Primary care startup One Medical is looking to shift more of its services online as a result of the Covid-19 pandemic. The company, which went public in January, saw the number of in-office visits drop in March and April as stay-at-home orders went into effect. Though the pandemic didn’t affect its first quarter earnings, it expects to take a hit in the second quarter.
“As Covid-19 started to emerge, we had immediately cut most discretionary spending,” One Medical CFO Bjorn Thaler said during a Wednesday earnings call.
He added that the company had stopped hiring for almost all nonclinical roles and was reviewing its clinical real estate footprint. This year, it plans to open 20 to 25 new offices, bumping back some planned openings into next year.
One Medical’s parent company, 1Life Healthcare, just went public in January for $245 million. The direct primary care company had been growing quickly, adding new members, hiring more physicians and building more brick-and-mortar clinics. The company currently has more than 60 offices across the U.S.
But of course, all of those bring added cost.
During the first quarter of 2020, One Medical saw its membership and revenue grow past expectations. The company brought in revenues of $78.8 million, up 25% from last year. It also saw its membership grow to 455,000, a 25% increase year-over-year. But the company also saw its net loss balloon from $7 million in 2019 to $34.6 million in the first quarter.
Through its direct primary care model, One Medical brings in a portion of its revenue from services billed to insurance, and a portion from an annual $200 membership fee that it charges.
Thaler said the company didn’t see a significant increase in expenses as a result of the pandemic, but did see a reduction in revenue going into March. To offset this, the company launched telehealth visits in late March that have helped make up for some of the loss in patient volumes.
“Our in-office volumes continued to decline into early April before settling into a suppressed level. However, we launched billable remote visits in late March and have seen accelerating week-over-week adoption,” he said.
In April, the company saw about 55% of the patient volumes that it saw before the pandemic. Those levels have increased some in May. But even though insurers are reimbursing for remote visits, they’re still less profitable than in-person visits, as physicians can’t administer certain services or procedures.
Physician groups and primary care offices have been hit hard by the Covid-19 pandemic, and One Medical is no exception. But the startup hopes that by leaning into telehealth, it can recoup some of those costs.
“A positive outcome of launching remote visits and changing demand patterns for in-person care is that we have an opportunity to further optimize our office footprint and provider staffing model,” Thaler said. “Over time, we may increase the number of providers we staff per office with providers working some shifts in office and some shifts remotely.”
Photo Credit: One Medical