UpSIDE to 2Q21
We expect 2Q21 revenue to come in at $127M on 632,000 members versus guidance of $110-$118 and consensus of $115M. We also expect COGS and G&A to improve sequentially as a percentage of sales. The key driver for our model is our Provider Tracker. The revenue, cost of care, and G&A per provider trend over 2020 and 1Q21. With a sequential improvement in medical utilization in 2Q21 as we've seen so far this earnings season, we expect Net Patient Service Revenue to hit $46M and continue rising over the remainder of 2021 as sites continue to open and locations continue to fill with patients. There is not much mystery in the membership revenue and we are largely in line with guidance. For partnership revenue, new partners announced in 1Q21 should generate sequential revenue growth. The care margin should continue to improve sequentially as provider panels continue to expand resulting in more patients per provider, leveraging their fixed provider and facility costs.
Low risk from Delta VARIANT
Looking forward into 2H21 we do expect the delta variant to negatively impact medical utilization, although concentrated in regions with low vaccination rates, and for higher acuity hospital based services. We don't expect primary care to be significantly impacted as policies are likely to restrict the movement of unvaccinated people rather than lock all patients out of sites of care as we saw in the pre-vaccine stages of the pandemic. As we move further into the flu season of 2021-2022, we expect the ambiguity of the symptoms between COVID-19 and flu to drive visits and testing.
Iora Acquisition FOCUS
The acquisition of Iora muddied our original thesis for ONEM. The bottom line is we're not big fans of management's views on synergy between the two brands, but we do think the primary care market, both for commercial and Medicare/Medicaid, is migrating to more consumer-centric and risk bearing models and feedback from our network of contacts has generally been positive on Iora. For now and from this price and the potential upside based on their projections, we've kept ONEM as an active long. We've since developed tracking tools to measure the pace of expansion and continue to speak to operators across the direct primary care industry.
We believe the 2021 projections for the combined entity can support a share price at 8X to 15X revenue and a share price in the $31 to $60 range, and higher depending on the proof points for the combined model. We think a good One Medical 2Q21 will be one of those proof points.
All data available upon request. Please reach out to with any inquiries.
Thomas Tobin
Managing Director
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