- Primary care networks One Medical and Oak Street Health on Tuesday both reported significant year-over-year jumps in revenue and membership during the third quarter as delayed demand for healthcare services amid the pandemic came to a head.
- One Medical, a membership-based primary care platform, saw revenue jump 46% year over year to $101.7 million, while Oak Street Health, a value-based startup focusing on Medicare patients, saw revenue increase 57% to $218 million in the quarter — its first as a public company. Both figures surpassed Wall Street expectations.
- COVID-19 has proved a major headwind for providers in 2020, but the third quarter is somewhat of a bright spot for medical networks, which were also helped by the employer return-to-work push, One Medical executives said on a Tuesday call with investors. However, pent-up demand for services may not persist in the fourth quarter.
Oak Street Health went public in August, raising $352 million. Since then, its stock has grown 162%, from $21 at its IPO to $55 at Tuesday's open. The company has yet to turn a profit, however, reporting a net loss of $59 million in the third quarter. That's compared to a loss of $33 million during the same time last year.
The eight-year-old Chicago-based medical network now operates 67 centers serving roughly 90,000 patients, with about 66% of its membership in capitated payment arrangements. Total patients grew 36% year-over-year. It opened 13 new centers in the third quarter alone, CEO Mike Pykosz said on a call with investors Tuesday morning, and kept all clinics open during the coronavirus pandemic to meet patient demand, while relying on higher telehealth use.
In September, Oak Street Health announced it was partnering with Walmart to add its clinics to three Walmart supercenters in the Dallas-Fort Worth area. The first opened in last month, with plans to launch the remaining two by the end of this year.
The company plans to operate up to 75 clinics by the end of 2020. It also plans to participate in CMS' latest value-based care model, called the Direct Contracting program, which starts April, and is excited by the growth opportunity, Pykosz said on the call.
For its part, One Medical saw its membership jump 29% in the third quarter to 511,000 patients. With that increase, the San Francisco-based primary care platform reached its projected membership for 2020 a full quarter early, executives said.
One Medical went public in January, and is not yet profitable, operating at a net loss of $16.4 million in the third quarter. That's compared to a net loss of $15.6 million same time last year.
However, the company reported its highest adjusted EBITDA ever in the quarter at $3.5 million.
One Medical is currently in 12 U.S. markets and plans to launch five more next year in Texas, North Carolina, Wisconsin and Ohio, CEO Amir Dan Rubin said on the call. It currently operates 103 clinics, up from 83 at the end of last year.
However, the novel coronavirus has been a major headwind for the company earlier in the year, causing significant declines in billable revenues. That recovered early in the third quarter before eventually exceeding pre-COVID-19 levels, CFO Bjorn Thaler said on the call.
One Medical reported "stellar Q3 results ... with clear but hard to quantify aid from COVID-related dynamics," SVB Leerink analyst Stephen Tanal said in a note, including elevated flu vaccinations, COVID-19 screening and testing and elevated demand for primary care.
"We've been able to see in this quarter kind of great momentum, signing up more employers and consumer members across markets," Rubin said. One Medical launched a return-to-work service for employer clients, called Healthy Together, which includes testing and also has a virtual-only option for companies in markets where One Medical doesn't have a physical presence.
As a result of the quarter, Oak Street slightly increased full-year revenue expectations, now expecting 2020 revenue between $854 million and $858 million.
One Medical expects full-year revenue in the range of $362 million to $367 million.