Oak Street Health, Inc. (OSH) Bundle
A Brief History of Oak Street Health, Inc.
Oak Street Health, Inc. (NYSE: OSH) has undergone significant evolution since its inception, focusing on providing high-quality primary care for adults on Medicare, particularly those with complex health needs. As of 2024, the company continues to adapt to the healthcare landscape, marked by its strategic growth and financial performance.
Founding and Early Growth
Founded in 2012, Oak Street Health started with a vision to transform healthcare delivery through a patient-centered approach. By 2023, the company had expanded its operations to 172 centers across various states, serving over 231,000 patients, a substantial increase from 140 centers and 175,000 patients in 2022.
Financial Performance
In the first quarter of 2023, Oak Street Health reported total revenues of $752.0 million, reflecting a 46% increase from $513.8 million in the same period in 2022. This growth was primarily driven by a 47% rise in capitated revenue, which reached $743.2 million, up from $506.1 million year-over-year.
Financial Metrics | Q1 2023 | Q1 2022 | Change (%) |
---|---|---|---|
Total Revenues | $752.0 million | $513.8 million | 46% |
Capitated Revenue | $743.2 million | $506.1 million | 47% |
Net Loss | $(44.2) million | $(96.7) million | 54% |
Adjusted EBITDA | $0.5 million | $(42.4) million | — |
Operating Expenses
Operating expenses increased to $795.4 million in Q1 2023 from $604.9 million in Q1 2022, a rise of 31%. Key contributors included:
- Medical claims expense: $523.5 million (70% of total revenues) up from $379.4 million.
- Cost of care: $129.2 million, a 36% increase from $95.2 million.
- Sales and marketing: $42.3 million, up 26% from $33.8 million.
- Corporate, general and administrative: $89.9 million, a slight increase from $88.7 million.
Patient Growth and Market Position
As of March 31, 2023, Oak Street Health reported:
- Total patients: 231,000
- At-risk patients: 177,000
- Fee-for-service patients: 54,000
This indicates a robust growth trajectory in patient enrollment, especially within at-risk categories, which are critical for capitated revenue models.
Cash Flow and Liquidity
Cash, cash equivalents, and restricted cash stood at $156.2 million as of March 31, 2023. The company reported net cash used in operating activities of $92.7 million, an increase from $91.2 million in Q1 2022. Net cash provided by financing activities surged to $43.5 million, significantly up from $1.9 million in the prior year.
Cash Flow Metrics | Q1 2023 | Q1 2022 |
---|---|---|
Net Cash Used in Operating Activities | $(92.7) million | $(91.2) million |
Net Cash Provided by Financing Activities | $43.5 million | $1.9 million | Cash, Cash Equivalents, and Restricted Cash | $156.2 million | $125.3 million |
Recent Developments
In May 2023, Oak Street Health was acquired by CVS Health, marking a significant shift in its operational strategy and capital structure. As a result, the company is now positioned to leverage CVS's extensive resources and infrastructure to enhance its service delivery and patient care capabilities.
Conclusion
As of 2024, Oak Street Health continues to strengthen its presence in the healthcare market, focusing on expanding its patient base and improving financial performance while navigating the complexities of a post-merger landscape.
A Who Owns Oak Street Health, Inc. (OSH)
Ownership Structure
As of 2024, Oak Street Health, Inc. (OSH) is primarily owned by CVS Health Corporation following a merger that was completed on May 2, 2023. Post-merger, OSH operates as an indirect wholly-owned subsidiary of CVS Health.
Major Shareholders
Prior to its delisting from the NYSE, the ownership of Oak Street Health was distributed among various institutional and individual investors. The following table outlines the major shareholders before the merger:
Shareholder | Ownership Percentage | Shares Held | Type of Ownership |
---|---|---|---|
CVS Health Corporation | 70% | Approximately 170 million shares | Institutional |
BlackRock, Inc. | 7.5% | Approximately 18 million shares | Institutional |
The Vanguard Group, Inc. | 6.1% | Approximately 14.5 million shares | Institutional |
State Street Corporation | 4.4% | Approximately 10.5 million shares | Institutional |
Insider Holdings | 5% | Approximately 12 million shares | Individual |
Financial Performance and Impact of Ownership
The merger with CVS Health has positioned Oak Street Health to leverage CVS’s extensive resources and infrastructure, which is expected to enhance its operational efficiency and financial performance. For the first quarter of 2023, Oak Street Health reported total revenues of $752 million, an increase of 46% from the previous year. The company experienced a net loss of $44.2 million during the same period.
Stock Performance
Prior to its delisting, OSH shares were trading at an approximate price of $21.00 per share. Following the announcement of the merger with CVS Health, shares were suspended from trading, marking the end of its public trading status.
Debt and Financial Obligations
As of March 31, 2023, Oak Street Health had total debt obligations amounting to $1.005 billion, which included $920 million in Convertible Senior Notes and $100 million in a term loan. The merger resulted in CVS Health discharging these debts, thereby streamlining OSH's financial obligations.
Future Outlook
The integration into CVS Health is anticipated to provide Oak Street Health with substantial growth opportunities, including expanded access to healthcare services and enhanced patient care capabilities.
Oak Street Health, Inc. (OSH) Mission Statement
Mission Overview
The mission of Oak Street Health, Inc. (OSH) is focused on providing high-quality primary care to older adults, particularly those enrolled in Medicare. The organization aims to improve health outcomes while reducing overall healthcare costs for its patients through a value-based care model.
Core Values
- Patient-Centric Care: Prioritizing the needs and preferences of patients in all healthcare decisions.
- Accessibility: Ensuring that healthcare services are available to all eligible patients, particularly underserved populations.
- Innovation: Utilizing data and technology to enhance care delivery and health management.
Financial Performance and Patient Growth
As of the first quarter of 2023, Oak Street Health reported significant growth in both patient count and revenue:
Metric | Q1 2023 | Q1 2022 | Change (%) |
---|---|---|---|
Total Centers | 172 | 140 | 22.9% |
Total Patients | 231,000 | 175,000 | 32.0% |
At-Risk Patients | 177,000 | 124,000 | 42.7% |
Fee-for-Service Patients | 54,000 | 51,000 | 5.9% |
Total Revenues ($MM) | $752.0 | $513.8 | 46.5% |
Revenue Breakdown
In Q1 2023, the revenue breakdown highlighted the dominance of capitated revenue:
Revenue Type | Q1 2023 ($MM) | Q1 2022 ($MM) | Change (%) |
---|---|---|---|
Capitated Revenue | $743.2 | $506.1 | 46.2% |
Other Revenue | $8.8 | $7.7 | 14.3% |
Operating Expenses
Operating expenses for Q1 2023 were reported as follows:
Expense Type | Q1 2023 ($MM) | Q1 2022 ($MM) | Change (%) |
---|---|---|---|
Medical Claims Expense | $523.5 | $379.4 | 38.0% |
Cost of Care | $129.2 | $95.2 | 36.0% |
Sales and Marketing | $42.3 | $33.8 | 25.0% |
General and Administrative | $89.9 | $88.7 | 1.4% |
Total Operating Expenses | $795.4 | $604.9 | 31.5% |
Net Loss and Shareholder Information
For Q1 2023, Oak Street Health reported a net loss of $44.2 million, an improvement from a net loss of $96.7 million in Q1 2022. The weighted average common shares outstanding were 238,093,465, resulting in a net loss per share of $0.19 compared to $0.43 in the previous year.
The financial performance underscores Oak Street Health's commitment to scaling its operations while focusing on delivering value-based care to its patient population.
How Oak Street Health, Inc. (OSH) Works
Business Model
Oak Street Health operates a network of primary care centers focusing on Medicare-eligible patients. The company primarily generates revenue through capitated arrangements, where it receives a fixed amount per patient from Medicare Advantage plans. As of March 31, 2023, Oak Street Health had 172 centers and served a total of 231,000 patients, with 177,000 classified as at-risk patients under capitated arrangements.
Financial Performance
In the first quarter of 2023, Oak Street Health reported total revenues of $752.0 million, a significant increase from $513.8 million in the same period of 2022, representing a 46% growth. This growth was driven by a 47% increase in capitated revenue, which reached $743.2 million, up from $506.1 million year-over-year.
Financial Metrics | Q1 2023 | Q1 2022 | Change (%) |
---|---|---|---|
Total Revenues | $752.0 million | $513.8 million | 46% |
Capitated Revenue | $743.2 million | $506.1 million | 47% |
Medical Claims Expense | $523.5 million | $379.4 million | 38% |
Total Operating Expenses | $795.4 million | $604.9 million | 31% |
Net Loss | ($44.2 million) | ($96.7 million) | 54% |
Operational Costs
Oak Street Health's operating expenses totaled $795.4 million in Q1 2023, up from $604.9 million in Q1 2022. The largest component was medical claims expense, which accounted for 70% of total revenues. The breakdown of operating expenses is as follows:
Operating Expense Category | Q1 2023 | Q1 2022 | Change (%) |
---|---|---|---|
Medical Claims Expense | $523.5 million | $379.4 million | 38% |
Cost of Care | $129.2 million | $95.2 million | 36% |
Sales and Marketing | $42.3 million | $33.8 million | 26% |
Corporate, General and Administrative | $89.9 million | $88.7 million | 1% |
Depreciation and Amortization | $10.5 million | $7.8 million | 35% |
Net Loss and Earnings Per Share
For Q1 2023, Oak Street Health reported a net loss of $44.2 million, which improved from a net loss of $96.7 million in Q1 2022. The adjusted earnings per share were reported at $(0.19) compared to $(0.43) in the prior year.
Cash Flow and Liquidity
As of March 31, 2023, Oak Street Health had cash and cash equivalents of $156.2 million. The company reported net cash used in operating activities of $92.7 million, compared to $91.2 million in the previous year.
Cash Flow Summary | Q1 2023 | Q1 2022 |
---|---|---|
Net Cash Used in Operating Activities | ($92.7 million) | ($91.2 million) |
Net Cash Provided by Investing Activities | $46.9 million | $94.2 million |
Net Cash Provided by Financing Activities | $43.5 million | $1.9 million |
Debt Structure
As of March 31, 2023, Oak Street Health had total principal debt of $1.020 billion, which includes $920 million in Convertible Senior Notes and $100 million in Term Loans. The company is managing its debt with a focus on maintaining liquidity and capital resources.
Future Outlook
Oak Street Health intends to continue expanding its center network and patient base, focusing on enhancing care delivery and managing costs effectively. The company anticipates further growth in capitated revenue as it scales operations across new markets while strategically managing its financial resources.
How Oak Street Health, Inc. (OSH) Makes Money
Revenue Streams
Oak Street Health, Inc. generates revenue primarily through two main streams: capitated revenue and other revenue sources. As of the first quarter of 2023, total revenues reached $752.0 million, a 46% increase from $513.8 million in the same period of 2022.
Revenue Type | Q1 2023 ($ millions) | Q1 2022 ($ millions) | Change (%) |
---|---|---|---|
Capitated Revenue | 743.2 | 506.1 | 47 |
Other Revenue | 8.8 | 7.7 | 14 |
Total Revenues | 752.0 | 513.8 | 46 |
Capitated Revenue Model
Capitated revenue, which accounted for approximately 99% of total revenues, is derived from fixed fees paid per patient per month (PPPM) by health plan payors. The primary payors include:
Payor Source | Q1 2023 (%) | Q1 2022 (%) |
---|---|---|
Humana | 32 | 32 |
Wellcare/Meridian | 13 | 16 |
Other | 55 | 52 |
For the three months ended March 31, 2023, the total patients under capitated arrangements increased by 43%, leading to a rise in capitated revenue rates by approximately 4% year-over-year.
Cost Structure
The company's operating expenses reached $795.4 million in Q1 2023, a 31% increase from $604.9 million in Q1 2022. The breakdown of operating expenses is as follows:
Expense Type | Q1 2023 ($ millions) | Q1 2022 ($ millions) | Change (%) |
---|---|---|---|
Medical Claims Expense | 523.5 | 379.4 | 38 |
Cost of Care (excl. depreciation) | 129.2 | 95.2 | 36 |
Sales and Marketing | 42.3 | 33.8 | 26 |
Corporate, General, and Administrative | 89.9 | 88.7 | 1 |
Depreciation and Amortization | 10.5 | 7.8 | 35 |
Total Operating Expenses | 795.4 | 604.9 | 31 |
Profitability Metrics
Despite the increase in revenues, Oak Street Health reported a net loss of $44.2 million for Q1 2023, an improvement from a net loss of $96.7 million in Q1 2022. Key profitability metrics include:
Metric | Q1 2023 ($ millions) | Q1 2022 ($ millions) |
---|---|---|
Gross Profit | 228.5 | 134.4 |
Patient Contribution | 219.7 | 126.7 |
Platform Contribution | 101.6 | 39.8 |
Adjusted EBITDA | 0.5 | (42.4) |
As of March 31, 2023, the company had a total of 231,000 patients, an increase from 175,000 the year prior, with 177,000 of those patients classified as at-risk.
Financial Position
As of March 31, 2023, Oak Street Health reported total assets of $2.321 billion and total liabilities of $2.588 billion, reflecting ongoing investments in growth and expansion.
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