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Universal American Corp. (NYSE:UAM)

Q2 2010 Earnings Call

July 30, 2010 9:00 a.m. ET

Executives

Richard Barasch – Chairman and CEO

Martina Alisuag – Director, IR

Bob Waegelein – EVP and CFO

Analysts

Sarah James – Wedbush

Daryn Miller – Goldman Sachs

Joe (Coons?) – Barclays Capital

Carl McDonald – Citigroup

Tom Carroll – Stifel Nicolaus

Operator

Good day everyone, and welcome to the Universal American Corporation second quarter 2010 conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode. I would now like to turn today’s conference over to Mr. Richard Barasch. Please go ahead, sir.

Richard Barasch

Thank you and good morning everyone. Thanks for joining us on our second quarter 2010 conference call. I'm here with Bob Waegelein, our CFO and Martina Alisuag, our Director of Investor Relations. I'd like to ask Martina to read our Safe Harbor language.

Martina Alisuag

Before we begin, I would like to remind you that we have posted a presentation for this call on the investor section of our website, www.universalamerican.com. I would like to remind you that some of the information discussed during this conference call will constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include statements regarding the likelihood or effect of any legislative or regulatory changes; our expectations of the performance of our Medicare Advantage, Part D, Med Sup, and other lines of business; the estimation of loss ratios and lapsations; the adequacy of reserves; our ability to institute future rate increases; expectations regarding our Part D and Medicare Advantage programs, including our estimates of membership, costs, revenue, future operating results, prior period adjustments, the success of our filings for new products, estimates of future membership, and the risks inherent in these businesses; the identification of acquisition candidates; the completion, integration, or accretion of any acquisition transactions; and the viability of any acquisition proposal.

Although we believe that the expectations reflected in these statements are based upon reasonable assumptions and estimates, we cannot give assurance that we will achieve the expected results. Forward-looking statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those projected. We recommend that you review the most recent risk factors that are set forth in our SEC filings. During this call we will also refer to certain non-GAAP financial measures. We recommend that you review our reconciliation tables listed in the press release.

Richard Barasch

Thank you Martina. This morning Bob and I are going to spend some time describing the highlights of the first half of the year, including the second quarter, and then move on to a discussion about how Universal American is positioned for the new environment. Next, we will discuss the special dividend, and finally, we’ll talk about our prospects for the balance of 2010. I know the press release contains a lot of information related to prior-period developments, and Bob will be available to answer any specific questions.

The short story is that 2010, mostly driven by increased Medicare Advantage membership, is developing a little better than we had projected, enhanced by around $0.11 of positive prior period items from last year that have emerged through the second quarter. Therefore, as you saw from the press release, we’ve increased our guidance by $0.15 and now project to a range of $1.85 to $1.95 per share.

I can’t tell you how happy I am not to have to discuss the pros and cons of healthcare reform as much anymore. While there are several areas of the reform legislation that remain to be finalized through rule making, we now have the basic rules of the road for our business and can get on with the task of managing our business through the coming changes.

Starting with slide 3 on the deck posted on our website, I’d like to reiterate that we still see tremendous potential in the senior market. This country faces an enormous task to pay for the increasing cost of healthcare to the rapidly growing senior population, and despite the negative rhetoric, and increased regulatory scrutiny, we still see a huge role for private insurers like Universal American to be a constructive part of the solution.

To be successful in the long run, our product must offer a compelling value proposition to our members and to the government as well. We must be able to deliver to our Medicare Advantage members a better healthcare solution than stand-alone Medicare and a less costly alternative to Medicare plus Medicare Supplement.

This can be achieved by wringing out the waste in the fee for service system with a combination of technology and common sense cost controls, and appropriately compensating our providers, keeping our members health, and delivering better and more cost-effective outcomes. We must also focus on compliance and quality to the benefit of our members and to conform to a more active regulatory environment.

We’re doing this successfully in our HMOs through our Healthy Collaboration model, in which we work closely with physicians and members to promote better health outcomes to control medical costs, and we’re confident we can deliver similar value in our new networks and to our rural members as well, even in a lower reimbursement environment. You can see from the chart on slide 4 we believe that we have the size and scale in Medicare to manage through the coming changes.

Now, turning to our financial results on slides 5 and 6, I’m going to turn it over to Bob Waegelein.

Bob Waegelein

Thank you Richard. I’d like to remind you that we post additional information on our quarterly results on the financial supplement that can be found on our website in the financial reports tab of our investor section. Turning to slide 5, you will see we report a net income of $21 million for the quarter, or 27%. Included in this amount is $0.02 of non-recurring tax benefits, resulting in operating earnings of $0.25.

The quarter results were also impacted by $8 million or $0.10 of after-tax items that were related primarily to the first quarter. Our Medicare Advantage segment continues to provide solid results, generating $51.6 million of earnings for the quarter. These results include $16.2 million in pre-tax positive period items relating to both the first quarter and 2009.

Our membership is up 24% from June of 2009, generating $790 million in premium revenue for the quarter, an increase of $136 million over the same period last year. This resulted in adjusted MBR of 84.5%, right in the middle of our expectations.

Our Part D business recorded a loss of $14.4 million for the quarter. That included $3.4 million in pre-tax negative prior period items relating primarily to 2009. This compares to a profit of $13.6 million for the second quarter of 2009.

It is important to note that these results were in line with our expectations, and that we anticipated heavier seasonality in our results throughout 2010 due to the manner in which we bid our business through lower margins for 2010 and changes in our benefit design for enhanced plan and changes to the standard benefit plan from 2009. In addition, since our membership increased by 204,000 members from last year, the seasonal pattern of losses was impacted further.

We continue to improve our Part D expense ratio, reducing it by 70 points from the second quarter of 2009. Our traditional segment reported earnings of $2.9 million for the quarter, ahead of our expectations, primarily due to improved loss ratios in our Medicare supplement business and lower claims incurred in our specialty health business.

Turning to our six-month results on slide 6, we report a net income of $22.4 million, or $0.29 per share. These results included $3.8 million, or $0.05 of tax benefits, resulting in operating income of $0.24. When we consider the $8.3 million of after-tax prior period items included in these results that related to 2009 and realized losses, our adjusted year-to-date income was $10.4 million or $0.13 per share.

Our Medicare Advantage segment posted strong six-month numbers, earning $99 million for the year to date. This includes $22.8 million of positive items related to 2009. Part D year to date results are a loss of $46.4 million and include $5.9 million of negative items related to 2009, resulting in an adjusted loss of $36.9 million that was in line with our expectations.

I would also like to remind you that the sale of CHCS occurred during the second quarter eliminated substantially all of the business operations of our senior administrative services segment. As a result, beginning with this quarter, we’re reporting the current and historical results of the former senior administrative services and corporate segments in one segment called Corporate and Other.

We’ll be happy to answer any further questions that you have at the end of this call or offline. Richard?

Richard Barasch

Okay, thanks Bob. Turning to slide 7, a description of our Medicare Part D business, now we have approximately 1.9 million members in our plans and we’re the second-largest sponsor of Part D based on the most recent CMS information. Increasing our membership over last year was largely due to the addition of nearly 150,000 new dual-eligibles, and we were under the benchmark in 29 of the 34 regions last year. In addition we recently added another approximately 20,000 members from a Part D insurer that lost its contract with CMS.

Given our scale and specific focus on Part D, we still think we have room to improve our expense structure, which will continue to enable us to offer a strong benefit package and very competitive pricing. We submitted our 2011 bids during the second quarter and look forward to hearing the results of these bids as it relates to dual-eligibles and low income members in mid-August.

Turning now to slide 8. This is a slide you’ve seen before. Just to reiterate, the recent legislation largely had a positive impact on Part D. Important for us some of the new bidding rules will help reduce the movement of auto-assigned dual-eligible and low income members between plans as part of the annual regional benchmark bidding process. Since we’re now one of the largest providers of Part D to duals and other low income subsidy beneficiaries, this is positive for Universal American.

Also, the closing of the donut hole has both real and symbolic importance. Over time we’ll be providing more insurance coverage, but probably as important is that Part D has been adopted by the Administration now that they have fixed a large and unpopular flaw in the program.

Turning now to slide 9, Medicare Advantage. As Bob mentioned, the second quarter in Medicare Advantage was strong. We continued to increase membership and profitability in our network based Medicare Advantage products further demonstrated a success of our healthy collaboration model.

We’re pleased with the 2010 selling season. Our increased membership reflects a combination of higher new sales, especially in our core markets, and very importantly, significantly lower attrition as compared to last year.

We’re happy that our network products gained market acceptance, both for new members and for certain private fee for service members who migrated to the network products in this past year. It’s absolutely clear that in order to be successful in a new reimbursement structure Medicare Advantage plans must materially influence the cost and outcomes of healthcare. To that end we’ve continued to invest in our medical management infrastructure, especially in our newer markets.

In our HMOs we continue to demonstrate the success of the healthy collaboration model built on strong and granular partnerships with primary care physicians whose mission it is to provide the best health outcomes, which not coincidentally often leads to lower costs.

Moving to slide 10 and 11, I’m sure most of you are familiar with the items on 10 and 11, which describe the effect of the reform bill on the Medicare Advantage business, so let’s move on to slide 12, which describes how we see 2011 and beyond.

First and foremost, compliance has become even more important with the new authority granted to CMS in the reform bill. There is an increased scrutiny of Medicare Advantage plans to ensure that we are fulfilling our promises to our members and there is greater oversight on plan bids and plan designs to ensure that members have lucid and understandable choices. CMS clearly wants there to be fewer and higher quality plans. Consequently we have focused our new 2011 filings on network private fee for service, a product which nicely also allows the easiest transition for our current private fee for service members. By the way, this movement by CMS toward fewer plans with more distinct choices is also true for Part D as well.

If we’re ultimately successful with our 2011 filings, we’ll have qualifying network products in 55 markets, covering around 85,000 of our current private fee for service members. The recently finalized rules will permit us to migrate private fee for service members to our network private fee for service product on a passive basis, without the need to reenroll.

Another positive development from the final 2011 regulations was the expansion of the number of counties that qualify as rural, which increased our estimate of the number of rural members that we will have in 2011. So, assuming we get final approval on our bids and network filings, we will have a product in 2011 for approximately 65% of our private fee for service members, as shown on slide 13.

Slide 14 is probably familiar to most of you as well. This analysis shows the distribution of our membership in the various pockets of the new reimbursement regime, assuming 2010 membership in places where we have, or will have, or are in the process of filing, network products, plus the qualifying rural membership. It does not include 2010 members in areas where we have chosen not to file network products.

If you look at the chart you can see that we’ve got a good distribution. Lots of our members fall into the 115% pocket, and those are largely in our newer markets, and there are 95% markets but largely in places like Houston where we think we’ve got a terrific infrastructure through which to manage to those numbers. Importantly, even to the extent we go to the lower benchmark target, we’re giving quite a long time, 7 years, for most of the members in the 95% bucket. So in the aggregate we believe that this distribution is manageable for us.

As I said, our lower reimbursement markets, like Southeast Texas, we have the market presence, the time, and the tools to maintain our position. In most of our newer network development markets we have the benefit of an ultimate higher floor in several markets and longer phase-in periods. For example, we see upstate New York and Indiana as markets of particular strength for Universal American going forward.

Now turning to slide 15, as you know from the press release we announced a special dividend of $2 a share to holders of (inaudible) as of April 5. In order to be able to pay this dividend, we amended our credit facility to give the company the ability to make an additional $100 million of restricted payments, including dividends. In consideration of these changes, we agreed to pay down the loan by $0.50 for each dollar of restricted payments made, as well as increasing the interest rate on the remaining outstanding debt by 12.5 basis points. So concurrent with the payment of the dividend, the company will also pay down approximately $78 million of its bank debt, leaving a balance of approximately $234 million. After these payments we’ll have approximately $11 million of restricted payments available for us going forward.

The special dividend reflects our commitment to maintain a capital structure that fits our business. After the payment of this dividend and the concurrent paydown of debt, the debt cap ratios will improve and we will retain more than adequate capital in our operating subsidiaries, especially in light of the anticipated reduction in the size of our Medicare Advantage private fee for service business in 2011.

Assuming we hit our guidance number for this year, we expect to end the year with risk based capital in our subsidiaries in excess of 450%. In addition as highlighted on slide 16, we will still have more than $40 million in unregulated cash at the holding company and a fully unused $150 million line of credit, so we still have plenty of liquidity at the holding company.

Turning now to the guidance slide, on slide 17, the guidance table on slide 17, as mentioned before, we’re increasing our guidance by $0.15 to a range of $1.85 to $1.95 per share. As noted, much of the increase comes as a result of the $0.11 net positives from our 2009 business that emerged through the first half of the year. Still, we see enough other positives, mostly in Medicare Advantage, to nudge our guidance up by a few more cents.

So with that I’m going to end the prepared part of the presentation. Thanks for your time. Bob and I will be happy to answer any questions that you have.

Question-and-Answer Session

Operator

(Operator instructions.) Your first question comes from the line of Sarah James with Wedbush.

Sarah James – Wedbush

You’ve seen two sequential quarters here of negative development in Part D. How doe s this impact your thinking around where your current cost trends and expenses may develop in 2011 (inaudible)?

Bob Waegelein

Good question. Most of the prior period was reconciliation of historical PTEs and quarter calculations among the various regions. When we did our bid, the cost element of our operating results this year so far are in line with what we felt we needed to do in the bids. So again, these are just kind of cleanup reconciliation items with CMS.

Sarah James

Got it. Thanks. Lastly, it looks like on slide 13 that there’s a change there in the number of members from private fee for service that are considered in rural counties. Can you talk about that decrease?

Richard Barasch

This is from the original guidance we did earlier in the year for 2010. In February when the specific rules for 2011 were published by CMS in the final call letter, the number of counties that qualified as rural was more than we had originally anticipated, and that added somewhere around 35,000 people qualified as rural for 2011.

Sarah James

So that guidance on there is old guidance, it’s not the . . .

Richard Barasch

Yeah, that’s old guidance.

Bob Waegelein

Original guidance.

Richard Barasch

Original guidance.

Sarah James

Thank you.

Richard Barasch

We should probably note that. Original guidance. Thanks Sarah.

Operator

Your next question comes from the line of Daryn Miller with Goldman Sachs.

Daryn Miller – Goldman Sachs

I wanted to better understand the seasonality in the Part D business as we look at the third quarter and fourth quarter, and just what are your expectations. Do you think we see even gains in the third and fourth quarter or would the third quarter have a large gain versus the fourth quarter? Just a little commentary on that would be helpful.

Bob Waegelein

Again, when we looked at our projections for this year internally we saw that the slope of earnings was much steeper in 2010 than 2009. Again, as a result of the change in the standard (inaudible) design the plan pay picked up 20 basis points less so that primed it a little bit of our loss. We changed our enhanced benefit design which made us cost more earlier in the period. So the slope will be steeper and I would guide you that the fourth quarter will be the bulk of the earnings for Part D.

Daryn Miller

And what was your target margin for the PDP business in 2010?

Richard Barasch

We had not published that, Daryn.

Daryn Miller

Okay. Any comment on target NCR for 2010 in PDP or no?

Richard Barasch

No, again we have not historically put that information in our guidance.

Daryn Miller

And did you guys record any risk adjusters for Medicare Advantage in the second quarter?

Bob Waegelein

Yes we did, and this, you’re referring to is the amount that we received mid-year, that we related for 2010 and that was some of the prior quarter development that came through in the second quarter, primarily for MA, that was about a $5 million or $6 million benefit that came through the second quarter that related to the first quarter.

Daryn Miller

Right. And . . .

Richard Barasch

We were explicit in our second quarter numbers that that was a prior period. That that was a prior quarter.

Daryn Miller

Right. And in terms of favorable development in the Medicare business, can you provide any commentary on how that was split between network-based and private fee for service?

Bob Waegelein

I would generally say more of it came from the private fee for service line.

Daryn Miller

Okay. And last question: Just curious in choosing to go the route of a dividend, you had done some share repurchases historically. Why the change in strategy of how to return capital?

Richard Barasch

I think it was a combination of items. Part of it is that given the ownership of our company, as concentrated as it is with four significant owners, we were conscious of not reducing the float even more than what it was, I think what it is right now. That was a big factor. And given the trading volume of our stock, we were concerned that a large share purchase would distort the shares, distort the market more than it should have given the trade environment that exists every day. We also, we bought back 12 million or 13 million shares at an average price of less than $10 and I clearly think that our company is, we’ll never say we shouldn’t, that it’s not value at these prices, but at this felt like a better use of the money at this time. We still have a share purchase, share repurchase plan in place, and nothing precludes us later from going back to that technique.

Daryn Miller

Make sense. Okay, thank you.

Operator

Your next question comes from the line of with Joshua Raskin with Barclays Capital.

Joe (Coons?) – Barclays Capital

Hi, this is Joe (Coons?) filling in for Josh this morning. Quick question on the fee for service members. You talked about 65% expectation, for 65% of those members to stay within Universal plans. Do you have any expectations about the remaining 35%? Are you building any of that into guidance? Is there anything that you’re doing proactively to address that group?

Bob Waegelein

We’re, just technically, when we notify these folks that we won’t have a plan for them in 2011 they’ll be allowed a special election period to move to other Medicare Advantage plans and we will clearly assist any of our members in helping them get to the next appropriate spot. Again, these are private fee for service members, and if they are in fact in places with limited choices of networks one product that we’re going to expose to them is our Medicare supplement product as well.

Joe (Coons?)

I know you already talked a little bit about the PDP factors for prior period reserve development, but can you talk a little bit about what the key drivers were for the Medicare side as well? Medicare Advantage?

Bob Waegelein

Key drivers of prior period, or the quarter?

Joe (Coons?)

Of the positive development, I guess what I’m really interested in is we see the negative development in PDP, the positive development in Medicare Advantage, so I guess I’m interested in what that discrepancy was caused by.

Bob Waegelein

Fair enough. The previous question about the mid-year, that clearly occurred in the second quarter relating to the prior quarter, so the first quarter. If we look at the year to date results, we had two things come through MA. In the first quarter you’ll note that we reported prior period items that related to 2009, and that was the wrap up of some of our revenue accruals that as we go through our charts and claim payments and submit adjusted risk course to the government, we adjust our expected recovery of premium for that. So some of that was really relating to 2009 premiums. And then we had the traditional run out of our claim reserves that happens. These things complete in 3-6 months and the completed are slightly favorable to us in the first quarter and again a little bit more in the second quarter.

Joe (Coons?)

Okay, great. Thank you. And . . .

Richard Barasch

Just on the Part D, Bob mentioned this before and I think it bears repeating. There was nothing fundamental in the Part D business that caused the negative restatement. These were reconciliation items, clearly you would have to ding last year’s results by these amounts, but there was nothing fundamental in the bid or the product structure that caused these issues.

Bob Waegelein

Just as an example one of the items is the various states bill the plans more than a year after on a reconciliation with us and unfortunately a lot of states come in in 2010 on matters that actually related to 2008.

Richard Barasch

And we may be guilty of giving out a little bit too much information on this but I think it’s important. We just want to make sure everybody is clear on what’s in period and what’s out of period.

Joe (Coons?)

Understood. Thank you very much for that. And last question is with the bids submitted last month would you expect any kind of material change in benefit design from 2010 to 2011?

Richard Barasch

Part D obviously, most of our business is in the prescribed benefit design, so we will all bid to that or actuarially equivalent to that in our main bids. And in our enhanced plans, one thing CMS, and I’ve referred to this before, has been pretty firm on is reducing plans to reduce the amount of confusion from beneficiaries. In so doing it’s required us to consolidate some plans and some of the members who are in lower value plans are going to be in higher value plans that are going to cost more money. Some of the people in higher value plans are going to be in “lower value” plans that are going to cost a little less money, so there’s going to be a little bit of movement among our members in those cases. Medicare Advantage, again, we had a freeze on rates from 2010 to 2011, despite the fact there was a fair amount of underlying inflation in the system. So when a combination of decreasing our costs and fooling with the benefit structures, we think we’ve done what we had to do, so there will be some benefit changes but we think that they’re quite manageable.

Joe (Coons?)

Okay, thanks very much guys. I appreciate it.

Operator

(Operator instructions.) Your next question comes from the line of Carl McDonald with Citigroup.

Carl McDonald – Citigroup

Thanks. Would you mind providing a little bit more detail around what the difference is between a network private fee for service and how that differs between traditional private fee for service and a PPO? And then also walk through exactly what a passive migration means. How does that differ for a member that, say last year was in private fee for service and stayed in private fee for service this year?

Richard Barasch

On one level network private fee for service and PPO are very similar, because there must be an underlying network that’s been approved by CMS as an adequate network for those members. So from a network adequacy perspective, the roles are exactly the same. From a product perspective, there are more techniques, managed care techniques, to broadly describe them, more managed care techniques that can be employed in a PPO or an HMO that can be employed in a network private fee for service product. So there are some product differences and some inside rules that create some differences but I would say that there’s a lot of, more similarities and differences between network private fee for service and PPO. A lot of it, this is all in plan design, and a lot of companies have different thoughts about this. You’ve got the tightness of the network and the out of network benefit. And there’s no definite continuum between PPO and network private fee for service for things like that.

What passive means is, here’s the contrast, if one of our members, who is a private fee for service member let’s say in Syracuse, wants to join our PPO. Technically that person dis-enrolls from private fee for service and then a new enrollment in our PPO product. For example this year we had about 7,000 or 8,000 members from private fee for service become PPO members and they had to fundamentally cancel where they were and reenroll as new members.

What network private fee for service allows is that with notification, so we will notify the members of the changes in their program, and there will be some. They will have to opt out in order to change programs as opposed to having to opt in in the case of a PPO product.

Carl McDonald

Got it. Okay. And then the last question. Just if you could walk through the cash at the parent build from first quarter to second quarter and what the drivers were there beyond the subsidiary dividend.

Bob Waegelein

Primarily it was the subsidiaries, dividends, we also got a tax refund on how we looked at some of the pre-acquisition tax returns of Member Health and re-filed that and actually received the cash. Some of the non-recurring tax benefits that were recorded in the quarter was interest on those refunds and that refund was in excess of $20 million, so $151 million, $152 million of dividends from the subs, the $25 million of various refunds from the government was the large accumulator of cash at the parent.

Carl McDonald

And the dividends from the subs, how would you think about that, breaking up between just normal earnings dividended up . . .

Bob Waegelein

Ordinary dividends from the 2009 results of the Pennsylvania Life and American Progressive subsidiaries.

Carl McDonald

Got it. Okay, thank you.

Operator

Your next question comes from the line of Tom Carroll with Stifel Nicolaus.

Tom Carroll – Stifel Nicolaus

You just answered my question on the unrestricted cash, so that’s good. One other follow up question, I guess somewhat theoretical in nature. If you look at first half margins in your MA business this year and exclude out prior period development, I calculate about 4.8% and that is very stable with the first half of 2009, actually up a bit. Would you suggest that going forward longer term, as we think about Medicare Advantage and how it’s going to evolve over the next several years that this is a good baseline margin level to think about? Because it seems like the margins were managed pretty well by the industry, you guys included, despite a very large change in reimbursement this year.

Richard Barasch

Yes, I think that to think about a margin in this range is appropriate going forward and I think the elements of this will change as time goes on. I think it will be, I wouldn’t be surprised to see loss ratios start ticking up, and for us however the MLR rolls come through probably doesn’t matter as much. It’s how we’re going to react to reimbursement changes over the next several years. So the notion of us being in the 85 range is fairly reasonable. I think what we’ll be striving to do at the same time is get our administrative margins down lower, which where we think, by the way, we have some room.

Tom Carroll

As you think about the next few years what are the things that perhaps lower this number even further?

Richard Barasch

Lower which number?

Tom Carroll

Your operating number. Your operating margin number.

Richard Barasch

By the way there’s a little bit of tension on this because as you know we’re going to get graded on the star system and the wrong thing to do would be to slice anything off the operations and negatively impact the member experience. So that’s an element that we have to be very mindful of, but I think as we get smarter about the business as we are able to automate more and we consistently seem to be able to automate more and in fact not diminish the member experience but actually enhance the member experience to the extent we’re better at technology, we think that there’s some room there. You can see this very graphically in our Part D business. The ALR has come down year over year over year in a pretty significant way and a lot of that is just getting better at what we do. Medicare Advantage is a little more complex, in part because of the moving parts that exist in the business with the effects of MIPPA and the change in fee for service, etc. It hasn’t been quite as simple, not that Part D is a simple product, it’s complex in its own way, but the fundamental structure of the product hasn’t changed as much as we’ve had to react to in MA. We had a lot of expenses embedded in our ALR number for network development, which we don’t think will reoccur, so we think there’s a path toward a somewhat ALR in our Medicare Advantage program.

Tom Carroll

Thank you.

Operator

(Operator instructions.) And there are no further questions at this time. I will now turn the call back to management.

Richard Barasch

Thanks everyone. We appreciate your time this morning and if you have any questions please call Bob or Martina. Have a good rest of the morning. Thank you.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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