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Bright Health Group (BHG)
Q2Â 2021 Earnings Call
Aug 03, 2021, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to the Bright Health Group second-quarter 2021 earnings conference call and webcast. [Operator instructions] As a reminder, this call is being recorded. Leading the call today is Bright Health Group President and CEO Mike Mikan, and Chief Financial and Administrative Officer Cathy Smith. Before we begin, we want to remind you that this call may contain forward-looking statements under U.S.
federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the risk factors included in our current and periodic filings. This call will also reference non-GAAP amounts and measures.
A reconciliation of the non-GAAP to GAAP measures are available on the company's second-quarter press release. Information presented on this call is contained in the earnings release issued this morning and in our Form 8-K dated August 3, 2021, which can be accessed from the Investor Relations page on the company's website. I will now turn the conference over to the chief executive officer of Bright Health Group, Mike Mikan.
Mike Mikan -- President and Chief Executive Officer
Good morning, and thank you for joining Bright Health Group's inaugural earnings call. I couldn't be more excited to share details on our business, our year-to-date performance, and our continued growth and momentum at Bright Health. After a few remarks, I will pass it to Cathy, who will cover a more detailed review of our performance as well as our outlook for the year before we take your questions. I wanted to start by touching on our mission and vision.
We are a healthcare company at our core. And because of that, our mission is central to what we do at Bright Health each day. Making healthcare right. Together.
Is built on the belief that by connecting and aligning the best local resources in healthcare delivery with the financing of care, we can deliver better outcomes at a lower cost for all consumers. Bright Health Group is well on its way to building the national integrated system of care needed to change healthcare in the United States. Both Bright Health Care and NeueHealth are demonstrating significant growth and diversification. And at a Bright Health Group level, we are forecasting 2021 revenue of greater than $4 billion.
As we enter the second half of 2021, Bright healthcare has seen tremendous growth and currently serves a diverse customer base with nearly 663,000 total consumers across our Commercial and Medicare Advantage lines of business. Our NeueHealth business has also seen remarkable growth with 131 total owned and affiliated primary care clinics and nearly 170,000 patients served under value-based arrangements through our own clinics. As we discuss the current state of our business, I'd like you all to keep five key themes in mind: one, we have demonstrated unmatched growth. Bright healthcare ended 2020 with 207,000 members served.
Approximately 145,000 commercial members and 62,000 Medicare Advantage members. As of the end of the second quarter of 2021, Bright healthcare served nearly 663,000 consumers, an increase of 220%. Two, we have delivered consistent performance. Critical to our model is our ability to price to our underlying capabilities and cost structure in each market.
Even with our explosive growth, we have been able to demonstrate in an adjusted medical cost ratio below 80% across our enterprise during the first half of 2021. Critical to this measure is our model's ability to drive in-network utilization within our integrated systems of care. Three, we are driving differentiation through NeueHealth. We have been building our NeueHealth business since the beginning of Bright Health.
However, we are now starting to see it come to life. Focused on serving all populations, NeueHealth builds and operates local, integrated systems of care that clinically, financially and with data and technology, align all stakeholders in a local market. Today, NeueHealth directly manages care for approximately 170,000 value-based patients through our 44 owned primary care clinics. This represents over 700% growth from the 19,400 patients we managed at the end of Q2 2020.
Fourth, we are building one technology platform. Core to our model is a single technology platform purpose-built for the aligned model of care. This platform, which leverages our provider and consumer-facing tools branded as DocSquad, connects our consumers and patients to their personalized care teams. We are also moving to a single operating system that spans our care financing and care delivery businesses, which will enable us to continue demonstrating differentiated performance and outcomes.
And finally, five, continued future growth. Bright Health Group has significant near- and long-term growth prospects as we plan to offer Bright healthcare products in four new states during the 2022 open enrollment period and expand our NeueHealth integrated care delivery footprint in Texas, North Carolina, and beyond. With that, I'll turn to a brief business update to guide everyone on how these teams connect to our day-to-day operations. The Bright Health Group business model is centered around aligning the financing of care with the delivery of care.
healthcare is not one size fits all, and neither is the way we approach it. Our business is purpose-built to meet the needs of each local market. That is why we have created two interdependent and market-facing businesses. NeueHealth focused on personalized care delivery and Bright healthcare focused on financing and distribution, both working in tandem, leveraging technology to optimize the healthcare experience for all.
What drives empowers our company is the Bright Health Intelligent Operating System or BiOS, its proprietary DocSquad provider and consumer-facing tools that connect consumers, payors, and providers while delivering real-time insights to support better clinical and financial outcomes. Across Bright Health Group, we have been able to demonstrate growth across all measures. Our Bright healthcare business has seen 220% year-over-year membership growth, while our NeueHealth business continued to add to its capabilities, driving over 775% growth in the number of patients served under value-based contracts. This tremendous growth was primarily the result of four drivers: First, strong AEP, OEP organic performance, especially in Florida and North Carolina, with organic growth contributing 84% of our year-over-year membership growth.
Additionally, that organic growth included a 29% organic growth rate in our Medicare Advantage business. Second, strategic acquisition activity provided additional depth, capabilities, and geographies. Third, special enrollment period growth in all but one state in which we offer IFP plans, with 47,000 net new consumers since March 1st. And fourth, both organic and inorganic investment in our NeueHealth business, including strategic acquisitions in key markets.
Equally important, this growth did not come at the expense of performance. Critical to the Bright Health model is our ability to price to the underlying capabilities and cost structure in each market and manage membership within our integrated systems of care. Our consistent performance starts with effective pricing that is built on both our unit cost advantage gained through our care partner networks and our integrated systems of care that allow us to effectively manage medical costs by driving improved in-network utilization and accurately capturing membership risk. Our most recent data indicates that even with our growth, our population is consistent with our target and pricing expectations.
We are seeing consistent membership demographics between our new 2021 membership and our broader book of business with age and gender mix in line with our mature markets. Also, non-COVID utilization trends are tracking at or below expectations year-to-date across both Commercial and Medicare Advantage. And our IFP metal mix favors silver plans across our markets, consistent with our underlying capabilities and pricing strategy. I'd like to spend a minute discussing our Medicare Advantage business, which we built into a significant contributor with over 110,000 consumers and nearly $1.4 billion in run-rate revenue today.
Over the past 18 months, we've developed the infrastructure for future Medicare Advantage growth through key investments to develop capabilities internally and acquire strategic accelerators. Our foundation is built upon three key factors: First, we capitalize on the relationships we've developed in local markets from our proven IFP market expansion model. We've built valuable care partner relationships and brand awareness that allow us to add new products to existing markets. In the 14 states in which we currently operate, there are nearly 13 million Medicare Advantage members, providing a multi-year growth opportunity.
Additionally, over 11% of our IFP membership is between the ages of 60 and 65, representing a key age-in growth opportunity. Second, we leverage differentiated capabilities at acquired assets. Brand New Day helped us become the third-largest provider of C-SNP plans in the country. A growing market driven by increases in life expectancy and better treatment options for seniors with chronic conditions.
We've managed to drive organic growth in BND's membership of 35% since we acquired it in April 2020. Similarly, Central Health Plan provided us a model of culturally relevant care with plans tailored to the needs of specific ethnic populations. And third, we partner with NeueHealth to accelerate growth. Our integrated systems of care include a comprehensive model of senior care through our own clinics, which we currently serve 17,000 non-Bright healthcare-related, Medicare patients through value-based arrangements.
This foundation has set us up for growth of our offerings in 2022 and beyond. We plan the capitalize on the IFP age-in opportunity, our differentiated special needs plan platform, and our Go Deep strategy tailored to these specific populations. We are deploying this approach by increasing the market depth of our offering in five key states: California, Florida, Colorado, Arizona, and New York. And we believe our MA business will continue to be a core driver of Bright healthcare performance.
NeueHealth operates local integrated systems of care in every market we serve. We know every market is different with the need to match the system of care to a population and capabilities of that specific market. That is why we have a model that leverages different market approaches built on 3 core delivery vehicles with a common set of principles. First, in all markets, we assemble and align with high-performing care partners to improve healthcare delivery.
Second, we enable providers to succeed under value-based arrangements. And third, our most aligned and integrated value-based care delivery comes from our owned medical centers. Each market leverages these NeueHealth capabilities in different ways, but they are all built upon a set of common alignment principles: clinical alignment, financial alignment and data and technology alignment powered by our DocSquad tools and capabilities. This approach of delivering local integrated systems of care has enabled us to be the national leader in delivering value-based care to the IFP population.
To date, our integrated care delivery footprint has been focused in South and Central Florida, serving approximately 170,000 patients under value-based contracts. In Florida, we built a hub and spoke model with larger centralized clinics offering multi-specialty care, lab, pharmacy, and dental services as well as wellness centers and urgent care. We have surrounded these hubs with smaller clinics in the community, which enable convenient access to core primary care services. We have also developed an infrastructure around our core clinical capabilities with bilingual call centers, nonemergent medical transportation, and other ancillary service offerings.
Additionally, our own clinics are tailored to the markets they serve. In Central Florida, our clinics served the largest retirement community in the U.S. with a comprehensive model for senior care, creating an opportunity to partner with Bright healthcare on Medicare Advantage offerings. In South Florida, our clinics are designed for multiple populations, as we are one of the only providers in the country, taking risk on the IFP population at scale while also managing Medicare and Medicaid patients under value-based contracts.
These owned care delivery assets are supported by our affiliated providers and our high-performing care partner network. This model allows us to serve all consumers across their entire life journey in an effective way not just a single population. Through our growth in Florida, we have established a replicable, differentiated integrated care delivery model, which we plan to leverage as we expand into new states. In 2022, we are deploying this model in both Texas and North Carolina with over 20 De Novo clinic launches planned during the year.
In addition, we continue to evaluate additional organic market entries as well as strategic inorganic opportunities to deploy capital to enhance our capability set. Expanding our integrated care offering will allow us to serve all populations while enhancing the level of alignment of the local care delivery infrastructure, improving patient outcomes, and driving performance for both Bright healthcare and other payors. Core to our model is our technology platform that enables our differentiated market performance. Purpose-built for the aligned model of care, we have made strides in its development and are excited for where we are going.
BiOS, our intelligent operating system is focused on two key areas: creating a single administrative platform and developing our external consumer and provider-facing platform, DocSquad. We are developing a single administrative platform built around the consumer. We operate with a 360-degree view of the consumer and have rolled out a differentiated, integrated payor provider workflow, panorama to our clinical teams. We are also migrating our health plan offerings including acquired assets to a common platform with 2022 new markets launching on our desired end-state solution and with existing markets transitioning in 2023 and 2024.
We are also rolling out DocSquad, our consumer and provider-facing solution that connects individuals to their personalized care team with an active rollout underway across NeueHealth owned clinics. Year to date, we have delivered over a quarter million virtual visits through this platform. As we look to the future, Bright Health Group is positioned to continue driving measured growth with a value proposition that resonates with both consumers and care partners. Our 2022 plans in existing states called for robust product diversification across IFP, Medicare Advantage, and employer offerings.
We will be entering our first county and IFP in California, the second-largest IFP market in the country after Florida, with an addressable statewide market of approximately 1.6 million lives, and are the first new IFP carrier to enter the state in 5 years. Just as we are bringing our IFP capabilities to California, we are also leveraging the experience and capabilities from our California Medicare Advantage business to grow in other states. We are expanding our market depth in five existing states with opportunities across both traditional Medicare Advantage products as well as in special needs plans. We are also entering new states in 2022.
Of the new states, Texas is a core priority. With a similar market opportunity and provider dynamics is Florida, currently our largest state in terms of membership. We expect to use our integrated delivery approach which I mentioned previously to effectively manage care and create a unique consumer value proposition. And finally, we are expanding our NeueHealth integrated care delivery model into Texas and North Carolina.
Building upon the successful platform we have put together in Florida. We expect future NeueHealth growth to come from both De Novo builds as well as continued investments in strategic opportunities as we enter new markets. I'd like to thank our team, our care partners, and all the frontline workers across the country. And now I'll hand it over to Cathy Smith, our chief administrative officer and CFO, to take us through the numbers.
Cathy Smith -- Chief Financial and Administrative Officer
Thank you, Mike, and good morning, everyone. I'll begin by leading you through our Q2 and year-to-date results and then we'll provide guidance for our 2021 full-year outlook. We are pleased with our second-quarter results and the momentum we are seeing across the business. At the Bright Health Group level after adjusting for intercompany eliminations, revenue was 275% year over year to $1.1 billion in Q2.
We saw robust growth in our gross margin as well with year-over-year growth of 229%, resulting in total gross margin of $209 million. Of note, our gross margin was positively impacted by a $58.5 million market-to-market gain on a passive investment. On a non-GAAP basis, our adjusted EBITDA declined year over year to $35.3 million, primarily due to increases in operating costs from new market entry and unplanned marketing and selling expenses related to the special enrollment period in our commercial business. Managing medical costs as efficiently and effectively as possible for the members we serve is critical.
Internally, we look at our underlying operational performance without prior period adjustments and unusual items like the impact of COVID-related expenses. Given the newness of our book of business and variability of scale across our markets, we thought it would be useful to share our view of operational performance. Over time, as our business matures, we strive to stick to reported performance while noting unusual items. In Q2, our adjusted medical cost ratio at the enterprise level was 82%, in line with the prior year.
On a reported basis, our Q2 '21 MCR was 86.8%, with the adjustments primarily driven by COVID impact and prior period development. I will provide additional color on the bridge between reported and adjusted MCR in my comments on year-to-date performance in a moment. In our Bright healthcare business, second quarter membership came in at 663,000, a 220% year-over-year increase. The increase was driven primarily by organic growth in our IFP business.
Including the special enrollment period as well as both organic and inorganic growth in our Medicare Advantage business. Our NeueHealth business also continues to experience significant growth. With the acquisition of Centrum Medical Holdings, which closed on July 1st, we now serve approximately 170,000 patients under value-based arrangements across our 44 NeueHealth owned clinics. In addition, our affiliate strategy continues to gain traction with NeueHealth supporting 87 additional clinics.
One key metric I'd like to highlight which demonstrates progress to the most comprehensive vertical integration of the financing and delivery of care is that 132,000 of the 170,000 total value-based patients served by NeueHealth are through an integrated relationship with Bright healthcare. As we step back and look at year-to-date 2021 compared to the first half of 2020, our growth and performance is truly remarkable. Our first-half revenue has more than quadrupled since last year, all while maintaining a consistent adjusted medical cost ratio below 80%. This is in large part due to our aligned model, which focuses on driving in-network keepage through our integrated systems of care.
Year-to-date 2021, we are currently at an in-network keepage rate of 87% across our business. And have been able to demonstrate an ability to accelerate the improvement of this metric as we refine our market entry model. In North Carolina, for example, we were able to drive an 18.5 percentage point increase in our in-network keepage year over year as promised. I'll now walk you through the bridge between our adjusted and reported MCR.
For reference, the appendix of our earnings release and investor presentation all concludes a detailed bridge. The 4.4 percentage point difference between our reported and adjusted MCR for the first half of 2021 is comprised of direct COVID cost impact to our MCR of 360 basis points and non-COVID prior-period development, representing an unfavorable impact to MCR of 90 basis points. With respect to the non-COVID prior-period development, this was impacted largely by onetime items in our Medicare Advantage business, a significant portion of which are from Brand New Day and related to time periods prior to our acquisition. The total net non-COVID prior-period gross margin impact to MA was unfavorable by $19.1 million.
Our IFP prior-period impact was minimal as performance was broadly in line with expectations with offsetting favorable and unfavorable developments. The total net non-COVID prior-period gross margin impact to IFP was unfavorable by $2.8 million and was comprised primarily of two items. First, we experienced favorable non-COVID IFP medical cost prior-period development of $21.7 million, driven by a population that was slightly healthier than our expectations. And second, this healthier-than-expected population resulted in an offsetting unfavorable risk adjustment impact to revenue of $22.3 million.
We expect the impact of MCR adjustments to decline in the future as our contribution from existing membership increases as a percentage of our overall book of business. The final point I'd like to make on year-to-date results relates to our operating costs. While we recognize we have a long way to go to achieve our target operating cost structure, we have been able to demonstrate a 940 basis point improvement in our operating cost ratio across the enterprise. The year-over-year improvement is a result of operating leverage from the additional scale of our business combined with efficiencies from critical vendor insourcing and improved contracting.
As I look at our membership growth, I want to highlight five key themes. One, we continue to operate a diversified business with consistent growth across both our commercial and Medicare Advantage business. Two, over the past year, we saw 63% of our total growth coming from new markets. with the remainder coming from existing markets and our 2021 acquisitions.
Three, overall, as Mike mentioned earlier, 84% of our total growth came from organic activity, driven by four states, Florida, California, North Carolina, and Colorado. Four, Medicare Advantage grew to 30% of our Bright healthcare premium revenues in the first half of 2021 and is currently an approximately $1.4 billion revenue business based on the Q2 '21 run rate. And five, while seeing this explosive growth, the overall composition of our new 2021 membership is consistent with our broader book of business and is in line with our pricing expectations. Within our NeueHealth business, we have seen rapid growth and expansion compared to the first half of 2020, driven both by inorganic growth in Central Florida and the expansion of our integrated care delivery offering in South Florida.
During the first half of 2021, we generated approximately $153 million of NeueHealth revenue, a more than 800% year-over-year growth rate from the prior period. This includes approximately $63 million in investment income because of a mark-to-market gain on the passive investment I referred to previously. Excluding that mark-to-market gain, our year-over-year growth would have been 459%. With the closing of Centrum Medical Holdings, and their 17 clinics, along with the continued organic growth, we are expecting approximately $425 million of full-year 2021 revenue from that segment.
Now I'd like to speak for a moment about our balance sheet and operating cash flow. The successful completion of our initial public offering resulted in net proceeds of $887 million. We had approximately $528 million in nonregulated cash and cash equivalence on our balance sheet as of June 30, 2021, after adjusting for the acquisition of Centrum, which we completed on July 1. This figure does not include $746 million of additional cash and equivalents held by our regulated insurance subsidiaries, which we sufficiently capitalized at levels above regulatory minimum to allow for continued growth.
In addition, during the first half of the year, we generated nearly $500 million in operating cash flow, which strengthened our balance sheet. Given our strong balance sheet, robust operating cash flow, and $350 million undrawn credit facility, we are confident in our ability to meet near-term liquidity needs and support the continued growth of the business. I'll wrap up my comments by discussing our outlook for the full year. We expect enterprise revenue to be $4 billion to $4.2 billion, depending on the risk adjustment factors, and anticipate an enterprise medical cost ratio of 86%, plus or minus 200 basis points.
While there are a variety of items that can impact MCR both positively and negatively. We have demonstrated we can manage within a reasonable range of outcomes, considering the maturity of our business and of our membership population. Within our segment, we expect Bright healthcare end of year membership of approximately 650,000 and are forecasting continued growth at NeueHealth to drive 2021 revenue of approximately $425 million. To bridge our enterprise revenue, we are also providing an expectation of intercompany revenue which we expect to be approximately $275 million.
Before I turn the call back to Mike, I want to appreciate our amazing Bright Health team across the country. Working together, we are changing healthcare. Additionally, I want to thank our shareholders for our continued support as we build a national integrated system of care. Thank you for sharing our mission of making healthcare right together.
Now here's Mike for some closing remarks.
Mike Mikan -- President and Chief Executive Officer
In summary, we are very pleased with our second-quarter results and think this is a strong start to our journey as a public company. I'd like to thank the 2,500-plus Bright Health employees who are executing on our strategic priorities and working to make healthcare right together. I believe we are well-positioned to capitalize on this era of consumer choice in healthcare. And look forward to keeping you all updated as we progress through the year.
Before we open it up to questions, I wanted to introduce two additional colleagues that will join Cathy and me for the question-and-answer session. Sam Srivastava, CEO of our NeueHealth business; and Simeon Schindelman, CEO of our Bright healthcare business. Operator, let's open it up to questions. And please limit to one per caller.
Questions & Answers:
Operator
Thank you very much, Mike. [Operator instructions] Our first question comes from Terence Flynn from Goldman Sachs. Terence, your line is open. Please go ahead.
Terence Flynn -- Goldman Sachs -- Analyst
Great. Thanks so much for taking the question. Maybe a two-part for me. Mike, thanks for all the color on the geographic expansion plans.
Just wondering if you can share any more insights on how you selected those four new states for next year and how you're expecting growth to progress there? Should we think about what we've seen so far and in some of your current states. And then for Cathy on the guidance, just any more context you can provide for 2021 EBITDA? Thank you.
Mike Mikan -- President and Chief Executive Officer
Yes. Thanks, Terence. This is Mike. Appreciate the questions.
With respect to geographic expansion, it's very consistent with the way we've approached the market over the years. We've stated many times, we seek to provide comprehensive services in broad highly dense populations. We're seeking the biggest counties in America. So you've seen where we've grown of late in Florida.
Obviously, entering in California is important for us and Texas as a core. So the four states with Texas and Georgia and Virginia being a big component of those, we see a lot of opportunity there. We've got great care partner relationships that we fostered for years. We've been working on the Texas expansion for now well over two years.
So we expect that there'll be a strong growth contribution from those markets, but we also believe Terence, that our existing markets will continue to grow market share. So between the new state expansion as well as our existing states, we see significant opportunities. Simeon, would you like to add anything?
Simeon Schindelman -- Chief Executive Officer, Bright HealthCare
Mike, there are a couple of comments that I might add to what you just said. One is, in California, we're also building on a very strong existing base of customer relationships, provider relationships, and also a general reputation in the market that's very supportive of our entry in IFP. In Texas, we happen to have broker distribution relationships that have already been very strong for us and performed extraordinarily well in Florida that themselves operating in the state of Texas, and we believe that's going to help us be successful there. And in Virginia, we're roughly adjacent to a very successful North Carolina business.
And the regional presence that we'll have in the Mid-Atlantic is going to be powerful for the company over the long term. So each of these states have been elevated of building on the business that we already have while also they also represent terrific opportunities on our own.
Mike Mikan -- President and Chief Executive Officer
And Cathy?
Cathy Smith -- Chief Financial and Administrative Officer
Yes. So thank you. With regards to guidance, we're giving the most important drivers for the business for all of you right now, which are top line, we gave guidance there and gross margin and MCR. As you know, our operating expenses will continue to leverage.
We are on a multi-year journey there as we've talked about. We a kind of at the height of inefficiency right now as we think about all of our vendor solutions moving to a proprietary solution that Mike described previously. So it will take us a couple of years, but we'll continue to improve the leverage on operating expenses. So it think that we can get to a meetable range of EBITDA for those -- from that guidance, Terence.
Operator, can we have the next caller or the next question?
Operator
Of course. Our next question comes from Kevin Fischbeck from Bank of America. Kevin, your line is open. Please go ahead.
Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst
All right. Great. Thanks. I guess I just want to dig into your view about your visibility into kind of your cost cut here and your ability to price for next year.
It sounds like you're not quite seeing the same exchange MLR issues that maybe your peers have. I guess want to get your sense of your visibility and the cost trend given the moving parts this year. And then on the M&A side, is this negative development that you're seeing, again, is something that you might think might impact your ability to price M&A correctly for next year?
Mike Mikan -- President and Chief Executive Officer
Thanks, Kevin. So with respect to our underlying cost structure and capabilities, let's start with the population that we serve. We obviously target a specific population as we enter a market and we price to our underlying capabilities and cost structure in that market. And so when we look across our overall book of business to date, it's about what we expected, maybe slightly healthier than we anticipated going into the year, and that's playing out utilization trends.
We're seeing that non-COVID trends, if you take out COVID within IFP that it's slightly down from the, call it, the baseline period, normal utilization. And so as we think about going forward for the remainder of the year with utilization, we do believe that we're going to see continued utilization for COVID as we saw in the second quarter. Interestingly, over the period, we saw over the first quarter, we saw our senior population impacted by COVID, that's starting to subside. We saw an uptick in the IFP population in the second quarter, albeit in a different way, we're seeing more professional and outpatient services.
We believe that, that's going to continue. And that's embedded in our underlying or forecast MLR, as Cathy had mentioned. So as we go into next year, we're generally assuming going back to the underlying baseline of our cost structure, so normal, call it, utilization. We might see -- continue to see a slight uptick with respect to COVID, but we're really not anticipating that going well into next year.
So we think we've got good visibility into our pricing on a year-over-year basis as well as the way we just generally priced to the marketplace and our cost structure as we enter new markets. So we feel we've got good visibility with respect to that. And then Medicare Advantage with respect to the unfavorable development. The unfavorable development really is related to onetime, either unusual items that came from Brand New Day prior to our acquisition of them, and it's really related to some provider true-ups and things like that.
So we don't think that has an impact on our underlying cost structure and will not impact our pricing for next year. Next question.
Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst
Great. Thanks.
Operator
Our next question comes from Josh Raskin from Nephron Research. Josh, your line is open. Please go ahead.
Josh Raskin -- Nephron Research -- Analyst
Thanks. Good morning. So first question, just if you could just give us the total diluted share count post the IPO or kind of what to expect in 3Q? And then my real question is just on the new market expansions. Is it more likely to come through finding a NeueHealth partner through M&A or contracting and then adding the insurance products behind that? Or do you think it's going to be more capturing market share with Bright healthcare and then developing NeueHealth underneath maybe a Texas and North Carolina example.
Cathy Smith -- Chief Financial and Administrative Officer
So, Josh, I'll start with the tactical question you asked and Mike will handle the bigger one. So diluted -- fully diluted share count, you'll see a table in the Q that we'll file next week. The full balance of common shares will be $625 million. But the average for the quarter will be $160 -- or $160,942 you'll see and because of the timing of the preferred converting the common through the quarter.
And then, Mike? I'm sorry, you had asked, Joshua a question about how we think about expanding and that's the second part of that question.
Josh Raskin -- Nephron Research -- Analyst
Yes. It was just the new market expansion. Is that going to be more -- it's kind of the chicken or the egg question. Right? Is it NeueHealth partner and then layer on top of it insurance products with the preferential cost structure? Or does it capture membership through Bright healthcare and then develop the NeueHealth opportunities underneath once providers see relevance etc.
Mike Mikan -- President and Chief Executive Officer
Thanks, Joshua. So I'll start, and I'll let Simeon or Sam add afterwards. But every market is different. We do believe that we've got differentiation in entering new markets with NeueHealth.
We think the opportunity to not only partner with Care Partners systems as well as large medical groups is obviously a core strategy of ours. It's been part of our Care Partner model from the beginning of Bright Health. But we also believe there's opportunities to enter De Novo and maybe through inorganic opportunities as they present themselves in new markets, leveraging our integrated care delivery model, like we're doing it as we enter Texas. We think that's a great model to go deep into the market and then have a highly concentrated, call it, care management program where we can continue to steer in-network keepage to our care partner network.
So every market is different, as we've talked about over time, but we do think that there are opportunities to enter the market through NeueHealth and then partner with Bright healthcare to drive volume. One thing we talked about, Joshua, as you know, that's advantage to us is we really can build our clinics based on expected demand. So we get the capacity relatively quick. So there's a high ROI for investing and owning operating clinics in the market.
Simeon, do you want to add anything first?
Simeon Schindelman -- Chief Executive Officer, Bright HealthCare
Yes. Well, what we've seen is that it can happen simultaneously. And I think that's a very important element here. It's not necessarily NeueHealth first.
It's not necessarily Bright healthcare first. In fact, in Florida this past year, the value of the simultaneous moves of establishing clinic relationships and also building a Bright healthcare set of benefit plan offerings, distribution capability and pairing those up, built a very strong business for us very quickly, and we're able to deliver the value into clinics and build the overall clinical relationships that also support Bright healthcare. So what we've also demonstrated is the simultaneous approach can be very powerful. As Mike mentioned, that's the reason in Texas.
Unknown speaker
And I'll just add that as we think about building localized integrated systems of care, we're always entering in with NeueHealth building high-performing care partner networks that are value-based. And within that, if there's opportunities to simultaneously enter with a Bright healthcare products alongside more deeper affiliate arrangements where we're looking at practices, we're aligning on risk or more deeply owning clinics that are de novo built. It allows for a higher level of performance, a higher level of certainty wrapped around what the cost structure looks like as well as the overall access quality outcomes. And so that allows us to kind of enter and penetrate the market more effectively moving forward.
And it's not just for Bright healthcare, but also from a NeueHealth perspective on all-payer basis.
Mike Mikan -- President and Chief Executive Officer
And then I would just add, Josh, this is Mike again, core to our strategy is connecting patients with their doctor. And so we seek to attribute a 100% of our population served, whether it's our members or patients, to a doctor within our care network. We have a strong ability to do that when we own and operate the medical centers or we're affiliated where we're aligned through value-based contracts, and that's core to our model. So -- and we think it's differentiated.
Next question.
Operator
Our next question comes from Justin Lake from Wolfe Research. Justin, your line is open. Please go ahead.
Justin Lake -- Wolfe Research -- Analyst
Thanks. Good morning. A couple of numbers questions and then a bigger picture. First, on the numbers, Cathy, maybe you could share with us the cash at the parent or the unregulated cash at the end of the quarter as well as any details on that unrealized gain of $58 million.
And then, Mike, in terms of your 2022 market rollout, there's been a bunch of questions here. But specifically, I wanted to find that. I mean you've had huge success in markets where you have had either the partnership model or even own centers like in South Florida. Can you tell us in these new markets, do you have anything you can announce in terms of you have affiliations with local provider groups? Do you have health system affiliations in those four markets that are going to help jump start the growth there that you could tell us about?
Cathy Smith -- Chief Financial and Administrative Officer
So, Justin, I'll start with the cash question. On the balance sheet, you would see unregulated unrestricted at a little over $500 million. You see restricted at a little over $700 million. And then when you combine that with strong cash flow generation, we generated almost $500 million of cash this last quarter.
And then obviously, our whole access to our credit facility, so like we've got great liquidity.
Mike Mikan -- President and Chief Executive Officer
And then the mark-to-market gain is a strategic investment with a care partner of ours. And obviously, it's -- we've got a market to fair value -- fair market value at each quarter. With respect to market -- the additional markets, Justin, we're not going to get into these relationships today. We'll lay that out as we get into our Investor Day conference in the fall when we talk about 2022 and beyond.
So we'll go deeper into in that. But it's fair to say that we feel really good about these markets. We've selected them. As we've talked about before, we've got a strong pipeline across the country and care partner -- potential partner relationships that we're fostering and building.
We're building in new markets today that aren't necessarily expansion markets in 2022. But in these markets, we've got strong relationships. And we've been building on for some time, and we feel really good about the opportunities in 2022 and beyond. Next question, please.
Operator
Our next question is from Jeff Garro from Piper Sandler. Jeff, your line is open. Please go ahead.
Jeff Garro -- Piper Sandler -- Analyst
Yes. Good morning. Congrats on the first quarter as a public company, and thanks for taking the questions. So a bigger picture one for me and I like to dive deeper into what makes your care partner relationships a win-win.
I think more specific in addition to those in-network keepage metrics you mentioned in the prepared remarks, I think it would be helpful to describe the level of market share or the risk-sharing opportunity that you can offer to care partners that you can deliver for them just to make it attractive for them to contract with Bright Health at favorable levels.
Mike Mikan -- President and Chief Executive Officer
Thanks, Jeff. Our care partner model was part of our foundation. And it was really built on the idea that if we collaborate and align clinically, financially and leverage technology and integrated data, we can build a better experience for the consumer. As we all know, the consumer era is here, consumer healthcare, more consumers are making decisions about purchasing their healthcare that really, frankly, they've gotten since World War two or earlier.
And so with that in mind, our model is designed to align our interest, embed capabilities that maybe they have developed our care partners or we can enable them to essentially manage the care. And if we align that interest, we just get better performance. So the relationship by design is the -- our care partners make an investment in us with strong unit economics. And our job is to aggregate consumers and connect them to our care partner through in-network keepage and attribution.
So we increase market share, but also by increasing in-network keepage, which is a core measure of ours, they get greater share of wallet. Their services are per patient goes up as a result of that. So it's truly an alignment model. It's not value-based care in the sense of capitation, but it is value-based care in the sense of alignment.
And as we talked about clinically, financially and through data and technology. So truly, it is a win-win proposition.
Jeff Garro -- Piper Sandler -- Analyst
Great. Thank you.
Mike Mikan -- President and Chief Executive Officer
Next question.
Operator
Our next question comes from Lisa Gill from J.P. Morgan. Lisa, your line is open. Please go ahead.
Lisa Gill -- J.P. Morgan -- Analyst
Thanks very much. Good morning. Mike, I'm just curious, when we think about NeueHealth versus other providers, I know it's pretty early on, but can you talk about the cost trend for Bright Health numbers that go to a NeueHealth versus going to another provider and the opportunity you see there? And then just secondly, you think about DocSquad, can you talk about utilization of the consumer? You know I agree with you that the consumer should be front and center. Just curious what you're seeing right now for utilization there.
And any cost trends that you're able to bend because of that interaction with the patient.
Mike Mikan -- President and Chief Executive Officer
Great. Thanks for the question, Lisa. With respect to our owned and operated medical centers, as Cathy mentioned, that's where we get our optimal performance so we can fully deploy all our tools. We've got full alignment, clinically, financial incentives.
So we're both share in the opportunity, both upside and downside as we perform. So everyone is incented to perform. And where we really see improved cost transits, we really engaged with that consumer early on. We mentioned -- we've mentioned before that this year, we rolled out our rewards program.
And of those that who enrolled in our rewards program on the IFP population, 96% of them took a health risk assessment. Of those 96%, 92% of those selected a primary care provider. And so in South Florida, as an example, core to our model is we partnered with four large medical groups. Mind you with multiple different medical centers and two of which we own and two of which we're aligned with.
And one of our core to our strategy is getting them connected to one of those primary care providers. So by having them engaged with their primary care provider, we see significant benefits from that because now you've got a referral coming from -- in a comfort level and a trust with the primary care position as a first form of access. We want to triage to the primary care provider, whether it's their doctor or their nurse first as opposed to going to an ER, whether in-network or out-network. And so we do that significantly.
And we also mentioned in our model in South Florida, which we think is very favorable. We also provide nonurgent transportation services. So we will go to the patients as they infer medical need or medical services of need, and that's another advantage. So by having a highly concentrated population, managed within our core primary care providers, that's where we get our best performance.
With respect to DocSquad. DocSquad is a key strategy of ours. It is what we talk about in terms of consumer engagement. It starts with getting them engaged through our rewards program, which is really rolled out across the country.
But it's also providing them direct connection to their personalized care team. We believe that not only every patient should have access to high-quality care, we believe that every patient should have relationship with their doctor. And their doctor would be their specialists included. And so we really want to emphasize the personalized care team and ease of access to them, whether it's through virtual technology, a synchronous, or through some form of virtual mechanism.
As we mentioned, we've done over 250,000 virtual visits on that platform to date. Or again, we will connect them to one of their providers, real-time schedule their appointment. And then we have the data to make sure that there's a closed-loop system that the primary care physician understands what services we are provided. So we're really excited about the integrated technology of DocSquad as we continue to roll it out and think over the long run, it will be a key differentiation for us.
Cathy Smith -- Chief Financial and Administrative Officer
Let's go to the next question, please.
Operator
Our next question comes from Ricky Goldwasser from Morgan Stanley. Ricky, your line is open. Please go ahead.
Craig Hettenbach -- Morgan Stanley -- Analyst
Yes. Thank you. This is Craig Hettenbach in for Ricky. When looking at some of the new members that you're onboarding this year versus older member cohorts.
Can you just talk about any differences that you -- any notable differences you're seeing in utilization patterns and level of acuity and how you expect that to trend going forward?
Mike Mikan -- President and Chief Executive Officer
Yes. Sure, Craig. Thanks for the question. As I mentioned, our risk demographics across our population, the new lives that have come to us this year is very consistent with our overall population with respect to age and sex mix, if you will.
And so -- and that's translated to underlying utilization. Non-COVID, we've seen slightly favorable utilization across the book of business. We're seeing that in really across all categories. And so overall, we believe that that will continue to play out the remainder of the year.
The one notable unknown is how COVID will continue to transpire in future periods. As we've mentioned, our shift of impact of COVID from the senior population who have a much higher penetration of vaccinations to the IFP population, which is a much more broader population with less vaccinations, we are seeing that whether it's the delta variant or else, we are seeing an uptick, and that we believe it will continue to be exist. We just can't predict as to how, how much impact it will have on the business overall. But non-COVID-related utilization is very consistent across our mature markets as well as our new markets with our new book of business.
Cathy Smith -- Chief Financial and Administrative Officer
Operator, can we have our last question, please?
Operator
Our last question comes from Steven Valiquette from Barclays. Steven, your line is open. Please go ahead.
Steven Valiquette -- Barclays Investment Bank -- Analyst
Great. Thanks. Good morning, everyone. Thanks for taking my question.
Just a few additional questions on the medical loss ratio. First, just to confirm for the 86% MLR guidance for the full year, does that guidance -- is that relating to the reported MLR for all the periods in '21 or the adjusted MLR metric that you're calculating? And then you just touched on this qualitatively earlier in the call, but quantitatively, what are you expecting the data to be between the reported MLR versus the adjusted MLR in the back half of '21? So I think it might be something maybe less than the 400 basis points that you saw in the first half of the year, but I just wanted to see if you could provide a little more color quantitatively around that based on what you know right now.
Cathy Smith -- Chief Financial and Administrative Officer
Good morning, Steven. The 86% plus or minus 200 basis points for the year as reported. Obviously, as Mike just said, we've got some -- an assumption of COVID impact a little bit. But if we saw something really severe, of course, that we don't have a crystal ball and couldn't contemplate that.
And then to your question about reported to adjusted, again, I don't know. We know what's happened in the first half of the year, but we think we've contemplated that in our guidance range that we're giving for the full rest of the year.
Mike Mikan -- President and Chief Executive Officer
So we don't plan for differences. Obviously, it will be noteworthy if COVID continues to exist. But outside of that, we don't plan for any adjustments between reported and adjusted number.
Steven Valiquette -- Barclays Investment Bank -- Analyst
Just real quick on the --
Mike Mikan -- President and Chief Executive Officer
So with that -- sorry. Go ahead, Steven. So with that, that will end the call for our first inaugural earnings call. We thank everyone for their time this morning and your interest in our company.
Have a great day.
Operator
[Operator signoff]
Duration: 59 minutes
Call participants:
Mike Mikan -- President and Chief Executive Officer
Cathy Smith -- Chief Financial and Administrative Officer
Terence Flynn -- Goldman Sachs -- Analyst
Simeon Schindelman -- Chief Executive Officer, Bright HealthCare
Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst
Josh Raskin -- Nephron Research -- Analyst
Unknown speaker
Justin Lake -- Wolfe Research -- Analyst
Jeff Garro -- Piper Sandler -- Analyst
Lisa Gill -- J.P. Morgan -- Analyst
Craig Hettenbach -- Morgan Stanley -- Analyst
Steven Valiquette -- Barclays Investment Bank -- Analyst
