Humana Inc. (HUM) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Nathan Rich, and I cover the managed care space here at Goldman Sachs. For our next session, we're pleased to welcome Humana to our CEOs Unscripted Conference. Humana is one of the largest health care benefit companies, and we're joined today by the company's President and CEO, Bruce Broussard and Lisa Stoner from Investor Relations. Bruce and Lisa, thank you so much for joining us this afternoon. Before we kick things off, I'd just like to remind the audience that if you would like to submit a question, you can do so through either the webcast or by e-mailing me at [email protected].

Bruce, I wanted to start with the 8-K that you released this morning with your updated enrollment assumptions for 2022 and specifically, the lowered individual MA enrollment relative to what your previous expectations were. The revised guidance, I think you said reflected higher terminations during the annual enrollment period as well as an expectation for higher member losses throughout the year. Could you maybe just start by going into the specifics of what played out differently during the AEP period relative to your expectation that you gave -- when you gave guidance in November?

Sure. Nathan, thanks for having us. Just a few things. Maybe just to give the investors some context as we entered the AEP. As I think we've talked to many investors, we entered the market in a very conservative fashion as we priced and bid, recognizing we were going to be at a disadvantage from a value proposition point of view, which in the previous years, we've entered the market that way. We've always held that we don't need to be the cheapest because there's much more value we offer outside of just the product itself that we're selling. And so when we entered the market, we came to the conclusion that we will be disadvantaged, but we felt very confident that we would be able to sell through. Ironically, we -- our sales are very close to what our expectations were. So it wasn't a sales side. It was on the retention side of the equation and specifically more in our core HMO and LPPO product. That was really where we saw the retention issue. And that is more a result of what we've seen in the changes in the evolution of the distribution structure within the industry, and maybe I'll spend a few minutes on that. The industry over the last few years have seen an increasing use of telephonic sales being one of them. And there's a number of companies that are dedicated to both Medicare Advantage and telephonic sales today. The second thing is we've seen this entrance into the industry over the last few years of aggregators. Many people refer to them as the Joe Namath ads. And the combination of those 2 really create awareness, which is a positive for the industry, but also create a shopping [ habit ]. And so what we saw this year is in markets there was much more shopping that occurred. So that was first just the awareness that went on. The second thing that we've also seen is that there is a significant amount of dollars that are flowing into marketing and into these channels, specifically the telephonic channels by our competitors. And those dollars are going into both marketing level, as I mentioned, but also into the areas of how they motivate sales individuals. And so we were much -- we decided not to commoditize the marketplace, and we said we're not going to play that game and really did not put the dollars in that channel. We put dollars more in our channel and other channels. But still, we're very conservative in that approach. The combination of us being disadvantaged on sort of what is sold through that channel. And then secondarily, the combination of us having a lower value proposition in the marketplace really created this opportunity for the sales to create salesmen -- salespeople to create churn in the industry, specifically our members. And so as we entered this market, we were under the full intention that we're going to enter it on a weaker value proposition, but really entered it knowing that we've done that in the past and that we can sell through it because of all the other aspects we've had. The sales channel really has created some commoditization and some motivations for churn in the industry that has played against that. And we were on the both sides of that. We were on lower commission structure that was made, and in addition, a lower value proposition going forward. And so as we think about where we -- why you see the shortfall, I really want to emphasize to the investors, it's not a sales issue. It was a retention issue, and it was really a retention issue because of the value proposition, but more importantly, from the motivations that are in the industry today around this churn and in addition around how much marketing has gone into the industry.

No, that's really helpful. I guess maybe trying to unpack those 2 different dynamics. First, with the value proposition. Are there specific elements where you kind of feel like there was maybe more parity in terms of the value proper? Or where you may be -- you think you may need to invest more in future years to kind of improve that value proposition relative to where the market as a whole stands?

Yes. I would say there's a few things going on. I would say, first, there's some really aggressive pricing that's going on in the marketplace. And I, being in this business for a long period of time, will question the sustainability of the pricing. I just look at how much money is going into marketing, how much money is going into the distribution channel and how much money is going into the product itself. And some of our competitors have been very aggressive for the obvious reason of creating lifetime value and taking ground and growth. I just don't know knowing the customers and when you have to change benefits and as you change the just the makeup of the product, how much they will stay with that individual. So some of it is just the makeup of people aggressively going at it. But within your specific question, where investments are needed? I would say, first, it's dependent on the competitor. There are some competitors that really doubled down on the social determinants of area and actually copied and improved a few areas, especially on the D-SNP area. And I think that's fully manageable and very capable to invest in. I think some of the more aggressive competitors really went heavy in some of the health insurance areas, specifically around maximum amount of pocket in those areas. And I think that's going to come back around where I don't think that's sustainable. And that we'll still make investments in that area, but I don't see those investments being as great as what's in the marketplace today. And then the last thing I would say is really from the point of view, is in the area of more around the provider network. And what we've seen is the provider network has become an important part of that, especially in the value-based area and some areas there. All 3 of those are very manageable with the middle being, I think the market's going to come back a little bit. But we do intend and I want to emphasize to our investors to make investments in 2023 that will greatly improve our value proposition and do that through focus on our productivity in our company and take cost out of the system and our continued focus on the trend.

Makes sense. And were there specific markets or geographies where you saw a more acute impact? Or was it fairly broad-based?

No, there are markets where we grew quite well and the retention was there. So I do want to say it's -- there are some market specificity. When I see what happened in the Los Angeles area with a few competitors there, although we're not big, there was some really, really aggressive pricing that went on there. There are some markets in, I would say, in our core market, Florida, that seem to have some aggressiveness in there. And then I would say, throughout various different markets within the Southeast and the Midwest. But I would say the market dynamics are an important part of that and drove some of the challenges that we've outlined. But I'd say the overall arching is aggressive competitors, putting a lot of money in and the marketing channel, putting a lot of money in the distribution channel and putting a lot of money on the benefit side. And again, I wouldn't make that across every competitor, but there were a few competitors that I think really stood out, and I just would question the long-term sustainability of that.

Makes sense. And I guess, could you maybe help characterize the profitability of the membership being lost this year, any kind of significant difference versus the average? And how does that factor into the margin outlook for the MA business in '22?

Yes. Listen, impacting from a retention point of view, has more impact than a sales point of view. I want to acknowledge that upfront and it's just because they're in health -- they're in plants -- excuse me, they are in clinical programs. They're well documented and all of the other things there. So I do want to highlight that as a negative. But at that same side as we went into 2022, we went into recognizing there's going to be pluses and minuses, There's going to be -- we always have pluses and minuses as we enter the marketplace, and this year we were conservative both in how we price and in addition to how we set our expectations. So I'd emphasize to the investors that we are -- we have cushion to absorb. This isn't a material amount, but it is something that we can definitely take on in our earnings guidance as we look at 2022. And frankly, that's one of the reasons why we reaffirmed the guidance in our 8-K.

Makes sense. And I did want to touch on the reaffirmed guidance for 2022. And just maybe any more details you can share on what allowed you to maintain the outlook? And were there maybe upside in other parts of the P&L, maybe relative to what you expected a couple of months ago?

Yes. Nathan, I really don't want to get into those details because as you well know, we're in the window of or in a window that we really can't provide a lot of disclosure. Obviously, we'll get into more detail in the fourth quarter. I do -- in our fourth quarter earnings call, but I do feel confident that we do have the cushion to absorb this, and I would just leave it at that.

Okay. Fair enough. The one other component of the 8-K that I wanted to touch on before moving to some longer-term questions on the business was just your expectations around the COVID impact. I think you had said you expect it to be net neutral to the Medicare Advantage business in 2022. But in your EPS guidance for the year, you did include room for a headwind should that arise. I guess are there any parameters you can maybe put around the COVID headwind that's included in that guidance maybe relative to the dollar headwind this year? I know we'll maybe get more explicit with details with the fourth quarter, but any kind of guidepost you can put around there for investors?

It's going to be difficult on the disclosure side. But I do think, Nathan, it's probably a good idea that we just maybe give our perspective on COVID, it is something that is top of mind for everyone, both personally and from a business point of view. A few things there. First, we continue to see what we've seen in the past where there is a spike, there usually is an offset utilization for that in the regular health care utilization. And so we continue to see that and continue to believe as there are spikes, we'll continue to see reduction in the utilization. As we look at where we are today with the Omicron and just what's coming there, what we are seeing is it is regional dependent, but we're seeing an increase in hospitalizations. But not at the level that we've seen in the past. And it could be a timing issue, but we are -- we're not seeing the spike. And our belief -- and this is when you look at the South Africa data that's come out and really studied the clinical side, what we are seeing is that it's less severe. And that has 2 aspects to it. One is how many people go to the hospital. And then when the individuals that do go to the hospital, are they utilizing the more expensive services, ICUs and vent. And our hypothesis in this particular situation is that we're going to see a less severe utilization, less utilization of the hospital and less utilization of the higher cost services there. So that's sort of our perspective on Omicron in specific area. When we think about COVID, what we really -- we never predicted where we are today with Omicron when we began to do both bids and in addition, as we set our initial earnings guidance. But we do just see a very uncertain environment, an uncertain environment in multiple different ways that are really causing us to be conservative in our approach as we set our estimates and that all the way is from a utilization point of view, the mortality of what's in the -- going on in the particular disease in our population and how that's changing. And we just wanted to ensure both in the way we approach the pricing and approached our estimates for 2022 that we approach that with that mindset. The specificity around how much cushion is in there, I really would rather stay away from that now. I think you will give more detail on the fourth quarter. But I think the investors can see both in our guidance and in our pricing as a result of this conversation we're having on our membership that we are being thoughtful and conservative in the way we're approaching this as a result of the uncertain environment that we're faced with.

Makes sense. And then maybe moving to some longer-term questions on the outlook for MA. I guess kind of given what you articulated with your experience through AEP this year, I know it's still early to talk about 2023, but are there changes that you're looking to make, whether it's on the benefit side or the distribution side for 2023 to address some of these dynamics which may potentially persist in the future years?

I would say, in general, we are going to put dollars back into the product. We have to and we will. And those dollars will be funded by things like productivity in our company and be funded by trend that's in our clinical programs there. So we are very oriented to continuing to improve the value proposition of our product. On the distribution side, I really don't -- there's a lot of work going on in both how do we work within the distribution parameters that are there. We're hoping that our competitors will be a little more thoughtful and the dollars that they put in that particular channel because I do believe is commoditizing some of the industry and the real value that is out there with Medicare Advantage around the clinical programs and all the things that are brought live there. And I just feel it's disadvantaging the full value of the industry that's out there today. So we need to work through various different means of the distribution side and at the same time, continuing to improve our value proposition. I do want to highlight that as we've face this being highly dependent on Medicare Advantage over the past number of years. You've seen the organization innovate quite well in a number of programs that have allowed us to really bring a live growth. We've innovated around the food card and that's really one of the reasons the D-SNPs have done well. You've seen us innovate around some of the distribution, even some of the companies that are that are in the distribution area on the telephonic side, we actually put them in business and brought them the channel itself. And so I hope the investors will have a trusting aspect that as the organization has proven in the past that the innovation to be able to develop and alter the way the industry has evolved has been a really tenant of Humana, and I think you'll see that in 2023.

Got it. And just to maybe be clear, do you -- you don't feel like any of this is the relative attractiveness of MA and you kind of feel like the market growth for 2022 was in line with what you expected. It was just the unique dynamics with value proposition and how competitors approach distribution that really drove the membership growth that you now expect to see?

I continue to believe that Medicare Advantage is a very attractive market and will continue to grow. Now is it going to grow at 9% or 11%, I don't want to get into that debate. I continue to believe that what it attracts and the value of it is really, really attractive. I do think that this year is a year that we've got some unique characteristics to it that need to evolve over time. I'm hoping that we will evolve to an industry that really markets and develops and improves the value proposition much more than just selling an insurance product. And that's where I see the long-term value for Medicare Advantage, where we're improving the clinical outcomes and improving the delivery system around value-based payment model, providing holistic care that is really the value for Medicare Advantage as opposed to just selling an insurance product. And I just feel that the industry can continue to orient to where the true value is. And I think this industry has a long-term growth that is for years to come.

And I guess, is there any color or detail you can maybe shed on the characteristics of the competitor, the competition you saw in the market that maybe have that impact of being more aggressive, I think that investors are kind of struggling to get their hands around kind of what played out this year?

I think there's really a bell curve there. I think there's a few of our competitors that are really good competitors and make us better every day, and I see them as being much more disciplined. So there's a rock out there that I really believe that continues to be there. There are some larger competitors, not just a few that really are looking to lifetime value and very aggressive in the marketing and in addition, the distribution channel and the benefit side. And I would say that those there, I just don't know how sustainable will it be. Time will tell. We've been in this industry for a long time, and we've seen people become very aggressive early on, buy share, and then in a result, they don't keep the customer because they have to change their benefits and in result, they believe is that share. And then we do see organizations that are really -- have raised money, whether it's public or private on growth and have really oriented to how do I grow as opposed to how do I improve my margin. And we have a group of smaller companies that are traditionally been not so much focused on the profitability of the business, but the top line growth. And I think the bell curve, a few in the middle that are really great competitors. And then we have these smaller companies that are growing as a result of that's what the investors want them to do and more sacrificing profitability for revenue growth. And then we have a few competitors that are sizable in scale that are really buying the market share to really have an entry into Medicare Advantage. And then you combine that with a distribution channel that is really encouraging churn with a large marketing orientation to create shopping, it's sort of the perfect storm.

Makes sense. But it does seem like your selling efforts in new sales were in line with your expectations. And maybe that kind of demonstrates the kind of effectiveness of your go-to-market strategy because it doesn't seem like the competition there had maybe significant of an impact relative to your expectations?

And again, as part of the industry -- I mean, the part of the distribution industry's motivation, they want to create churn. So go get Humana members to go buy a competitor, and they get paid for that. And then if you -- on top of that, they get paid more if they go and sell that. So it's just an interesting dynamic that's out there today. I'm not -- it is what it is, and we're going to have to work through that structural issue, and I have very high confidence that we will do that. But it is an issue that with low value -- with a lower value proposition, putting less dollars into the channel have really hurt us this year.

And how does the increased member churn this year maybe impact Star scores in future years? Is that a meaningful -- I don't know, I guess, how meaningful that could potentially be for future quality?

I don't consider that to be any kind of red herring. I would say our Star scores have really withstand the test of time, both in good years and bad years of growth. In some ways, you could have the argument that when you have really fast growth, getting people on clinical programs and other things like that will have more of an impact on Stars than the churn of existing ones.

Makes sense. And then I wanted to touch on margins. I think that you guys have talked in the past about kind of the trade-off between benefits and margins and in terms of how you manage to enrollment growth, I guess. Has anything changed in that equation today? And how should we think about how the company might be prioritizing margin improvement and maybe returning to 4.5% to 5% individual MA margin versus returning to more market-level enrollment growth?

Let me try to maybe give some perspective around that because I know this is top of mind for our investors, and we really appreciate it. And over the years, we've used the margin as a test of our pricing and how aggressive. And I think this year is a great example of that of us being more conservative in the way we've approached it. I would say a few things. Just when this margin was set up, it was set up almost, I think, in 2009, predates make. And a lot has changed since then all the way through the implementation of ACA and all the things that have come about with ACA, significant growth per member per month as a result of the growth in duals, and in addition, just the growth in the program itself and the -- how much is incorporated in the benefits now. And in addition, on top of that, just the competitive nature of it. So I would just say the dynamics over the last number of years have changed and the margin conversation needs to evolve on that. The second thing, and I'll come back to how we want to have a transparent conversation with the investors about this. The second thing that's really occurred is Humana's changed. Humana today has a much more broader business base than it has in the past. And so as we think about individual MA margin versus enterprise margin, that's something we should just consider because the enterprise margin has unregulated businesses that are growing and have an opportunity for us to utilize more of the profitability there that maybe would impact our MA margin. So the enterprise margin needs to evolve, too. And so as we think about the margin, what we're really trying to utilize this time, and we will come back in the second quarter to give an ample discussion with the investors around our perspective on margin, both enterprise margin, our perspective on individual margin and really address this issue over time. That does not negate our commitment to continuing to improve the productivity of our business, which we've taken a significant amount of cost out, continuing to focus on trend and not compromise membership growth over margin deterioration. And I just want to reemphasize that. The measurement and what that looks like and where it goes, those are details that we are working through. And as part of that, we -- and this has become a really important part of our transparency with our investors. We did an investor survey in the fourth quarter of this year to gain people's perspective on margin. And we've gotten some very valuable feedback on how investors are looking at it, both in its individual MA, but more importantly, from an enterprise margin point of view. So that's a long-winded answer to say how does it improve. I think we are committed to improving our margin and from an enterprise point of view, and we are committed to continuing to manage our business that is both managing growth in membership but also growth and improvement in margin. It's just a question of what is that margin and what does that improvement look like?

Okay. Great. And so it sounds like the company may shift towards talking about an enterprise margin at some point in the future given a lot of what you're doing, maybe specifically on the health care services side and that actually I think it's...

And the dynamics in the industry.

Makes sense. Okay. I did want to spend some time on the health care services business. And maybe, again, kind of tying it back to the earlier discussion on value proposition, Bruce, you talked about a lot of opportunity to improve the profitability of members by delivering more value, whether that's primary care or pharmacy or home health. So can you maybe just talk about the -- where you feel like the asset base is today and kind of what you see as the biggest opportunities to capitalize on to improve that value?

There's really 3 parts to that, Nathan. And as we think about, first, the quickest and the most capital efficient is continuing to evolve our relationships with value-based providers in the marketplace where there's already existing capacity and leveraging that capacity. And you see us actively doing that and we measure not only the members that are in value-based relationships, but also the effectiveness of those relationships, how many is the measurement of how many of our members are in surplus contracts. And that continues to improve. Our percentage from a disclosure point of view hasn't improved. But up to this year, it hasn't improved, more because of our members that have grown, and we've added probably close to almost 1 million members over the last 4 years or so, 3 years, and that has been a large contributor to our ability to grow members in value-based care models, but it hasn't shown up in the percentage side. On the -- but on the area outside of our value-based relationships, the other area is really in the primary care area and continuing to get more and more of our members in the clinics. That is a little slower road as a result of the capital that's required there in the building of those. And so that's why we really look at utilizing a multifaceted approach for that. One is around our joint ventures that we have relationships with, others is around affiliates that are in the marketplace today that like Oak Street and others that we leverage. And then in addition, our members sit there. So we have really a three-pronged approach that we approach that with to be both capital efficient, also build long-term sustainability for us as a company, and at the same time, continuing to improve the the margin of our Medicare Advantage. The second area outside of primary care is home. And we see a home is a wonderful opportunity that has a very long track record and a long -- I mean, a long runway for us and the ability to improve care in the home, both with home delivery in its traditional fashion with the ability to leverage home and a value-based relationship and then to expand the home use. Today, we think about 25% to 30% of care can be provided in the home that are the low acuity care that can be transferred into the home, that's a more convenient setting and the opportunity to really allow us to engage much deeper. Both of those will also allow us to have more impact because people that we're serving sometimes don't have transportation. Sometimes they are not fully equipped from a mobility point of view and it gives us the opportunity to serve them. And at the same time, we have a much more holistic view of the care model there. So that combined with the ability to leverage technology like telemedicine allows us to be able to leverage those 2. So to sort of summarize, when we think about the impact, continue to do what we're doing and expanding value-based relationships, leverage the capital efficiency of our joint ventures and affiliates from a point of view of getting more people into clinics, building clinics in a way that is capital efficient, both in on and off balance sheet, so it doesn't deteriorate the short-term earnings growth of the company and continue to take our home platform and scale it to allow it to be much more impactful from an ability to deliver more value-based care in the home in more acute services.

Makes sense. I wanted to touch on those 2 pieces, primary care and home separately. Maybe starting with primary care. I guess, I think there's been a lot of focus on just the economics of that model and you've talked about the J curve in the past. And now that you've had several years in the market with your JV with owning your own centers. I guess -- what have you seen with respect to that ramp in profitability? And I guess, how are you ensuring that you kind of get the appropriate returns on the investments that you've made?

Sorry, I keep on going on you because I'm in the office, and I didn't know we had a construction project going on. So you might hear...

There's a little bit of background noise, but not too bad.

I apologize to the audience for that. One of the reasons why we did the joint venture with Welsh, Carson, Anderson & Stowe is to really test out that J curve to understand how is -- how does it perform? And so we chose 50 -- now it's up to 60 centers to be able to prove that out. And what we've seen in the earlier cohorts is that they are either at/or exceeding that J curve and getting to the returns that we anticipated within that. And that gives us some comfort of the ability to continue to roll out additional clinics there. In addition, we have been very active with many of the public companies that you see today and a number of the private companies to see their and understand their J curve because we've been significant part of our business and understand it from that point of view. So we have confidence in that the existing J curve and the growth of the J curve. There is a ton of I know there's -- when investors see the amount of primary care that's being put in the marketplace, there's a ton of opportunity there from a demand point of view. We don't feel that the demand from a patient point of view is that, I think that probably the weak link in the chain is recruiting primary care physicians and the staffing to be able to serve those clinics as being probably more than the demand itself. And so when we think about how that J curve performs, we really are oriented to the clinical areas and the ability for us as an organization to recruit and retain the clinicians because that is at the core of really being successful here. The demand is important, and it comes, but the ability to maintain and retain the clinicians is such an important part of the value proposition.

Makes sense. But it seems all in -- it's kind of continued to progress along the lines of your expectations. I guess, when it comes to funding future growth, I know that you've been asked this in the past, but just the decision on whether to continue some form of JV model or maybe bring that on balance sheet, given kind of what you've experienced to date. Can you maybe just give us your updated thoughts on how you want to approach that going forward?

And one of the reasons why we did the investor survey is to really understand the investors' perspective on short-term and long-term profitability. And just how do you balance that? And I think what you're going to see the organization do not think, I know what the organization will do is they have a thoughtful approach of balancing how much we do on balance sheet and how much capacity we have to do it on balance sheet where it does not greatly reduce our earnings growth, and at the same time, continue to be able to use off-balance sheet financing to continue the growth trajectory that we think will create long-term sustainability. And that balance is what we're working through as we speak here. And in the second quarter, when we begin to come out with our transparency not only on disclosure of how we become more transparent on the performance of our health care service business, how we think about margin. We'll also talk about what is our views on the financing on the primary care side and specifically this balance of on-balance sheet versus off-balance sheet. But we understand the investors are very sensitive to the shorter-term growth. And -- but realize the long-term value it creates and that balance is something that we are actively thinking through to come up with the right combination.

Makes sense. And so there could be value in funding some of that on growth given that there does seem to be the long-term opportunity there. And it might help give a more direct view into kind of the ramp to maturity for those clinics?

And even irrelevant of its on-balance sheet or off-balance sheet, I think what you'll see on a more thoughtful view on just the disclosure of this. And it's become more important to our investors and we realize and appreciate it, both because it is becoming a more important part of our strategy. And then secondarily, it is also -- there's a lot of other competitors out there, lack of a better description that is in this market, and it creates the need to sort of understand more relative comparison. So we appreciate both of those and recognize and fully appreciate the request by investors.

Makes sense. I wanted to go over to home and then we had a few questions come in through the web that I wanted to touch on before we wrap up. But maybe with the home health business. I guess you indicated I think the operating environment for Kindred was maybe a little bit more challenging in the back half of this year relative to when you did the acquisition. Could you maybe or when you announced it, could you maybe just kind of talk through what's played out in the back half of the year? And kind of what you expect into 2022 for the performance of that business?

In general, the business and the demand of the business continues to be strong. It's really the supply of labor. And this does not -- I think any hospital CEO is having this problem many and any clinic is having this problem, it's the labor side. And that labor is really constraining the capacity, we can meet the demand. And so as we -- and this has been -- this was prior to when we acquired it, as it goes in when we were in the minority ownership. It's just gotten more acute because the market's gotten more acute. I think the stresses and strains of COVID, some of the circumstances of schools and all the things that go there has just caused a reduction in the supply of clinicians that then has put up pressure on the health care system. It puts an [ honours ] on us to be a company that can recruit and retain nursing. And as we think about sort of the long pole in the tent, it is -- that's an important point on part of our strategy. We don't see it so much on therapy -- therapists. We feel that we have a good supply and that's not as much of a constraint. It's really on the nursing side. That's the constraint as we speak to that.

Got it. Okay. So just to kind of summarize staffing costs, it seems to have been a little bit more of a pressure than imagined. And when the kind of full acquisition was announced, and so that might continue into next year. But from the demand side, very happy with what you're seeing. Anything else in terms of that based on kind of since the deal is fully closed in terms of timing of the hospice disposition or anything like that, that's changed regarding your thinking?

Yes. On the hospice side, we acquired both the businesses at a very reasonable valuation. I think on the hospice side, what we're just trying to figure out is not so much are we going to get the money we put into and is more how do we maximize the valuation of it. And that's really what you see us doing. And a number of the public companies challenges that they've had as a result of COVID and the ability to sell has put a little bit of dampening on that business. Not that it hasn't caused those multiples to be below multiples that we've acquired the business on is just put a little dampening on with the value you get. We're just trying to measure as it holds and improve the value. Or is it -- can we find a way to maximize the value of the former maybe participate will move a little longer later on down in the longer run. So we're just trying to find the proper financing around for that. On the home side, I think the real key for the investors over time will be how are we continuing to evolve it to be value-based oriented and continuing to expand the use of health. And so as an investor, I would utilize that as a constant questioning of not only how is the home performing financially, but also strategically, are we accomplishing what we set out to be. That's a multiyear journey, but it is something I would just continue for the investors to -- we'll be transparent on it but continue to push an inquiry.

In the couple of minutes that we have left, going back to some of the questions we got related to the 8-K, I guess one relates to the distribution strategy and your decision to maybe not use brokers as aggressively as some of your peers? And are there any guide rails on how aggressive some of these competitors can be in the market brokers in terms of the incentives that they provide?

From a regulatory point of view, and I will tell you what we have seen in the company in this channel is a higher compliance issues. We've seen sales that have been sold that people didn't even know they were being sold. So it's an aggressive channel. I just want to put that in totality in there, and that's a little bit why we are walking appropriately in a slow fashion here on this. I would say that there is a regulation around how they can pay, how we can pay commissions to directly to a salesperson. They are regulated, they are regulated by amount and so on. And I think all the companies are following that. I think the challenge comes to be is that there are ways you can pass dollars back to the company in totality. Some of that is through marketing. Some of that could be through some type of performance-based payment models and then they have the opportunity to decide on how they pay their commissions within their company. And so there is some subjectivity in the commission side. And so the dollars are regulated on a per person basis how we pay that person but the regulations are a little broader and how we can provide value back to the corporation. And that's where we've seen a lot of money spent. We've provided marketing dollars. We've provided thoughtful views there. We have been less oriented to the commission payment side.

Great. And then maybe just to wrap up. I think the other question is these issues that you cited, how quickly can they be addressed? And sort of what does what we went through during this annual enrollment period mean for '23 and years beyond that for the company? And could you maybe just talk to what you're kind of -- how you're planning to change your approach for next year and to maybe mitigate some of these impacts?

One that is very impactful is changing the value proposition. At the end of the day, a lot of this is just around the value proposition. Now we have been a big believer that this is not a business that should be commoditized. And we have been able to prove that time and time again because this business, when you commoditize it, you are commoditizing something that has tremendous value. And I feel the industry is not doing justice to the value that it's provided. And so for us as an organization is continuing to reemphasize the value that is in having that relationship that's much broader than offering a maximum amount of pocket expense. We're offering a particular deductible on a particular treatment. It's -- that's not where the value is. And so for us, is continuing to try to deemphasize the commoditization and continuing to emphasize the value there. So how we do that? And the areas there, whether that's marketing through -- or is that through other channels? That's work we have to do. I think just getting the value proposition up where we're on equal footing and competing is an important step for us, and we will put the dollars in there, and we're going to put the dollars in there through taking costs out of the system to be able to make that happen. And on top of that, I do believe the industry is going to have to -- they're going to have to adjust to it a bit. Again, there's a bell curve. I think there's some of our competitors that are right down the middle and we're -- we don't think they're going to adjust. We think some are far aggressive on the right side, and we think some are far aggressive on the left side, meaning the left being they're small, the right meaning that they are competitors and they're more sizable. I think those 2 are going to sort of over time sort of come back to the center. You're just going to have to -- there's just too much money that is going to be required here, and we see this time and time again in the industry. And so for us, top priority is [indiscernible] continue to try to fight through the commoditization that's happening in the industry and focus on positioning the product, which is really the value and then secondarily, increase the value proposition and through putting more money into the product.

Great. Well, Bruce, let's wrap it up there. Thanks for all the details that you shared on 8-K. We really appreciate you joining us today and walking us through that. And thanks, everyone, on the line for joining. Have a great day.

Thank you.