Question-and-Answer Session
Operator
(Operator Instructions) We’ll go first to Michael Gwen with Credit Suisse.
Michael Gwen – Credit Suisse
Can you comment on why there’s kind of a significant change in the cost of care ratio and the SG&A ratio? It seems like kind of inconsistent with historical trends.
Mary A. Chaput
I think that’s right Michael. I think what we have discovered and I think we might have talked about this a little bit in the fourth quarter call was the Axia organization was more product oriented and more wellness oriented so whole population and had marketing materials that appropriately were booked to cost of service which normally our marketing materials which are broader in nature and not specific to contract get booked below the line. So, what we see is a little shift to – in terms of percent of revenue heavier on the cost of service line and less on the SG&A. We have encouraged people now to start looking at our EBITDA line which is why we started to include that in our earnings release.
Michael Gwen – Credit Suisse
Why did the billable lives decrease a little bit in the quarter?
Mary A. Chaput
Actually, there was one contract which wasn’t renewed which was access to our CAM/Chiro networks so that included a large number of lives but not as much revenue.
Michael Gwen – Credit Suisse
Billable lives went up as a result of WellMart though? That was partially offsetting that affect?
Mary A. Chaput
That’s correct and other contracts that are in the ASO and direct to employer that we don’t announce specifically.
Michael Gwen – Credit Suisse
One quick question on the competitive environment. Health Dialog recently had a change in ownership from a London based company. I’m wondering if that changes your outlook on your international expansion and expectation for change in the competitive environment?
Ben R. Leedle
From a standpoint of the international competitive landscape Health Dialog has been pretty open prior to BUPA’s acquisition of them of both their presence and their intent to compete and we’ve seen them out there in the international market. It’s not a new entry from that perspective but obviously it gives them a home with a base in the UK that will probably give them some advantage in that specific market and BUPA also has some established relationships obviously, around the global with some business with the privatized side of healthcare in some countries. We would expect that where Health Dialog has been a great competitor here domestically we’re likely to see them be a good competitor in the international market.
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