Specialist
Former director at Village Practice Management Co LLC (VillageMD)
Agenda
- Recent trends and developments in the value-based primary care physician group market, focusing on VillageMD (NASDAQ: WBA)
- Walgreens Boots Alliance’s (NASDAQ: WBA) growth investments in VillageMD, execution strategy and attractive prospective geographies
- Competitive landscape, including CVS’s (NYSE: CVS) announced acquisition of Oak Street Health (NYSE: OSH)
- Tech assets to increase cost savings on managed populations
- 2023 company outlook and potential strategic exits
Questions
1.
What major trends and developments have you been following in the value-based primary care services market over the past year or so that might better inform our discussion today on VillageMD?
2.
Could you break down VillageMD’s efforts to become an omnichannel healthcare services provider? More specifically, what’s the greater strategy behind the value-based primary care clinic’s proximity to Walgreens’ pharmacies and CityMD outpatient assets all under one umbrella?
3.
You mentioned Oak Street. How does CVS’s February 2023-announced purchase of Oak Street shift the competitive landscape for VillageMD? How do you assess the competitive dynamics between these two integrated primary care conglomerates with large pharmacy investment and even ownership, especially in Oak Street’s case?
4.
How would you differentiate VillageMD from Amazon’s budding One Medical franchise? I appreciate One Medical also targets the employer channel, but given that there’s limited competitive interplay right now, how much or little overlap might we see going forwards? Do you think we’ll see an expansion from Amazon One Medical, especially given the more lucrative unit economics on managed Medicare that you outlined?
5.
What kind of threat do you see from Walmart’s emerging efforts to build out a healthcare services arm? As you mentioned, the company’s brand matches up quite well in the managed Medicare and managed Medicaid sphere. How serious a contender could Walmart Health be longer term?
6.
Could you expand on VillageMD’s proprietary tech infrastructure, DocOS? What tools does this give the company in terms of being successful and reducing costs of care on managed populations? How differentiated are its tech capabilities and population health management assets?
7.
How would you break down the contract dynamics in managed Medicare for VillageMD? What are the typical bundled payment amounts and value-based KPIs, etc, appreciating this will vary substantially by geography?
8.
You mentioned that VillageMD may look to get into managed Medicaid later. With this context in mind, what reimbursement mix do you think the company will look to strike between commercial Medicare and Medicaid longer term? What are the main strategic considerations here, considering factors such as unit economics and the target patient demographic?
9.
What are your thoughts on VillageMD’s January 2023 acquisition of Summit-CityMD to bring that large network of urgent care and outpatient settings under one entity with VillageMD’s primary care clinics? What major revenue synergies can be realised via referral networks, as well as capturing a wider swath of the care continuum?
10.
How easy do you think it will be to integrate CityMD under the VillageMD umbrella? Are there any significant pain points the company might encounter? How do you assess its ability to mitigate any integration challenges?
11.
Where do you see VillageMD deploying capital over the next 12-18 months to continue to grow the business, aside from new clinic openings? Which capital spend avenues make strategic sense to put the company on the right path for sustained future performance?
12.
How costly is it to acquire patients? What marketing or brand equity initiatives is VillageMD exploring to get the name out there and acquire new patients in some more nascent markets?
13.
Thinking about a Midwest Medicare population perhaps being more likely to see a billboard than be on Facebook, what are the main criteria that VillageMD looks at when thinking about entering a new market? Which geographies are most attractive for further growth runway considering this?
14.
What do you think VillageMD will strike between de novo clinic openings and acquisitions? How do they compare in terms of upfront cost through to break-even profitability, appreciating that will vary by geography?
15.
Is there any risk with oversaturation of clinics? You said that not every clinic is full. How is VillageMD thinking about those concerns to try to optimise or maximise its clinic volume for the footprint in select markets?
16.
When VillageMD purchases an independent provider clinic, how does the company help prepare it to succeed in value-based models? Unless I’m mistaken, it only purchases providers that already have value-based care experience. Is there a substantial lift to get clinicians familiar with operating in risk computation arrangements?
17.
Regarding the implementation process, are there any cost synergies that could be realised by eliminating duplicative IT, labour and other costs, after a new clinic or group of clinics is acquired?
18.
Especially for some de novo clinics, how long does it typically take to start realising gains from population health management efforts once entering a new market? It might be helpful to break out profitability over the first 1-3 years in select new regions.
19.
From Walgreens’ perspective, what are some advantages of the VillageMD partnership, in terms of bringing additional foot traffic into retail pharmacies? How valuable does Walgreens sees this benefit as?
20.
Looking at VillageMD’s scaling strategy, do you see any significant risks from expanding too rapidly? The company was once opening multiple clinics per week. How do you think it will balance considerations around rapid growth vs becoming profitable in select markets, before moving horizontally, perhaps expanding on our conversation around patient saturation or volume at clinics?
21.
Where do you see VillageMD’s business heading over the next few years, in light of current macroeconomic conditions? What might be some likely opportunities, including a potential IPO, full buy-out by Walgreens or sale to a private investor, etc?
22.
Is there anything we haven’t discussed that is important to highlight when thinking about VillageMD?
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