folks who are higher needs or lower income via managed Medicaid programs, as well as folks who receive coverage through their employers in commercial programs. That split is around 60, 25, 15 in terms of revenue for seniors, Medicaid, and commercial, respectively. The business serves those 1 million Americans via a couple of different delivery mechanisms. We operate a large network of affiliated providers that were contracted with us in order to provide care, and we work to organize those providers into coordinated delivery networks of both primary care doctors as well as specialists.
There's around 10,000 of those doctors, and in addition to that, we also employ physicians in our, what we call a staff model, but it's clinics that we own and operate with our kind of branding on them, so first-party, so to speak, clinics. We have around 60 of those in 3 different states today. Finally, underlying kind of the technology or underlying the clinics that we actually own and operate, as well as the 10,000-strong affiliate network, we have a, what we call a care enablement platform. And that is a technology and services platform that enables doctors to coordinate the care for their patients in an appropriate, high-value, and accessible way.
At the end of the day, what the goals of the system are to provide a valuable proposition to insurance companies by helping them manage their total cost of care at the actual place the care is being delivered. So if I'm an insurance company, for example, I may underwrite a product, whether it's Medicare Advantage, whether it's Medicaid, whether it's, whether it's a commercial plan, but may not have the ability to actually deliver care by employing providers or operating clinics or hospitals. That's where we come in.
If a provider, if an insurer, rather, is growing into a new area or needs to better manage a section or subset of their population, they would come to us, contract with us for a preset percentage of their premium dollar, and we would then be responsible not just financially for the outcomes, generated by the population, but also clinically for the quality and the care outcomes for the patient. This is a valuable proposition for the payers, and I apologize, I'm just backing up here, given the diversity of the crowd. But this is an interesting proposition for payers because payers are mandatorily, from a regulatory perspective, capped in terms of the amount of profit margin that they can make on patients. If they make more than 15% margin, they have to return those dollars, anyway.
And so when we come in and say, "Hey, we can manage your population, you can still keep your maximum regulatorily mandated profit margin, but we can take on that 85% of the premium dollar. We can manage the cost of your patients more effectively than you can. We can reduce the volatility that you'll have in your books." And we can keep your patients happier so that they are retained, and they continue to choose your health plan over and over again, year in and year out. That's a very valuable proposition for them because we're reducing volatility for them, increasing LTV for them, and reducing churn on their behalf. On our end, we believe that we have differentiated ability to actually serve those patients relative to what an insurance company might be able to do. We have been in the business for 30 years.
We operate, as I mentioned earlier, a large network of both primary and specialty care providers. We're adding hospitals to that mix. We also operate and own and operate, you know, primary specialty care and ancillary care facilities of our own. So the ability that we have to deliver care, we believe is sets us apart from what an insurer, you know, is, business is to do, which is to underwrite premiums, and actuarially calculate, you know, a 15% profit margin for them. So that's kind of the value add that we're providing, you know, for payers. In a typical healthcare ecosystem, doctors are generally operating in a pretty uncoordinated fashion. On this map, you know, we have a bunch of independent dots. What we are doing is really we're going into a community or geography.
We are working with the primary and specialty care doctors in that geography to organize them by binding them together via technology, via services, and we'll talk a little bit more about what those services are and what that technology looks like, so that they can deliver care in a coordinated fashion and prevent some of the waste that many of you probably experienced when navigating the healthcare system. For example, if you go to a new doctor and they didn't get their... your lab results or your X-rays that you had from a previous physician because they don't have a data exchange set up, they may make you just go to another lab.
And while that may be annoying or costly for the patient, it's even more costly for the overall healthcare system that denies care for someone who might actually need it just because we were being inefficient with the system. So that's a very simple example of where better coordination of care via technology, via services, via our platform that we've built, can take costs out of the system. There are obviously tons of other opportunities, let's say, to reduce total cost of care. For example, patients who often go to the emergency room or are readmitted to a hospital after discharge, there are opportunities there to identify which patients are higher risk for that readmission and then, for example, intervening so that that readmission doesn't happen, saving often a $10,000-$30,000 hospital admit.
We will send nurses to the home when our machine learning algorithms detect that a patient is high risk. We can get them in for a virtual visit. We can engage them at their PCP's office by sending a nurse practitioner to that office and embedding them in the location. And these are just a few of the tools that we have at our disposal, which are technology-enabled, in order to figure out which patients need what care at what time and making sure that they have access to that care. Augmenting the kind of affiliate...
Augmenting our 10,000 provider-strong affiliate network, you can almost think of it as a, you know, not trying to necessarily say that providers are cab drivers, but you can almost think of it in Uber-like fashion, where Uber is contracting with drivers in order to provide services to their customers. We are contracting with independent doctors in order to provide their services in a coordinated fashion to the patients that the insurers tell us to are reinsuring with us. In addition to that, we're also actually owning and operating parts of the care delivery system. The analogy there would be if Uber actually owned some of the cars and employed some of the drivers in order to supply or in order to meet supply and demand imbalances. So, for example, I was born and raised in Los Angeles.
A lot of our business is headquartered there. In Los Angeles, it's very easy in downtown, in Beverly Hills, let's say, to get an appointment with a dermatologist. There's a dermatologist literally on every block, maybe two on the same block sometimes. But if you go 50 miles east, drive an hour and a half out to, into the middle of the desert, for example, there's literally not a dermatologist, sometimes within a 30-mile radius. And so that supply-demand imbalance means that we, as the coordinator of the care and the responsibility, holding the financial and clinical responsibility for the patient, we have to do our best to try to fix that supply-demand imbalance.
If we're unable to find, in this example, a dermatologist to contract with out in the desert, what we often do is we will employ a provider, put them up in our own clinic within our four walls, it's branded as Astrana Care, to fulfill that supply-demand gap. And so as we've continued to grow and build density in certain areas, in order to make sure the patients have good access to care, we now employ over 100, you know, primary care doctors, dermatologists, gastrointestinal providers, cardiologists, so on and so forth, in order to make sure that patients have access to care for some of the higher demand specialties and not have to wait, you know, 3-6 months, for access to some of them.
We really think the care delivery kind of physical footprint augments the kind of more virtual network of providers that we organize and coordinate. Finally, all of that, you know, wouldn't fit together well and serve as an efficient co-delivery system without the underlying kind of air traffic control infrastructure that coordinates the care for those patients. So in between visits or in between encounters with different parts of the healthcare system, that's often where a lot of things get dropped or are disjointed, or are poor patient experiences, and that's what the care enabling platform is meant to be for.
And so we provide services to providers, we provide services to payers, as well as to patients directly via our patient app, that allow them to better view their longitudinal care history, whether regardless of which independent doctor they went to, allows them to talk instantly to a virtual member, virtually with a member of our care team, you know, an NP or a RN or even an MD, if acute, and also allows them to book and schedule visits virtually or in person at one of our sites via the Care Enablement Platform... Holistically, what this means is that we have a very large and diversified platform serving a bunch of different types of Americans across the entire care continuum.
As you can see here, you know, very diverse in terms of demographic, in terms of age, and in terms of the lines of business that they represent, and that we partner with insurance companies on. Because they're so satisfied with our services, we do have great provider retention. You know, over 98% of our doctors remain as part of our network, other than retirees, and the average provider is with our system for over 11 years. In addition, it's one thing to coordinate the system.
The other, you know, the more important part is extracting the financial value that we are creating for the system, the savings that we're generating, and being able to take risk on that, so that we're able to partake in some of the upside that we're creating for the system. And around 96% here, as you can see, of our members are involved in some kind of financial arrangement in which we are able to extract some of the financial value generated for the insurance companies by taking on risk on these contracts. And so what I mean by risk is that they're literally giving us, let's say, illustratively, 85% of their premium dollar. For every 100 bucks that they're receiving each month, they are putting 85 of those dollars into our bank account.
We're responsible for paying out all the claims, all of the care delivery costs for the patient, and whatever is left is essentially ours to keep, and that's where kind of our gross margin would come from. Moving on to our technology platform, we think there are a couple of different key pillars where our technology platform is pretty differentiated. All of it is built in-house. We have around 75 individuals across data science, analytics, IT, engineering, as well as some folks, offshore that help us create and build and ideate these products. And we think we really serve a couple of different purposes here. The first is serving our providers, you know, the 10,000 providers in our affiliate network.
These providers have access to point-of-care analytics integrated into their EHR, their charts that allow them to figure out what is the next best action for a patient, what preventive measures might be relevant for a given patient. For example, if a woman comes in who just turned 45, it would pop up on the EHR that this woman may need a mammogram, for example, because that's kind of the evidence-driven care pathway for that particular program. For a senior who is polychronic, what is the next best action? Could they, you know, be referred to a pre-diabetic program? Could they be referred to a dialysis program?
So on and so forth, and these are the items that our AI programs will figure out in the back end, but then also integrate directly into the EHR, so the doctor doesn't have to log on to some other system or, try to integrate a bunch of different data sources on their own. On the care management side, internally, we employ around 300 clinicians at the corporate level, who serve as almost a cloud task force to figure out the highest-risk parts of the population, the 1 million patients that we serve, and engage them in a way that is going to hopefully be preventive in terms of lowering their risk on a go-forward basis for their healthcare. So, for example, patients who are at high risk for falls in their home, for example, we would...
The care management platform will figure out, "Hey, this person's high risk. Should we send them a monitor? Should we send them a remote patient monitoring device? And is there someone who can call them every couple of days to check in on them?" Or if it's someone who could be a candidate for a heart attack, for example, is there something we can do to get them an EKG early, a stress test, make sure that they're eating healthy, doing diet coaching ahead of time, and making sure that that doesn't progress into something worse that could be more costly for the healthcare system? And in that way, all of our incentives really are aligned. We're aligned. We're incentivized.
We're incented to keep the patient as healthy as possible so that, you know, as the de facto insurer or payer for that patient's healthcare costs, we're able to, you know, create value for the system. On the third pillar here, we've also developed a pretty sophisticated population health and analytics platform. Before I started my job at Astrana, I used to be a trader down the street at Ken Griffin's Citadel, and I was trading Delta Ones and Spot FX and a couple of other Delta One-like entities. And if I ever did something, if my strategies ever did something that put us at risk, that were out of some strict P&L bounds or had too much beta to one thing or another, I would get a call from the risk department.
They would call me and say: "Hey, you're out of bounds here. You need to... Do you want to reset your strategy? Do you want to fix this? Do you want to hedge out here, hedge out there?" And that's how we run the business here. I mean, at the end of the day, we are taking fixed dollars, a percentage of premium from insurance companies, and we're paying out a floating set of claims based on the utilization of our patients, and ideally, the fixed numbers coming in are bigger than the floating numbers going out.
And so we very carefully monitor our, you know, quote-unquote, "beta" or our exposure to various risk factors, whether it's COVID, whether it's a regional spike in cardiology costs, whether it's a statewide regulatory event, whether it's a specific idiosyncratic example of someone performing fraudulent, you know, billing for a fraudulent service. We have sophisticated algorithms that are constantly running in the back end that will detect some of these anomalies, surface them to the relevant medical director, always an MD, you know, in the market, who understands community, who understands what the patients need and what the providers are doing in that market, and figuring out if there's a way we can improve that system. So that's part of...
This system is part of how we build our care delivery network, the owned and employed clinic sites that I talked about earlier, because we can identify where in certain zip codes or counties, if we have an imbalance in supply and demand, and the wait times, for example, for a cardiology visit, start to creep up, someone will get a notification about that, and then we can go and figure out that we either need to contract more cardiologists in that area, or we need to build a clinic and then employ a cardiologist in the area so that we can keep things in balance, and patients can have access to high-quality healthcare whenever they need it. And then finally, we built a lot of tools, especially with the advent of, you know, more sophisticated AI, to improve our operating leverage.
So a lot of the things I talked about earlier in terms of the care model, in terms of preventive care, those don't show up in the P&L right away, frankly. I mean, we wish it did, but they just don't. Something that, you know, getting someone a mammogram isn't going to magically make them cost less to the healthcare system year zero, but it could have an effect sometime down the line when you prevent that event, you know, adverse event from happening.
So the only thing or the most reliable thing, year zero, when we go into partner with new providers going to a new region, is to first get them operating very efficiently so that we can take some of those dollars that we saved by the operating leverage we have to invest back into the health of the patients and the health of the communities, so that over the long term, we can carve out a margin from actually lowering the actual cost of care for those patients over time. On the operating leverage side, you know, we've built everything in-house, proprietary tools for care management, for paying claims, for doing rev cycle, for doing billing, doing call center. We're also delegated by our payer partners to perform tasks that you might associate with a payer, typically, like prior authorizations, approvals and denials.
For example, we recently just built a large language model that we feed in all of the Milliman Care Guidelines, the health plan regulations, the CMS guidelines, and then recent research papers to figure out the right care models. The LLM can read all of that and surface the relevant parts to a nurse or a medical review director so that they have a better context about what the patient's doing, and they can still, at the end of the day, still a human, you know, writing the approval or denial report, but at least they don't have to scroll through, you know, thousands of pages of best practice care guidelines in order to get there.
So there's a lot of things that we're doing on the technology side that we think allow us to operate in a more effective, in a more efficient way than maybe some of our peers as they try to engage in this space. And all of that adds up to great clinical outcomes for the patients as well. 48% lower than the CMS, Centers for Medicare and Medicaid Services, benchmark in terms of number of hospital admissions per 1,000 seniors that we have, 43% lower visits to the emergency room, and all of those are expensive visits. I mean, 43% lower visits, each visit can range from $5,000-$50,000, and you can see why there are dollars generated by saving total, you know, by decreasing the total cost of care for our patients.
At the end of the day, what that means, what that translates to financially, is that we're able to reduce, at least in our current markets, around 350 basis points of what we call Medical Cost Ratio, or essentially you can think of that as gross margin, claims divided by total premium dollars. And we can get to profitability in a new market within a two-year period. First, like I mentioned, by reducing OpEx, then over time, reducing medical costs by around, you know, 3.5%. This is a growth conference after all, so talk a little bit about growth. As I mentioned earlier, growing around 26% a year over the last four years, tripled over the time that we've been here, that I've been at the business, rather.
I think we think there's still a huge runway ahead to grow. The market, as many of you may know, has been unfortunately challenged, I think, from whether it's regulatory changes around reimbursement for Medicare Advantage, whether it's utilization trends and pressures, coming out of COVID, and people going back to all of the elective surgeries that they put off, you know, during the pandemic. There have certainly been challenges for the industry. We think that this is an opportunity for us. As Ryan mentioned, we're one of the, I think, most profitable, among our peer set in the space, and we can take...
And as others are trying to cut back on risk so that they can preserve the margin that they have, we've invested so heavily over the last two or three decades in our community's health that we can continue to be profitable and run 10% adjusted EBITDA margin and continue to press our advantages while others are retreating from risk. And so that's a real large opportunity for us, as even our payer partners, as we speak, are coming to us saying, "Your peers are no longer interested in taking on risk with us. Would you like more members? Would you like to take on risk on more of our population?" And we're just trying to figure out a path forward where we can grow at a decent clip.
You know, we've guided towards 25%-30%, while still maintaining the, you know, level of profitability and margin, preservation that, that we've historically run at. We think there's a large runway to do that for the next 3-5 years to come. That's going to come in a couple of different places. We're going to expand in our existing markets, founded in California and Los Angeles back in the 1990s. You know, today, we only serve less than 3, I think, 3 or so, percent of the California population, so still a large runway to go just in California alone. We don't even serve a single member in Orange County or San Diego, for example. Today, we're in Los Angeles, we're in the Central Valley, when we're up in San Francisco.
Then outside of California, we've recently expanded to Southern Nevada, Las Vegas, and Henderson, as well as in Texas, Houston, Dallas, and Fort Worth. Obviously, there's huge population centers there where we have very low penetration and a very high desire from our payer partners to have a value-based care partner in those areas. We've historically guided on my last earnings call towards growing into one or two new states this year. Given some of our performance in Q1, we may even accelerate some of those plans and get to, you know, two to three, if not more, just given the amount of demand for our services.
The second big lever for growth, other than, you know, simply growing the number of members that we have, is to grow the amount of revenue and EBITDA generated per member. And so an interesting dynamic is that in California, where a lot of our members are, we historically did not have a certain regulatory license. Not important what the name is, but it's a restricted Knox-Keene license, and essentially, you have to apply for one in order to be able to take on full risk across both Part A, you know, inpatient-related items, as well as Part B, outpatient-related services, for the California population. And so we recently got approval for these licenses in California. We got approval for the Medicare Advantage license back in 2023, and...
Very recently, at the end of March, we closed on a deal to acquire the Medicaid version of that license. After having these licenses, we are now able to move from the left side of the page, you know, partial risk environment, where we're accruing illustratively 40% of the premium dollar and paying out claims against that, and then, you know, whatever the associated EBITDA margin is, to accruing for, again, illustratively, 85% of the revenue of the premium dollar as our revenue dollar, and then improving EBITDA margins as well on the overall premium dollar.
So there's really a big opportunity to essentially, even if we don't grow a single new member in the next 3 years or say 2 years, we could still have a huge revenue and EBITDA tailwind just from moving patients from a partial risk construct to a full risk construct. And while I'm using the words risk, because technically it is, it's not inherently, we don't think at least, truly a higher risk proposition to take on the full risk versus the partial risk. And the reason is because these are patients that we've had in our system for a long time.
We actually see the claims dollars, both on the Part A inpatient and the Part B outpatient side, and we already employ a lot of the hospitalists, the discharge planners, the care coordinators, the inpatient case managers, etc., that would help us manage the inpatient cost, even though those economics don't currently accrue to us. And so in a way, we're almost already paying some of the OpEx in order to manage the inpatient part of the dollar, but not actually accruing any of the financial benefit for those patients. And in addition, because we have all the claims data for those patients already, because they're our patients on the professional side, on the outpatient side, we can actually model out, if we were to enter into a contract, given the past historical claims data, what would the profit or loss on that contract look like?
And we're entering full risk selectively in those areas where obviously we're, you know, operating at a positive margin. So obviously, you know, past results don't necessarily indicate future performance, but we do think this is a de-risk proposition in order to move our existing members, members that we know well, members that we've been treating and seeing in our facilities for a long time and in our network for a long time, from a partial risk to a full risk environment. And that is gonna be another large tailwind in addition to growing just the membership base itself. On a quarterly basis, we've been now reporting, you know, how much of our revenue comes from a full risk contract.
So we started off, you know, at zero, you know, a while ago, and that has been rapidly increasing due to the licenses that we recently got. We're at around 60% of the revenue, of our capitated revenue, coming from a full risk arrangement as of April 1, and we've guided in the past towards that number being around two-thirds by the end of the year. Finally, we think because of the operating leverage and the platform we've created, there's a pretty interesting opportunity to continue to be more aggressive than just performing organic growth in terms of membership and moving people up the risk track. And that's by acquiring low risk, you know, accretive, entities that are looking for a solution, looking for an exit, especially in a more troubled macro environment today.
One example of that was a transaction that we announced in late last year and just closed on March 31st. That was the Medicaid full risk license that I mentioned earlier. That was a group called Community Family Care. It was a doctor who came to us back in 2020. Actually, one of the first clients that I onboarded personally. And at the time, they were doing around high single-digit millions of EBITDA, maybe call it close to $100 million of revenue. And at the time, they wanted to be bought out for $200 million, which I suppose was okay for the multiples at the time.
We didn't want to pay that amount, but instead, what we offered was, "Maybe you can just be a client of our technology platform." And so over the next, you know, three and a half years, we worked closely with that group. We helped them double their revenue from $100 million to around $200 million. We more than tripled their EBITDA to around $25 million in LTM EBITDA at the time of the announcement of this deal. And as they grew into that valuation that they wanted, you know, $25 million of EBITDA, we were actually okay paying $200 million for the business. So we ended up announcing that deal, getting it signed, acquiring one of our clients in the process, at what we think is an accretive multiple, I think, 6x LTM EBITDA up front, 8x post-performance milestones.
So that's another area of pipeline for us, is using our technology platform as a wedge to win new clients and then using the opportunity to get to know them really well in order to acquire them into the business overall. I know we're out of time here, but I'll just whiz through the last few slides. You know, had a decent Q1, we think, in our opinion. We reiterated guidance for the year, despite some of the headwinds for the industry. And we look forward to continuing, you know, growing quickly and proving that our care model works and having an impact on Americans throughout the country. With that, I'll thank you so much.