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Signify Health, Inc. (SGFY) Q3 2021 Earnings Call Transcript

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SGFY earnings call for the period ending September 30, 2021.

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Signify Health, Inc. (SGFY 0.42%)
Q3 2021 Earnings Call
Nov 10, 2021, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Hello, everyone, and welcome to the Signify Health third quarter 2021 earnings conference call. My name is Seb, and I'll be the operator for your call today. [Operator instructions] I will now hand the floor over to Jennifer DiBerardino, head of investor relations and treasurer. Please go ahead.

Jennifer DiBerardino -- Head of Investor Relations and Treasurer

Good morning, and welcome to Signify Health's third quarter 2021 earnings conference call. This call is being webcast live, and a recording will be available on the Events page of our investor website at through January 10, 2022. Throughout the call this morning, we will be referencing the financial tables that appeared in our press release dated November 9, 2021. And in addition, the third quarter earnings call summary slide presentation we have posted to the Events page of the IR website.

This morning, we will discuss Signify Health's business outlook, and we will also make certain statements about our future performance, including projections about our future financial performance, our anticipated growth strategies, anticipated trends in our business and our outlook, including estimates for total GAAP revenue, total adjusted EBITDA, in-home evaluations, program size and weighted average savings rate. These statements are only predictions based on our current expectations and projections about future events and constitute forward-looking statements within the meaning of the federal securities laws. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Please note the cautionary language about our forward-looking statements as presented in our earnings press release and in our quarterly report on Form 10-Q, which will be filed later today.

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That same cautionary language applies to the statements made in this conference call. We will also discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. Reconciliations to the relevant GAAP numbers for these non-GAAP measures are included in the earnings release filed on Form 8-K yesterday and also in our Form 10-Q, which will be filed later today. As a reminder, we intend to participate in industry or sell side-sponsored conferences.

In lieu of issuing a press release to announce each conference, we will be posting our conference attendance on the Events page calendar of our Investor Relations site at I encourage you to register for alerts on the Investors site so that you receive an email notification each time we add a conference, other events or other updates to the IR calendar. Joining me on the call today are Kyle Armbrester, chief executive officer; and Steve Senneff, president and chief financial officer. Kyle will provide a business overview followed by Steve with a financial overview.

We will have an operator-facilitated question-and-answer session after our prepared remarks. Now I will turn the call over to Kyle.

Kyle Armbrester -- Chief Executive Officer

Thank you, Jennifer. Good morning, and thank you for joining us. Our third quarter and year-to-date performance reflects progress toward our mission of activating the home for care and enabling the shift to value-based care. Our current strategic focus is expanding to as many unique homes as possible.

We also build diversified service offerings that help to identify and close care gaps and drive better patient outcomes. Yesterday evening, we announced strong financial results for the third quarter and first nine months of 2021. Through September, revenue grew by 42% to $592 million. And adjusted EBITDA increased 52% to $131 million from the nine-month period a year ago largely driven by in-home evaluation or IHE, volume growth and our Home and Community Services segment.

In the first nine months of the year, we performed over 1.4 million IHEs, exceeding the number performed for the full year 2020. Our 2021 results to date are driving positive momentum into 2022 with continued in-home demand expected to fuel HCS growth, diversification of our services in the home and our episode weighted average program size moving from approximately $5 billion to $6 billion next year. Given this performance, we are projecting 20% plus top line growth in 2022 and corresponding adjusted EBITDA growth, which is expected to benefit from improving operating leverage. Clients are increasingly asking us for expansion of our Transition to Home and analytics services for their other value-based programs, which we view as another positive trend.

A testament to our value of our in-home evaluations, we have received new customer commitments for IHE volume that will continue to drive substantial growth momentum into 2022. We have seen several notable clients move and expand volume to Signify and away from legacy or in-sourced programs, realizing the value that we bring to their members. We remain confident in our belief that the risk of in-sourcing in our space is low given our unique data and analytics platform, nationwide clinical network, member density and our strong customer relationships. As we look ahead to future years, we are very bullish about our HCS business.

The value of our in-home evaluations for both our customers and Medicare Advantage members, who receive IHEs at no cost, has increased tremendously. We're doing more in the home than ever for our clients by helping to connect their members back into the health system each and every day. We also have made substantial progress on the social in terms of health front, connecting members more than 390,000 times with social services in their community. We are working to connect members, many of whom have not been under the regular care of a provider, back to a primary care physician and their community and even scheduling appointments when possible.

We provide the PCP a comprehensive summary of their patients' clinical and social evaluation, highlighting issues that require attention. In fact, approximately 72% of members who receive an IHE from Signify Health returned to an outpatient care setting within a year after their IHE. While our doctors and nurse practitioners are in the home, they perform various screenings to help close care gaps. We are proud to have earned the National Committee for Quality Assurance or NCQA Healthcare Effectiveness Data and Information or HEDIS certification for several of our in-home screening services such as diabetic eye exams, diabetic kidney disease monitoring, colorectal cancer screening and osteoporosis management in women.

Test results are also shared with the member, the plan and the respective primary care physician to provide another data point for any identified health issues and appropriate treatment plans. We continue to successfully expand our clinician network to support our growing IHE volume despite recent concerns in other part of the industry around the difficulty in hiring healthcare workers. While we have seen some capacity challenges in certain geographic areas, a significant benefit of our flexible network is that we credential our providers in multiple states, allowing us to deploy them wherever evaluation demand requires, including rural communities. Our model and technology make it easy for providers to do what they value most, spend quality time with patients, instead of dealing with administrative issues in a facility setting.

As a result, we believe we have not experienced the same clinician staffing issues as reported by some others in the industry. Using the home as the key venue to activate the care journey, we believe coordination of care will be one of our strategic pillars going forward. Our future service expansion includes medication management, chronic condition management, remote patient monitoring and follow-on services to improve the health and well-being of beneficiaries. Almost all of our customers are asking for this expansion of our work, realizing the value of our engagement in their members' lives while in their homes.

This represents a tremendous opportunity for us to expand our in-home market share and continue to diversify into new services to drive better outcomes for the millions of lives we touch annually. We have frequent conversations with our plan customers and regulatory and legislative constituents about the current state of and the future vision for healthcare in the United States generally and the Medicare Advantage program specifically. Medicare Advantage is an important program, providing about 27 million individuals high-quality care with better benefits at a lower beneficiary cost when compared to Medicare fee-for-service. We believe that the risk adjustment process with all of the appropriate checks and balances is critical to the functioning of value-based care and Medicare Advantage.

Appropriate risk adjustment, including in-home evaluations, levels the playing fields to provide broad and equitable access to care for the most vulnerable MA members. As I've outlined this morning, the value of our IHEs to our customers and Medicare Advantage members is tremendous and is an essential service that provides insights, coordination and critical member touch points. And we have a road map to expand our capabilities in the home as we focus on the opportunities to support our clients in their efforts to address health disparities to ensure health equity moving forward. We believe there will be further adoption of value-based payment programs in Medicare, Medicaid and across the entire health system.

Currently, approximately 40% of Medicare fee-for-service payments, 30% of commercial payments and 25% of Medicaid payments are made through some sort of value-based arrangement. As we advance value-based payment models through our excellent work in both our home and community services and Episodes of Care Services, we expect Signify Health to be a significant part of this movement. In Episodes of Care, we are the largest convener in the CMS bundled payment program today, and as such, meet regularly with CMMI to provide feedback through thought leadership on the current BPCI-A program and its future state. We look forward to the next iteration of the BPCI-A program and believe that it will likely have a mandatory aspect.

Liz Fowler, the head of CMMI, recently spoke publicly at a briefing hosted by the Alliance for Health Policy and indicated that CMMI is actively engaged in exploring bundled payments that go beyond post-acute care to move upstream to engage specialists in managing patients to avoid and/or reduce acute events. This focus nicely dovetails with our non-BPCI-A Episodes of Care, where we can support not only procedure-based bundles, but also conditions such as maternity, diabetes and substance abuse. We are continuing our focus on diversification of revenue through continued discussions related to ACO programs and other targeted models like radiation oncology. We continue to make successful inroads in our non-BPCI-A business.

In October, we jointly announced with our customer, the State of Connecticut, that their program was approved by CMS as an all-payer advanced alternative payment model. This is an important designation for the Episodes of Care payment model administered by Signify through our Networks of Distinction. Eligible services include and -- included in these programs could span as much as 60% of the average health plan spend and include episodes such as knee replacement, colonoscopy, cataract surgery, care related to pregnancy and more. CMS' ongoing efforts and commitment to affordability, quality and outcomes has been of significant benefit to patients, providers and taxpayers alike.

We are excited that the best practice from federal value-based programs will be extended to commercial health plans, and we are proud to be a part of this catalyst for continued adoption of value-based care by innovative provider organizations. In closing, we are pleased with our third quarter and year-to-date results. Our long-term vision is to drive positive outcomes for our partners and their members as their platform for value-based care. We simplify participation in highly complex payment programs and enable health plans and health systems to successfully transition to value-based payments.

Over time, we may supplement our strong capabilities with acquisitions or partnerships with other companies to add further functionality and innovation to our platform to drive increased value for our customers and for patients. I will now turn the call over to Steve to walk you through the third quarter and year-to-date financial results.

Steve Senneff -- President and Chief Financial Officer

Thanks, Kyle. Good morning, everyone. Strength in our Home and Community Services segment is driving our strong performance in the third quarter and year to date. In Episodes of Care Services, we continued to deliver strong savings through our partners across the BPCI-A program, while ensuring individuals received excellent care within their episodes.

Results for ECS in the third quarter were in line with our expectations as we await the next BPCI-A program reconciliation in the fourth quarter. During my commentary, I will be referring to the tables that appeared in the earnings press release issued yesterday, as well as the earnings presentation on the Events page. As you can see in Table 1, we had total revenue in the quarter of $199.2 million, an increase of 29% when compared to the same period last year. Revenue strength in the quarter was primarily driven by HCS growth of 47% to $169.1 million.

Total evaluation volume for the third quarter was approximately 488,000, including virtual evaluations. Virtual evaluations as a percentage of total evaluations continued to decline through the first nine months of 2021, reflecting customer preference to perform the evaluations in the home although we saw an uptick in September in certain geographic regions, which we attribute to local COVID spikes. HCS segment services also include diagnostic and preventative testing services. And we continued to see attachment rates increase.

As a reminder, we expect fourth quarter IHE volume to be in line with historical patterns as the lowest quarter of the year and to be lower year over year in comparison from the 2020 fourth quarter due to last year having the COVID-related catch-up as we have previously discussed. Still on Table 1, third quarter 2021 ECS revenue was $30.1 million, a 25% decline compared to the same period last year. The decline was related to the adverse impact of COVID-19 on program size and our savings rate. Additionally, we recognized $9.2 million of revenue in the third quarter of 2020 related to new information received ahead of the reconciliation due in the fourth quarter 2020.

The new information received reflected the impact of COVID-19 on BPCI-A program size and the subsequent CMS-imposed changes offered to providers that had an overall beneficial impact on savings rates. As I mentioned, we will receive the next BPCI-A reconciliation in the fourth quarter, which will reflect bundle performance primarily from the first half of 2021. As we discussed last quarter, we continue to monitor patient case mix adjustments and the next site-of-care issues with skilled nursing facilities. And we'll have more information when we receive the next reconciliation and report on it with our year-end results.

Our data indicates that utilization continued to improve in the third quarter despite the prevalence of the COVID Delta variant. We remain on track to end the year at a $6 billion run rate for program size, setting our Episodes business up for a strong 2022. Moving to Table 4. Total company adjusted EBITDA for the third quarter increased 46% to $42 million, compared to $28.7 million for the third quarter of 2020 driven primarily by the strong growth in Home and Community Services.

Back to Table 1. Third quarter total net income was $29.3 million, compared to a loss of $13.3 million for the same period a year ago. Net income attributable to Signify Health was $20.2 million in the third quarter of 2021 or $0.12 per share on a fully diluted weighted average share basis. There is no meaningful year ago comparison due to the IPO and subsequent reorganization in February 2021.

Our strong operating performance, in addition to the $27.3 million quarterly revaluation of our equity appreciation rights or EARs, drove net income this quarter. We mark the EARs to market each quarter, and the credit in the quarter reflects the current lower value of our stock price. Even excluding the impact of the EARs, we achieved positive net income in the third quarter, an encouraging sign of the trajectory we are on. Year-to-date results through September 30, 2021, largely reflect the continued overall strength in our Home and Community Services segment with strong IHE volume for the first nine months of 2021 of over 1.4 million.

As I mentioned, we did see a slight uptick in virtual IHE since September, but we still expect virtual evaluations as a percentage of total IHE volume to continue to be lower than 2020 pandemic levels. Episodes of Care Services results for the first nine months of 2021 continue to reflect the COVID-19 impact on healthcare utilization, savings rate and discharge patterns reported in connection with the reconciliation received in June. Moving on, as you can see in Table 2, we ended the quarter with $678.8 million in nonrestricted cash, an increase from the second quarter primarily related to cash receipts from the second quarter BPCI-A reconciliation. We ended the quarter with debt outstanding of $350 million and $173 million in capacity under our new revolving credit facility.

Given our strong cash position at September 30, 2021, which exceeds our debt levels, we ended the period with negative net leverage. Given our strong results for the nine months ended September 30, 2021, we are raising total revenue and adjusted EBITDA guidance ranges for 2021 as follows: total GAAP revenue in the range of $755 million to $770 million, and total adjusted EBITDA in the range of $160 million to $170 million. We are providing updated estimates for our key performance indicators for the full year 2021. Reflecting continued strength in Home and Community Services, we now expect IHEs in the range of approximately 1.815 million to 1.855 million.

Reflecting the ongoing impact of COVID-19 on Episodes of Care Services, we are maintaining our estimates of ECS segment weighted average program size of approximately $4.9 billion to $5.1 billion, and ECS segment weighted average savings rate of approximately 6.1% to 6.4%. Referring to Slide 6 in our third quarter earnings presentation, I would like to point out that when we gave guidance for 2021 in March of this year, we are projecting about 20% revenue growth. And with our updated 2021 guidance, it could now be as high as 25%. As Kyle mentioned, we are looking at strong top line momentum heading into 2022 with expectations for overall 20%-plus revenue growth and corresponding adjusted EBITDA growth, which is expected to benefit from improving operating leverage.

Taken all together, this is a testament to the incredible work done across the company. We plan to provide detailed 2022 guidance on our fourth quarter 2021 earnings call. Now I'd like to turn the call back to Kyle for closing remarks.

Kyle Armbrester -- Chief Executive Officer

Thanks, Steve. I would like to take this opportunity to thank our team at Signify for their positive and compassionate focus on the individuals we serve. Signifiers consider the whole person when helping health plans and providers close gaps in care so that people can remain in their homes and enjoy more healthy, happy days. As I've mentioned, our current strategic focus is expanding to as many unique homes as possible, while we also build diversified service offerings that help to identify and close care gaps and drive better patient outcomes.

I would also like to thank all of our stakeholders who are on this journey with us for the value we expect to generate over the long term. Now I'll turn the call over to the operator to take your questions. Operator?

Questions & Answers:


Thank you. [Operator instructions] Our first question comes from Anne Samuel at J.P. Morgan. Please go ahead.

Anne Samuel -- J.P. Morgan -- Analyst

Hi, guys. Congrats on the great quarter, and thanks for taking the question. Really appreciated the color on 2022 growth expectations. I was hoping maybe you could provide a little bit more color about what headwinds and tailwinds are included within those assumptions.

Steve Senneff -- President and Chief Financial Officer

Yeah, it's Steve. Yeah, we -- typically, I wouldn't guide to 2022 this early, but we just see tremendous momentum. So I'd say the two big things are we're seeing a lot of momentum on IHE volume. So as we look into next year, we have a lot of visibility.

We're doing all that planning today with our plan members, plan payers. And then also the $6 billion, the confidence we have in having the $6 billion-plus exit run rate for ECS. So when you combine those two, we felt confident that we could lean in and give a little bit of a signal that we feel like we're going to have another great year in 2022.

Anne Samuel -- J.P. Morgan -- Analyst

That's great. And then maybe just a follow-up to that. How should we be thinking about some of the labor inflation impact on your savings rate as we think about next year?

Steve Senneff -- President and Chief Financial Officer

The labor rates, are you talking about just the labor rate inflation that other companies are facing because that's not related to savings rate.

Anne Samuel -- J.P. Morgan -- Analyst


Steve Senneff -- President and Chief Financial Officer

Yes. OK. So --

Anne Samuel -- J.P. Morgan -- Analyst

Yeah, I guess maybe if it could have more impact on margin. Yeah.

Steve Senneff -- President and Chief Financial Officer

Yeah. So look, one of the things we have advantage, you hear a lot of companies saying that they're having a lot of pressure on that. I think the uniqueness of our network today allows us to avoid some of those same challenges that other companies are having. So we've continued to maintain a very strong network.

Our biggest challenge is just the growth. The growth is so significant, making sure that we keep up with that. So there's a few markets that we have had to make sure that we can deliver in those markets. But the flexibility has always been -- we've got physicians and nurse practitioners are credentialed across different markets that allow us the flexibility to move people around.

And so that's a big advantage that we have.

Anne Samuel -- J.P. Morgan -- Analyst

Great. Thank you.


Our next question comes from Michael Cherny from Bank of America. Please go ahead.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Good morning. Thanks for taking the question. Maybe just a follow-up again on the '22 numbers. And I know, Steve, as you mentioned, this typically isn't when you give a lot of color, but I just want to make sure I understood Kyle's comments correctly regarding EBITDA.

I couldn't really tell. Are you expecting EBITDA margins to expand next year? Or is EBITDA, at least on the preliminary side, expected to grow in line with or ahead of revenue based on what you see currently?

Steve Senneff -- President and Chief Financial Officer

Yeah, Michael, fair question. Like I said, we're not -- we're going to save all the details for the next quarter. But yes, what we're signaling is 20%-plus top line growth we're comfortable with. And our model, as we continue to grow, we do have room for EBITDA expansion, as well as investing back in the business.

So it's a nice part of our business model as we can do both.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Got it. I just want to make sure I heard the comments correctly, and that's helpful. And then I guess, intra quarter, obviously, the OIG report came out that had some questions about the market as a whole. And I know that the company has been very vocal in putting forward their explanation.

I think in this -- and you as well, I would just love to hear a little bit more about your reaction, Kyle, Steve, to the OIG report and why Signify is differentiated versus some of the commentary that was made in some of the approaches that were taken relative to the view of the Medicare Advantage carriers that were noted in the report.

Kyle Armbrester -- Chief Executive Officer

Yeah, absolutely, Michael. Happy to take it. The most recent report that came out really wasn't anything new. And it was focused on 2016 data, and it was largely the same as the report that they put out in 2020.

So they were pretty consistent. And what they were really focused on more than anything was MA plan oversight. And I would just share they were obviously focused on a single plan. And what that plan was doing back in 2016 was groundbreaking and innovative, and it's become commonplace throughout the industry now, right? And so this whole notion that there's any gamesmanship or anything I think it's totally unfounded, number one.

Number two, the big recommendation from the report, which we've been doing for a long time, is just when you're touching MA members, are you going in and identifying conditions or closing care gaps? It's to make sure that you're reconnecting them to care, both social and clinical. And we spend a lot of time sending medical records to primary care doctors, getting appointments booked so folks can get back to see a specialist or a primary care doctor. As we mentioned in the script, we've closed over 390,000 social condition issues. This could be food shortage issues, transportation.

So I think it's actually our -- the fact that in-homes exist for the Medicare Advantage population is remarkable, right? They're provided for free to the beneficiaries. And we go in and do, as I just mentioned, a battery of different work. And the other thing I would say is our model is really absent moral hazard, right? We -- our clinicians go in and get paid the same amount of money regardless of the work that they do inside the home. And our whole focus is on activating and getting those folks reengaging their care.

So many of them haven't seen a primary care doctor in a long time, have a lot of chronic conditions that are going unmanaged. And typical fee-for-service ignores them, right? Typical fee-for-service waits until they show up in the emergency room or run into a negative health outcome. What's the beauty of Medicare Advantage and the model that we've brought forward in that so many of our plan clients are deeply engaged in is it's genuine preventative medicine, right? We're moving away from just sick care in this country and instead taking care of folks and making sure that their conditions and diseases are being managed more appropriately. And the last point I would make, we've -- while the report focused on risk adjustment, that is a very small percentage of the total work that we do inside the home, right? As I mentioned, we're doing chronic condition management, a battery of gaps in care closure, closing out social determinants of health issues.

And we're super proud of that. The -- and we've done that, and the other beauty of Medicare Advantage, it extends to rural markets and really help solve a bunch of health equity issues where folks aren't able to get care easily and affordably. And so it's a great model that we need to continue to expand on. But if anything, I view some of the commentary in the report is a tailwind for us.

The report is pushing for more services to be done in the home. And each and every one of our health plan clients is looking to do the same, right? More condition management, more engagement to help make sure that we're driving better health outcomes through the members' lives that they serve.

Steve Senneff -- President and Chief Financial Officer

Yeah. I think people misunderstood how this report would actually impact us. We view this actually as an opportunity, as Kyle mentioned. So just to reiterate, getting them rescheduled back to their PCP, connecting them to community resources, making the referrals to the healthcare management groups.

These are all things we're doing today and plan to do more of in the future.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks so much for that. Appreciate it.


Our next question is from George Hill at Deutsche Bank Securities. Please go ahead.

George Hill -- Deutsche Bank -- Analyst

Yeah. Good morning, guys, and thanks for taking the question. And Kyle, I actually want to follow up on Michael's line of questioning, which is really, I guess, is there anything more that you guys can do to highlight the -- I loved your quote, the absent moral hazard line about the services that you're providing in the HCS segment. I'd say both kind of is the way to differentiate -- like show that there's a real arm's length transaction between you guys and the MCOs and the carriers and that there's a real value to using a third-party provider just because I think it would be very helpful both for the business growth and for the stock price.

And then, I guess, just I'll throw a quick follow-up in there for Steve. As we read a lot about the great resignation, I guess, can you talk about how you're thinking about kind of labor inflation and employment and kind of just like the number of people that you have in the field as we're seeing kind of a very tumultuous employment environment and how that kind of impacts margins as we think about 2022?

Kyle Armbrester -- Chief Executive Officer

Yeah. I'll take it first, and then Steve can touch on your second question. Yeah, the moral hazard piece is important. So I mean, let's start from the top.

First and foremost, these visits, so folks are selecting in the Medicare Advantage seniors on their own, right? Like they're choosing to go into the program. And then they choose to receive these visits, which is free healthcare in their home. It's a pretty amazing value proposition. And what we've been excited about is that we have been focused on providing those -- all of our services as a flat fee to the health plans regardless of the work that we do inside.

And you're right, it's an arm's length transaction that gives the health plan and the member peace of mind that we're going in to do genuine high-quality diagnostic work and then ensuring that we're connecting them back to care. It's why we're not using home health workers to do this work. We're using medical doctors and top of the license nurse practitioners as we're going into these homes. And so it's a real opportunity to see healthcare where it really happens, which is inside the home, right? We're spending 20 minutes going through their medication that they often can't afford and helping them to figure out better ways to make those meds more affordable for them by connecting them back to benefit services that the plans offer.

We're contacting their primary care doctors to them, sending their medical information to the primary care doctors so they can see that they're not taking their meds or that they have a transportation issue or their chronic condition has gone completely unmanaged, and their A1C level's through the roof, right? And so all of that being done as a free benefit to these members in MA is really something that's special and something that we need to be leaning more in as a country, I think, across other populations, which is why we're excited to see our service model pretty dramatically expand into Medicaid and into commercial populations as well. And so the plans are leaning in. And almost all of them as a strategic pillar have home access, and expansion of home services is a core differentiator for the current and future state of their businesses. And we're a key partner driving that success for them.

Secondarily and something that's really important, we -- our year-over-year rebooking rate is very high. And members see extreme value in us coming in and helping again to solve problems where healthcare really happens inside their homes, right? We're able to lay eyes on their broader social, clinical and behavioral environment and then provide all that information back in a safe, secure way to the plan and to their primary care doctors. And then finally, just on the moral hazard piece, our doctors and nurses do not code, right? They go in and do a totally focused clinical evaluation of individuals' lives that they touch. We have a totally separate team that goes through and does the coding and any documentation work related to the visit.

And I'm super proud to say that that team has consistently quarter over quarter, year after year had a 98%, 99% plus positive audit rate on all of the work that we do. So we are delivering a highly compliant, super valuable touch point that's having a very positive impact on millions of seniors, many of who are in dramatic need -- lives throughout the country. And so I appreciate the question, George. And I think that to answer your -- the second point about the stock price and everything else.

I mean, we're focused on consistent delivery and execution. And we are more bullish than ever on the value that we deliver to seniors and to folks in Medicaid and commercial and the deep connectivity we have with our plans who are asking us, each and every one of them, to expand our services in the home and to better connect to these members' lives. And Steve, why don't you take the second part.

Steve Senneff -- President and Chief Financial Officer

Yeah. And then go back to the -- yeah, back to the employment situation. Our network, as I mentioned earlier, continues to be strong, 9,000-plus. And as we look across the company, we are spending a lot of time as a management team focusing on engagement, making sure this is a great place to work, both virtually and safely back in the office, when appropriate.

We spent a lot of time talking about the mission of the company and when we start off our meetings with a lot of mission moments. So a lot of that stuff goes a long way of really being excited to work for the company that you have -- that we're at. So like everyone, we have challenges. But as I mentioned in my previous comment, we still expect next year, even with a lot of the noise around labor and pressure, to continue to expand our margins.

And so it's, again, back to our model is as we continue to scale, we will see margin expansion.

George Hill -- Deutsche Bank -- Analyst

Thanks, guys.


Our next question comes from Sarah James at Barclays. Please go ahead.

Sarah James -- Barclays -- Analyst

Thank you. I was hoping that you could kind of level set us on how you think about seasonality of earnings. So what were some of the unusual items that impacted this year? And how do you see typical seasonality playing out?

Steve Senneff -- President and Chief Financial Officer

Well, the typical seasonality is for the HCS business, you're typically going to have a stronger first half. And in the back half of the year, it's going to be a little bit softer because as you go through the list, the member list, and get the in-home engagements, that starts to trickle down in the back half of the year, Q4. As we've said since we had the IPO and the road show, it's always our softest quarter. And there's a variety of reasons for that.

We're winding down the list, there's holidays, the weather, typically, and then we start again for the following year. So that's the biggest thing. On the ECS business, the only things that are a little bit different there is typically when we get the recons in Q2 and Q4, there could be some true-ups there that would give it a bump. And then you've also -- we've got the 13th month, extra month that gets booked there the way the revenue recognition works.

So other than that that's probably the quickest way to explain our seasonality.

Sarah James -- Barclays -- Analyst

Got it. And thinking through the headwinds and tailwinds that you mentioned for '22 so far, it seems like there might be a little bit more headwinds in the beginning of the year, tailwinds in the end of the year. So is that the right way to think about the shift in seasonality in '22 versus a typical year?

Steve Senneff -- President and Chief Financial Officer

No. Look, I think there's nothing in '22 that I would see any different, that we would start off strong again on the IHE front. We're going to have all our new lists, and we'll go at it. We'll have the higher program size to start the year with the exit run rate of $6 billion.

So 2022 should -- we should be off to a strong start, should be a typical seasonality year, where first half is a little stronger than the back half and Q4 is -- would be the softest quarter.

Sarah James -- Barclays -- Analyst

Great. Thank you.


[Operator instructions] Our next question is from Sean Wieland at Piper. Please go ahead.

Sean Wieland -- Piper Sandler -- Analyst

Thank you. Good morning. You touched briefly on the possibility of mandatory bundled payments. I wanted to get your perspective on -- for your business, is that a good thing or a bad thing considering CMS might play a greater role as the convener?

Kyle Armbrester -- Chief Executive Officer

Hey, Sean. Good to hear from you. Yeah. Ironic, we had a great call yesterday with almost all of our very large BPCI-A participants talking just about this subject and just future of the program, etc.

So I've got some good perspective from the field. I would say two things. One, we've had -- as I kind of mentioned on the script, great, consistent engagement with CMS. They are focused, I would say, threefold on the future of the program.

One, they want to get more into specialty care. And so that's upstream from where we are today, whereas we operate predominantly in the post-acute. And so that's helping to make site-of-care decisions on where you're going to get your knee surgery done or get your heart valve replaced, etc., versus just the discharge moment. So that's a great opportunity for us.

That's everything that we've been doing out in the non-BPCI-A bundle space. So that's number one. Number two, they are looking at and we're having frequent meetings with them about the expansion into chronic condition inclusion into the bundles as well, which obviously increases potential program size dramatically because a lot of spend is associated with chronic condition management. And then finally, on the future of mandatory, and I would also lump in there the overlap with ACO is another big focus point for them.

I would say that they've been consistent that they want better engagement between ACO and bundled payments in the future, so more understanding of attribution. And largely, that's because they're focused on a mandatory. And then I believe -- this is my speculation, probably a voluntary component as well. And I would say almost all of the big health systems we had on in hospitals, PCP groups yesterday on our client advisory board all agree with what I just said.

We play the role as convener sometimes and often don't play the role as convener with others. We're in analytics and data and then service company that helps manage the post-acute today. And so the status of being a convener or not is not critical to our future in the program would be the direct answer to your question. And our model is flexible to work with folks regardless who is convening.

I think we had a lot of value convening today and have helped, I deeply believe, push forward all the great success that we've seen in BPCI-A across the country. But we don't view that as a headwind to us if that was to shift in direction longer term. Does that answer your question?

Sean Wieland -- Piper Sandler -- Analyst

Yes, that does. Thank you. And then you also mentioned in your prepared remarks the NCQA HEDIS certification. Is that new? Is that an expansion of the addressable market? What would be your thoughts there?

Kyle Armbrester -- Chief Executive Officer

Yeah, absolutely. Yeah. Great question, and thanks for picking up on it. My clinical quality team will be thrilled.

We have a great team there. Jennifer Cobb, who's our leader, who's really leaned in and taken that bull by the horns. I would say one of the big macro trends inside the health plans, and this goes to my earlier comments. The risk and quality in clinical groups have all started to merge together.

And many of our clients are like, hey, guys, you're in hundreds of thousands of, if not approaching 1 million of our members' homes. We need you to be doing more. And so the quality teams have really leaned in. And we've worked in concert with them to start to bring in more quality-centric gaps-in-care device work into the home.

And so just to be clear, all -- a lot of that work has nothing, as I mentioned before, to do with risk adjustment. But it's more focused on gaps-in-care closure, etc. And so we want to do that at the highest possible standard. NCQA, obviously, is the platinum standard in the industry.

So it's helping us get HEDIS certification in other work. And we're doing this in concert by opening up this totally new avenue of doing more of this gaps-in-care closure inside the home. Some plans are even pushing us toward just gaps-in-care visits into the future with different populations. So it is an expansion opportunity, Sean, and one that we're very excited about.

Sean Wieland -- Piper Sandler -- Analyst

Awesome. Thanks, Kyle.


Our next question is from Matt Larew at William Blair. Please go ahead.

Matt Larew -- William Blair -- Analyst

Yeah. Hi. Good morning. I wanted to follow up on your comments around service line extensions, things like med management.

How much of that you see as capabilities that you feel you have today, but maybe just you did figure out payment structures versus capabilities that you could expand to either through enough technology development or M&A?

Kyle Armbrester -- Chief Executive Officer

Yeah. Great question, Matt. I would say it's on med management, chronic condition management, we have great capabilities today. So I'll touch on those two first.

So on the med side, the largest percentage of time we spend in the home is helping seniors understand their medications, and it is -- it's, frankly, frequently a mess, right? They don't understand the pills they're taking, med-to-med interactions, this pill makes me nauseous. And I don't have enough money to afford food necessarily to eat with this type of pill like the doctor recommended. So working through all of that is such a big part of what we do. The plans also have comprehensive med reviews, MTM services and connection back to their PBM workflow.

We're in talks of expanding into all of that, given that great, rich, really golden med list that we're producing outside of the home with all of the surrounding social, financial, whatever they may be issues. So we are in the catbird seat, I think, to make a real positive impact for seniors to get their meds cleaned up once and for all. And this is a plague across the senior population today, and I think Signify's in a great position to make a positive impact there. So that's well underway.

We've been doing a lot of work there, and it's been -- will be a great expansion opportunity for us next year. On the chronic condition management side, it's a big synergy between the two businesses. And so what we've been building out for years now on the Episode of Care division is the ability to manage chronic conditions for a period of time to get them back in check, right, with clinicians, social workers, all of the patient identification work we do. We are now wanting to bring that capability set more into the home.

And so we already do all the identification work, obviously, on the chronic condition. What we want to push forward into and we're in talks with numerous plans on how to best pilot this is to go in and pick diabetes, chronic heart failure, some of these conditions that really are plaguing seniors, and making a positive impact, connecting them back to caregivers, taking on some risk ourselves as a part of that. So I would say that's more in the pricing, figuring out how to do the med economics and the actuarial analysis. On remote patient monitoring front, we're doing a lot of that today telephonically.

And so we -- as a part of our Transition to Home services, we're spending a lot of time engaging and making sure that we're monitoring folks remotely. I think there's an opportunity to expand our device hub and tie more passive remote patient monitoring work inside the home as well. CMS recently approved a pretty dramatic expansion of fee-for-service billing on the RPM side, remote patient monitoring side. That's an opportunity for us, obviously, as BPCI-A is a big fee-for-service population.

But I think that the Medicare Advantage plans are leaning in here, too. And again, we're in a great position to activate and to monitor and provide follow-on services as a result of that reach in the home. So we're pretty excited about that road map. And I think that as I characterized earlier, what are the plans asking us to do more of? It falls into that bucket of work, I would say, more than anything.

The final thing that you'll see continued innovation from us. We're spinning up a team that's focused just on deeper connection back to primary care and to specialists out of the home as well. And so we've been doing that for years, but we're now wanting to dig in more using our core data platform and assets to push information via our fire APIs, push digital scheduling. And we view ourselves as a big reactivation hub to really get folks more engaged in their care.

And I -- the plans are super excited about that innovation from us as well. I mean, getting folks back to their care providers, it lowers readmissions. It allows them to have more happy, healthy days at home, which is our mission. And it's something that we're laser-focused on next year as well.

So thanks for the question, Matt.

Matt Larew -- William Blair -- Analyst

Yeah, thanks a lot, Kyle. That's really helpful. One thing I want to follow up on from your comments, you mentioned that some of the IHE strength this year, next year is related to not the share taking, but more movement from in-house volume. And I'm curious, the OIG report perhaps wasn't applicable to you and the services you provide.

But wondering if you think it's changed the thought process or kind of the risk calculus that payers are going through as they consider in-house versus third-party IHEs?

Kyle Armbrester -- Chief Executive Officer

Yeah. I think that it really plays into this arm's length moral hazard thing. They -- you want to have a completely independent, highly compliant, 99%-plus audited partner to help you deliver these super critical services end-to-end, number one. Number two, I mean, they -- we have the best data asset and the best logistics and routing platform to be able to pull this off at nationwide scale.

And they're consistently seeing this. And we saw several of our large and medium and small clients expand their programs, number one. So move this to more members because they're seeing all of the benefit of positive outcomes to those members, number one. And number two, we saw the sunsetting and move away from several in-sourced programs.

And so I deeply believe we have no real risk of in-sourced, which is always something that folks say inside payer services businesses, why wouldn't they just in-source themselves? I think our payer clients, we have extremely strong relationships with them. And it would be nearly impossible, I believe, for them to stand up nationwide scale like we have. And so it's been fantastic. Instead, conversations focused on, hey, guys, we need you to do more in the home.

Like we want to drive more of an impact. And as I've kind of mentioned extensively on the call, we want deeper and deeper engagement from you all because you've got a really trusted relationship with these folks. Like what's more trust than allowing a clinician to come inside your home, right, and spend an hour with you trying to solve some really complex health problems? And there's more work we could be doing on benefit explanation and connecting them to other programs that the plans are running and pushing forward on the supplement of benefit side, too, is something we've talked a lot about. And so I do think we're going to continue to see an expanded TAM by the moving into, as I mentioned, Medicaid and commercial and touching more and more Medicare Advantage lives, number one.

But number two, we see no risk in the foreseeable future of in-sourcing. And in quite the contrary, folks are leaning in more than ever and asking Signify to do more than ever to make a positive impact on these individuals' lives that we're touching.

Matt Larew -- William Blair -- Analyst

Yeah. Makes a lot of sense. Thanks for all the great detail, Kyle.


As we have no further questions on the call, I will hand back to Kyle to conclude.

Kyle Armbrester -- Chief Executive Officer

Great. Thank you, all, very much for a wonderful quarter, and thanks to the whole team for leaning in. It's been amazing to see us dive into more homes, as I mentioned, expand our services. We're very bullish on the expanded program size and seeing episodes continue to drive positive outcomes, both for the BPCI-A population, as well as the Episodes of Care, the non-BPCI-A population.

Thank you, all, very much, and we'll talk to you guys all soon. Take care.


[Operator signoff]

Duration: 49 minutes

Call participants:

Jennifer DiBerardino -- Head of Investor Relations and Treasurer

Kyle Armbrester -- Chief Executive Officer

Steve Senneff -- President and Chief Financial Officer

Anne Samuel -- J.P. Morgan -- Analyst

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

George Hill -- Deutsche Bank -- Analyst

Sarah James -- Barclays -- Analyst

Sean Wieland -- Piper Sandler -- Analyst

Matt Larew -- William Blair -- Analyst

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