One Medical said Wednesday they beat Wall Street expectations on earnings and revenue in the second quarter, driven by a higher-than-expected rebound in care volume following stay-at-home orders during earlier months of the COVID-19 pandemic. The company reported net revenue of $78 million, an 18% year-over-year increase.
The primary care chain, which went public in January, said membership grew 25% year over year to reach the high end of its guidance range. Executives told investors on an earnings call they expect an especially strong third quarter as patients seek more care they delayed earlier this year because of the pandemic, but don’t expect those tailwinds to carry into the fourth quarter.
One Medical also announced the rollout of a new virtual option for people in areas where the company does not have a physical location for a reduced fee. It also said it would enter two new markets — Raleigh-Durham, North Carolina, and parts of Wisconsin — meaning it will have a presence in at least 15 markets by the middle of next year.
The new virtual product, called One Medical Now, grew out of interest from employers with national workforces that wanted to extend benefits to employees in areas without a One Medical physical presence, executives said Wednesday. Its potential is clear as the coronavirus crisis continues to ravage the country and patients have flocked to telehealth to avoid exposure.
“This has allowed us to further broaden our footprint, expand our reach within existing employers, and build relationships with new national employers and clients,” CEO Amir Dan Rubin said.
Analysts with SVB Leerink wrote in a note Thursday morning the new service, other ancillary services, “and, eventually, lower cost operations, will be key to making the numbers work” for long-term projections.
They added One Medical is not alone in its burgeoning sector. One competitor Oak Street Health saw its stock price nearly double in the first day of trading last week.
“We do not believe that [One Medical] possesses an impenetrable moat,” the SVB Leerink analysts wrote.
When in-office visits began to decline in March due to stay-at-home orders, One Medical launched COVID-19 care and billable remote visits. It has provided on-demand symptom assessment, testing and follow up care and also has a worksite re-entry program.
Rubin said the company expects to be able to deliver treatments and vaccines for COVID-19 if and when they become available.
Executives said the company received $2.4 million in funding from the Coronavirus Aid, Relief, and Economic Security Act, which helped boost its “care margin” to $24.6 million, or 31% of net revenue.
Its loss from operations was $28.7 million, or 37% of total net revenue.
One Medical slightly boosted the lower end of its membership guidance for the third quarter. It is not providing full-year guidance for any metric of than membership, which it expects to be in the range of 505,000 to 515,000. Membership in the second quarter was at 475,000.
CFO Bjorn Thaler told investors that while COVID-19 continues to mean a volatile and unpredictable future, the company expects its new services to boost its model.