Centene Corp (CNC) 2009 Q1 法說會逐字稿

Good morning.

My name is Jackie and I will be your conference operator today.

At this time I would like to welcome everyone to the CNC Q1 2009 financial results conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer session.

(Operator Instructions)

I will now turn the call over to Ed Kroll, Senior Vice President of Finance and Investor Relations for Centene Corporation.

You may begin your conference.

Thank you and good morning, everyone.

It's Ed Kroll, Senior Vice President Finance and Investor Relations at Centene Corporation.

Thank you for joining us on today's conference call for our first-quarter earnings.

Michael Neidorff, our Chairman, President, and Chief Executive Officer, and Eric Slusser, Executive Vice President and Chief Financial Officer will host this morning's call.

The call is expected to last about 45 minutes and may also be accessed through our website at www.Centene.com.

A replay will be available shortly after the call's completion, also on our website at Centene.com or by dialing 800-642-1687 in the US and Canada, or 706-645-9291 from all other countries.

The access code for those calls is 93132567.

Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in Centene's Form 10-Q dated today, April 28, 2009, and other public SEC filings.

Centene anticipates that subsequent events and developments will cause its estimates to change.

While the Company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

With that, I'd like to turn the call over to our Chairman and CEO, Michael Neidorff.

Thank you, Ed.

Good morning, everyone and thank you for joining Centene's first-quarter earnings call.

I will briefly review some of the highlights of the first quarter and then turn the call over to Eric, who will walk through the financial results in greater detail.

Before I discuss another solid quarter for Centene, I would like to take a moment to briefly comment on three important and timely topics.

One, our first swine flu and its possible impact.

Secondly, Centene's position as a Medicaid Managed Care organization in the current economic environment.

And thirdly, the impact on our business from possible federal healthcare reform.

While the recently ended regular flu season was significantly lighter than last year, the very recent outbreak of so-called swine flu has become the main topic of healthcare news around the world.

Swine flu is a respiratory disease of pigs caused by the Type A flu virus.

People do not normally get swine flu, but human infections can and do happen.

Swine flu virus has been reported to spread from person-to-person and is contagious.

The symptoms of swine flu in people are similar to the symptoms of regular human flu and include high fever, cough, sore throat, body aches, headaches, chills, fatigue, and gastrointestinal tract related issues.

Centene has a detailed response plan in place that was developed in 2006 during the bird flu pandemic scare to manage major disease outbreaks, which allows us to be proactive rather than reactive in our actions.

We communicate and coordinate with providers, state and local agencies, and our members as we continuously monitor the disease incidence in our markets.

Our NurseWise call centers are an invaluable resource in disseminating useful information on symptoms, treatment, and prevention.

While there is no flu vaccine for swine flu, antiviral medications like Tamiflu and Relenza have proven successful as a treatment.

These medications should be taken only on the advice of a physician within 48 hours of the onset of symptoms.

In addition, Centene has a comprehensive business continuity plan to ensure that our operations are not significantly disrupted in the event of a pandemic.

We have mobilized our team and are on alert to implement the plan if needed.

Right now it is simply too early to predict the scope and implications of the swine flu situation, but we will keep you updated as necessary.

Switching to the economy, the downturn in the US economy has had a significant impact on state budgets, with the majority of the states now forecasting budget deficits for the full-year 2010.

Let me remind you, Centene's business model is built to grow in both good and bad economic times.

We understand the strain this economic environment places on our state partners, and we are committed to working with them to ensure we provide better health outcomes at lower cost.

We will maintain our focus, dedication, discipline in managing our business in 2009 and beyond and remain committed to our growth, the improvement of our profit margins, and producing consistent and adequate returns for our investors.

Also, the fiscal stimulus bill passed in February includes $87 billion in additional federal funding for state Medicaid programs over a two-year period through the increase to FMAP, with states eligible for additional funding based on their unemployment levels.

We have previously described these funds as state budget stabilizers, which will fill gaps from lower tax revenues and serve to dissuade states from cutting Medicaid Managed Care reimbursement.

I am pleased to report that this money as of the end of March is now flowing to the states, and almost $4 billion of these additional FMAP funds have already been remitted to the states where Centene operates health plans.

On April 1, the SCHIP reauthorization signed by President Obama in February went into effect.

This reauthorization is for four and a half years and expands the 4.7 million children currently eligible by an additional 3.9 million.

Almost 25% of these incremental children reside within Centene's geographic footprint.

Furthermore, higher unemployment rates in our states increase the number of people who are eligible for Medicaid coverage.

We will update you in the future on the likely impacts these events have on our business and will consider them in future guidance.

Right now we think it is still too early to try and fully quantify them.

As the capital markets remain volatile, we continue to stress the importance of being prudent balance sheet managers with a focus on liquidity and capital adequacy.

Strategically, we will continue to build our multiline strategy, coordinating efforts between our health plans and specialty companies to drive productive innovation and new product innovation; become a low-cost producer; enhance our members' health outcomes; and win new business.

However, it is essential that we maintain an abundance of conservatism and remain selective in our pursuit of new business opportunities.

Moving to the subject of possible federal healthcare reform, all any of us can do at this point is speculate on timing, cost, feasibility, and private-sector impacts.

Ultimately, budget realities will limit changes to those that are affordable.

But we do believe that we are well positioned as any managed-care organization to work effectively in a post-reform environment, given our focus on helping underserved, vulnerable populations gain better access to healthcare coverage, cost effectively, with our wide array of products due to our unique multiline strategy.

Our recent contract in Massachusetts offers evidence of our ability to meet the needs of different markets and customers in a dynamic fashion.

Our growing experience with the Massachusetts program, which I will comment on later, will serve us well.

We are well versed in operating as a government contractor, and while there are no guarantees, it is difficult to imagine a type of healthcare reform under which our skills, flexibility, and focus will not be valued.

Stay tuned.

Now, back to the first-quarter results.

The quarter's performance demonstrates that the actions we began taking last year, in an effort to produce more predictable earnings and to achieve financial strategies, are working.

We had solid revenue growth in the first quarter at 20% year-over-year, and our list membership grew in all our states.

The medical management and network enhancement efforts put in place in Ohio and other states continue to pay off, as the consolidated HBR improved 160 basis points year-over-year, excluding the effect of the Georgia 2007 retroactive rate increase booked in Q1 of 2008.

We continue to expect a consolidated HBR to vary between 82% and 84% range due to normal seasonality.

Turning to our general and administrative expense, the G&A ratio for the first quarter of 2009 was 13.5%, a year-over-year increase of 50 basis points, excluding the effect of Georgia 2007 retroactive rate increase booked in Q1 of 2008.

This increase is due primarily to expenses for additional facilities and staff to support our growth; the acquisition of Celtic; and presentation of Access as a consolidated subsidiary.

Now I'd like to speak to some of our newer growth drivers.

In February 2009 we began converting managed-care membership in Florida from Access Health Solutions' nonrisk book to our new subsidiary, Sunshine Health Plan, on an at-risk basis.

The conversion process is going well, and at March 31, 2009, we served 29,100 members on an at-risk basis while Access continued to serve 92,900 members on a nonrisk basis.

In South Carolina, our organic growth ramp remained strong.

In March 2009 we completed the previously announced acquisition of certain assets of Amerigroup Community Care of South Carolina.

In combination with our previously converted membership in the state, we serve 48,500 at-risk members in South Carolina at March 31, 2009, compared to just 2,200 a year ago.

Note that we converted members in Florida and South Carolina to our risk plans during Q1.

These converted members in both states have what is known as a choice period both before and after the conversion date.

Both states' choice period will occur during Q2.

There is potential for minimal membership volatility in Q2 before we stabilize at higher levels between now and the end of 2009.

Last but certainly not least, in March we announced that our Celtic unit was awarded a contract to manage healthcare services for the working poor in Massachusetts.

With a strong local provider partner, Caritas Christi Health Care, we will operate a joint venture called CeltiCare Health Plan, commencing in July 2009.

This contract win is especially satisfying for us, as it validates our strategic rationale for buying Celtic last year.

We acquired Celtic in 2008 to allow us to expand our addressable market for Medicaid-only to all of the uninsured.

Celtic's individual health plan skill-set allows us to work with states in designing coverage solutions for uninsured individuals and families that do not qualify for traditional government-sponsored Medicaid.

CeltiCare will serve the Central, North Boston, and Southern regions of Massachusetts.

The Massachusetts Commonwealth program is a health-insurance program for low income working adults up to 300% of the federal poverty level who are not eligible for Medicaid or employer-sponsored insurance.

There are approximately 165,000 members eligible under the program.

We anticipate membership will begin building up in July and expect the annual run rate of revenue of $100 million to $125 million by the fourth quarter of 2010.

As a reminder, we will not comment on the Jersey transaction with Amerigroup, as it is our long-standing policy not to comment on active litigation.

Lastly, I would like to remind everyone that our seventh annual investor day will be held in New York City on Tuesday, June 2, 2009, beginning at 8 a.m., and we hope you can join us.

More information will be forthcoming on this.

We appreciate your support and interest in our Company.

And with that, I will now turn the call over to Eric for the financial.

Thank you, Michael, and good morning, everyone.

Before I discuss the first-quarter financial highlights, I would like to remind everyone of two important facts from 2008.

First, the 2008 first-quarter results include the benefit of the July 1 through December 31, 2007, rate increase for Georgia of $20.8 million of premium revenue or approximately $0.28 per diluted share.

Second, beginning with the fourth quarter of 2008, the results of operations for University Health Plans, our New Jersey health plan, were classified in the financial statements as a discontinued operation as a result of our intent to sell the business.

The financial results discussed throughout this call will be in the context of continuing operations unless noted otherwise.

In addition, beginning January 1, 2009, we have presented our investment in Access as a consolidated subsidiary in our financial statements.

Access was previously an equity method investment, and the earnings were recorded in Other Income in prior periods.

For the quarter ended March 31, 2009, revenue net of premium taxes grew to $908.9 million, which represents 20% growth compared to the first quarter of 2008.

Excluding the Georgia rate increase recorded in 2008, the growth was 23%.

The revenue increase in 2009 was driven by the following items.

Organic full-risk membership growth in each of our states.

The acquisition of certain assets of Amerigroup Community Care of South Carolina on March 1, 2009.

Third, the consolidation of Access as a subsidiary as well as the conversion of nonrisk Florida Access members to the full-risk Sunshine State Health Plan model starting on February 1, 2009.

Fourth, the commencement of the Arizona acute-care contract in October 2008.

Number five would be acquisition of Celtic in July 2008.

Sixth, the commencement of the Texas Foster Care contract in April 2008.

And finally, low single-digit premium rate increases across our health plans.

Our consolidated Health Benefits Ratio, or HBR, was 83.5% for the 2009 first quarter, compared to 82.7% for the 2008 first quarter.

The retroactive Georgia premium rate increase recorded in 2008 had the effect of decreasing HBR for that period by 240 basis points.

Excluding the effects from Georgia in the prior year, the resulting 160 basis point improvement year-over-year was due primarily to a decrease in respiratory illness in the first quarter of 2009 as a result of a lighter cold and flu season.

In addition, we experienced significant improvement year-over-year in our Ohio ABD HBR as a result of our ongoing medical and network management efforts in that state.

Sequentially, our HBR was 83.5% for the first quarter of 2009, compared to 82.3% in the 2008 fourth quarter.

The 120 basis point sequential increase was the result of normal seasonality and the addition of a new state and acquired members.

Now turning to our general and administrative expenses, G&A expenses in whole dollars in the first quarter were essentially flat sequentially from the 2008 fourth quarter.

G&A growth for new businesses and Access in the first quarter of 2009 were offset by G&A efficiencies across the business.

The G&A ratio for the first quarter of 2009 was 13.5% compared to 12.6% in the first quarter of 2008.

The retroactive Georgia premium rate increase recorded in 2008 had the effect of decreasing the G&A ratio for that period by 40 basis points.

Taking the impact of the Georgia rate increase into account, the G&A percent was up year-over-year as a result of new business initiatives including the acquisition of Celtic and the consolidation of Access.

In addition, we made a $1.4 million contribution to our charitable foundation in the first quarter of 2009.

Our first-quarter investment and other income was $3.6 million, a decrease of $4 million year-over-year and a decrease of $2.4 million sequentially.

The decline in investment and other income was due to an overall decline in market interest rates, as well as a decline in earnings from equity method investee resulting from the presentation of Access as a consolidated subsidiary beginning in 2009.

Our 2009 first-quarter effective tax rate was 35.5% compared to 37.5% in the 2008 first quarter.

The decrease was primarily due to lower state income taxes and an increase in tax-exempt interest.

We expect the income tax favorability to continue throughout 2009.

Earnings per diluted share from continuing operations were $0.43 for the 2009 first quarter compared to $0.56 in the first quarter of 2008, or $0.28 excluding the Georgia retroactive rate increase.

Balance sheet highlights at March 31, 2009, include cash, cash equivalents, and short-term investments of $410 million and long-term investments of $435.6 million, including restricted deposits of $12.8 million.

At March 31, 2009, our holdings in the reserve primary fund were approximately $7.6 million.

We also received a distribution from this fund this month, leaving our remaining holdings in the reserve primary fund at approximately $4 million.

At March 31, 2009, cash and investments held by our unregulated entities totaled $28.9 million, while cash and investments held by our regulated entities totaled $816.8 million.

We have estimated our regulated capital and surplus to be in excess of 355% of risk-based capital, or RBC, requirements.

Our total debt was $290.3 million, and debt to total capitalization was 34.6%.

Our medical claims liabilities totaled $372.5 million, representing 45.3 days in claims payable, a net decrease of 3.2 days from 48.5 days at December 31, 2008.

This change was primarily driven by three factors.

First, at December 31, 2008, we had approximately $15.7 million in claims checks printed but not yet processed for mailing, as compared to only $4.9 million at March 31, 2009.

The checks at year-end were unusually high due to the schedule of processing claims payments at year-end around the holidays.

These checks represent claims checks printed prior to quarter-end that were mailed subsequent to quarter-end due to normal processing time.

In accordance with generally accepted accounting principles, we reclassify these amounts back into medical claims liability and cash at the period-end.

The net reduction in unmailed checks compared to year-end decreased our days claims payable by approximately 1.4 days and our claims liability approximately $11 million from year-end.

Second, during the first quarter of 2009, we experienced lower inpatient cost as a percentage of total medical expense.

This change in our medical expense mix decreased our DCP by approximately 1.3 days due to the shorter payment cycle on our non-inpatient medical expense categories as compared to inpatient claims, which have a longer payment cycle.

Third, we experienced a 6% increase in large dollar claims paid during the first quarter, which reduced our DCP by 0.7 days.

This increase in payment of large dollar claims was driven by an emphasis on processing high dollar claims to avoid interest on late payments to providers, and as states have moved to more stringent timely claims payment requirements.

We have applied a consistent and conservative actuarial methodology to estimate our medical claims liability and believe our March 31, 2009, reserve estimate is consistent with our December 31, 2008, estimate.

Given the three-day sequential change in days claims payable, we thought it appropriate for this quarter to also reinforce the conservative nature of our reserving methodology with additional commentary in the reconciliation table in our press release.

We expect days claims payable to continue to fluctuate within our previously discussed range of 45 to 50 days.

For the quarter, cash flows generated from operating activities were $23.4 million, approximately 1.2 times net earnings.

As a reminder, the first quarter is typically our seasonally weakest cash flow quarter due to lower earnings for the quarter compared to other quarters and the timing of certain payments.

That concludes my comments on our first-quarter results.

Before we open the call for your questions I would like to update you on our 2009 guidance.

We are adjusting the lower end of our guidance range upward $0.02 to reflect the favorable results from the lower effective income tax rate.

We expect the income tax favorability for the remainder of 2009 to be offset by the impact of startup costs and early operating results for our new Massachusetts operation.

Overall for 2009, we expect from continuing operations revenues net of premium taxes in the range of $3.65 billion to $3.775 billion; earnings per diluted share of $1.84 to $1.94; a consolidated HBR range of 82% to 84%; and consolidated G&A expense ratio of 13% to 13.5%.

And with that, we can open the call up to questions.

(Operator Instructions) Joshua Raskin.

Thanks.

Good morning.

First question, just if you could help us out in terms of the cash flow.

Seasonally you mentioned weakest, but still obviously well above net income this quarter.

I was curious if there were any timing issues there, specifically around the unearned premium.

It looked like that might have been affected maybe by a state payment.

Will that reverse in the second quarter?

Yes, we actually this quarter -- or excuse me, the month of March we had a couple of states that actually held payments.

You will see an increase up on the balance sheet on the asset side related to that.

So we had two that held their payments to a month later.

We had one that prepaid, which is causing the change in unearned income.

The other thing you will note in the cash flow is in the payables line, that significant change and driver of the lower amount.

That was driven mostly by the estimated federal income tax payment we made in the month of March related to our finalization of '08 earnings and taxable income.

I guess just in terms of expectations for the second quarter then, would you expect the second quarter to be slightly lower on a year-over-year basis than previously expected?

We would expect our second quarter trend to be consistent with prior years and moving upwards in the range of 1.5 to 2 times net income.

Okay, perfect.

Then a second question.

Just do you have for New Jersey the contribution?

I know you guys broke it out in terms of discontinued ops last quarter.

But do you have a number of what the contribution was in the first quarter of '08?

Hang on just a second.

Yes, it looked -- it's around almost a penny positive contribution.

Okay, okay.

Then just last question.

There is a ton of moving parts and the top line of over 20%, obviously it is a big number.

But just trying to figure out if we could -- if it's possible to strip out sort of Foster Care and Arizona and maybe even South Carolina acquisitions.

Do you guys have what you think is the organic?

What is the organic rate of growth on revenues in the quarter?

We some time ago said it's very difficult to comment on organic because of what's true organic.

If we add a new product in an existing state, is that organic?

And one that we acquired -- it gets too complicated.

So we indicated some time ago in the concern to not mislead but -- and not do something that we do comparable period to period, we just won't comment on it.

Yes, I guess I understand.

I mean it's sort of impossible to even classify it.

Maybe if I ask it a different way, it sounds like you saw low single-digit rate increases in your existing states.

What would you say the membership growth was in states where -- sort of same population year-over-year?

I think we showed to what the membership growth is in the tables in the news release.

I can't comment beyond that.

Okay, thank you.

Gregg Genova.

Morning.

Looking at the MLRs a little bit, it looks like the ABD and the Medicare MLR came in pretty low in the quarter, while the Medicaid and SCHIP came in a little higher.

Was there any negative or favorable development in either one?

And can you talk a little bit about how those kind of [worked] through the quarter?

Eric, do you want to comment on that?

Yes.

As I commented a little bit in my comments, the ABD is driven by improvement as I talked about.

We saw a decline in upper respiratory disease this year in the first quarter compared to last year.

Particularly in Ohio there has been significant medical management efforts as I talked about.

Really in all of our plans around that program, as you had seen in our press release, the ABD HBR was down to approximately 81%.

We don't expect that the trend is going to continue at that level, but through management of and efforts to improve that -- and again the change year-over-year in the upper respiratory disease, which particularly impacts that group -- we saw favorability.

We typically don't comment about positive or negative prior period development.

We tend to manage that process and as I indicated we reserve conservatively.

But we show the table, the year-over-year development, in our press release; and we just do not comment about a quarterly over quarter development.

But again there has been significant management, both network management and member management, around that population in an attempt to improve it over that prior year, where it was upwards of 97% HBR for the ABD.

Okay, thanks.

I guess shifting over to investment income and other.

Obviously that is lower because the reclassification of Access.

But still just the core investment income, if you annualize that it comes out more towards $15 million versus I think you guys had talked about north of $20 million.

You talked about the lower interest rates.

So I would assume, is that going to come down a little bit and that's being offset by things that are working in the other direction?

I guess you have an $0.08 hit from the tax rate offset by maybe some -- I'm sorry, a benefit from the tax rate offset by the costs from Massachusetts of around $0.06 or so.

So can you talk maybe just a little bit more around the moving parts to the guidance now?

Yes, well, let me talk about the tax rate first.

As we indicated in the first quarter, that was about $0.02 of benefit, which as I also indicated was the reason we took up the lower end of the range.

We expect the tax favorability will continue at approximately the same level of $0.02 per quarter.

But we are also estimating that the cost of Massachusetts, both startup and the early operations until it gets to a breakeven and accretive stage, will offset that for the last three quarters of this year.

So net-net, the positive from the taxes will be offset by the cost of Massachusetts, netting no estimated change in our run rates around those two items and in guidance for the rest of the year.

And on the investment income then, is that --?

Yes, investment income -- as the Feds have continued to lower the rates in the first quarter, we have seen a decline in investment income.

If I look out the rest of the year, assuming all things being equal, no more changes by them, looking at that line -- for the most part investment income and interest expense will just about net each other out to zero.

And again I will remind you that last year there was Access earnings in that other income.

There will be nothing in there this year related to Access as we consolidate that entity.

I would add also we have to be even cautious on the tax rate going forward.

In that if we move from some of the municipal tax-free investments we have to others, as we move that around based on what we see in the current political economic environment, that too could change.

So we are managing that very carefully, recognizing or attempting to recognize in the -- to minimize risks in the investment that we have.

Yes, and there is also an element of favorability driven in that tax rate through a jobs tax credit we're getting for growth and new employee addition.

So certainly that also will be subject to our new job additions as we continue through the remainder of this year.

Thank you.

Greg Nersessian.

Hey, good morning.

Just a couple of questions.

First was on Florida.

I see you converted about 21,000 lives this quarter.

How should we think about that ramping in over the rest of the year?

Is there sort of a monthly conversion figure we should expect?

Help us in modeling that out.

I'll ask Jesse to respond to that.

Jesse?

Yes, Greg, so the way that the Florida conversion -- and any state conversion is county specific.

So we are working through the conversion process right now, building out networks and other regulatory approvals in terms of readiness, etc, on a county by county basis.

So we have been approved in four counties; that's what was converted in the fourth quarter.

We have submitted additional counties to the state for approval; so we expect those to come up obviously through the second half of the year.

We do not expect, based on the timing right now, to do any conversions in the second quarter of 2009.

But we obviously expect to continue to work through county by county conversions the second half of the year.

Is there a penetration amongst that?

It looks like there is about 90,000 non-risk lives.

Is there a penetration rate there that you expect or a conversion rate that you can help us?

What percentage of that do you expect to hold on to, I guess?

Yes, we can't really get into some of the specificity around that.

Obviously our objective is to make the retention rates as high as we can and obviously to grow the business through both member choice and auto-assignment on an ongoing basis.

Okay.

Then next question on Massachusetts.

Sounds like you have got the startup costs built in there.

Doesn't sound like -- or you haven't changed the revenue, so assuming no revenue impact this year from that.

Can you just give us a sense of how the economics work there with your joint venture?

I think if you look at the revenue line we have a range of revenue for the year, so it's within that range as we see it this year.

Okay.

Okay?

And we have a joint venture with a hospital and a contract within -- we are managing the plan for them, and we will share on an equal basis as appropriate.

There are some adjustments in there because of the nature of the hospital.

When you expect to be -- start generating revenue in Massachusetts?

We are hoping to start and grow slowly in July 1.

Okay.

Then just a last quick question.

It looks like you added about $20 million of short-term debt in the quarter.

Is there an intent to repay that in the second quarter?

Well, some of that is driven by timing of the items I indicated earlier in the period.

We would expect to continue to keep that balance at a moderated level.

But at this point there is no intention to take it downward significantly in the second quarter.

Okay, thanks.

Daryn Miller.

Hi, good morning.

Question on the accounts receivable or premiums receivable that increased during the quarter.

What states was that related to?

Wisconsin and Indiana.

Got you.

That would -- they also had a similar situation, was it like third quarter of last year?

Yes, we've had actually each quarter -- I don't have the specifics -- but each quarter we have had instances of -- most the time it's just been one state where they lag over the month-end into the next month.

So you'll see that volatility.

And we expect in some cases that would likely continue.

It's a timing issue, but there are some states, as in this case, that held them over to the first week of the following month.

Then the other side of that is like Ohio where it was essentially a pre-paid this time.

So net-net they didn't quite offset the two states versus the one; but there was some offset in pure cash flow because of the pre-payment/post-payment.

Great.

Can you comment on what you're seeing in terms of behavioral health utilization?

Bill, would you like to comment on that?

I think it's pretty steady between years.

We've added Foster Care overall, which we classify as part of the Medicaid segment.

We are a year into that program, and I don't think there is anything out of the ordinary at this point.

Okay.

Then one last one.

The services revenue line increased $6 million.

I'm sorry if I missed your comments on what was driving that.

That is the consolidation of Access.

Okay.

The Access is the nonrisk membership, ASO membership; and that gets recorded in the service line.

Got you.

That is what, about $2 million-ish?

About $6 million-ish.

Is that what it was running at last year too?

Because -- was all of that in the other line of investment and other in revenue last year?

The investment line, the other income is just the net earnings impact.

I got you.

(multiple speakers) percentage.

That is only our portion of the earnings.

We now consolidate it.

And under consolidation you show 100%, and then you net out the minority interest impact.

Okay.

Thank you very much.

(Operator Instructions) There are no more questions in queue.

Well, we thank everyone and look forward to the call again at the end of Q2.

We would remind you that we have our investor day coming up, so look forward to seeing you there as well.

On June 2.

Thank you.

This concludes today's conference call.

You may now disconnect.