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Avid Technology Announces First Quarter 2021 Results

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Avid Technology Announces First Quarter 2021 Results

 

78.2% Year-Over-Year Subscription Revenue Growth and Net Increase of Approximately 28,000 Paid Subscriptions During the Quarter

9.2% Year-Over-Year Revenue Growth as the Company Returned to Year-over-Year Growth

$12.3 million in Net Cash Provided by Operating Activities and Free Cash Flow of $11.1 million in the Quarter

Raises Full-Year 2021 Guidance for Subscription & Maintenance Revenue and Free Cash Flow

BURLINGTON, Mass., May 05, 2021 (GLOBE NEWSWIRE) — Avid® (NASDAQ: AVID), a leading technology provider that powers the media and entertainment industry, today announced its financial results for the first quarter ended March 31, 2021.

Total revenue increased 9.2% year-over-year in the first quarter, as the Recurring Revenue components of the Company’s business remained strong. Subscription revenue was $24.9 million, an increase of 78.2% year-over-year, reflecting continued growth in paid subscriptions and strong enterprise subscription sales in the quarter.

Net Income was $4.4 million in the first quarter, an increase of $10.2 million year-over-year, and Adjusted EBITDA was $17.7 million in the first quarter, an increase of 324% year-over-year. Net income and Adjusted EBITDA benefited from the year-over-year increase in revenue combined with expanding gross margin and lower operating expenses. Net income also benefited from the year-over-year reduction in interest expense. The improvement in profitability also resulted in significant year-over-year improvement in net cash provided by operating activities to $12.3 million, and Free Cash Flow to $11.1 million in the first quarter.

First Quarter 2021 Financial and Business Highlights

  • Subscription revenue was $24.9 million, an increase of 78.2% year-over-year.
  • Paid Cloud-enabled software subscriptions increased by 49.2% year-over-year to approximately 324,000 at March 31, 2021 and increased by approximately 28,000 during the quarter.
  • Subscription and Maintenance revenue was $54.7 million, up 19.6% year-over-year.
  • Total revenue was $94.4 million, an increase of 9.2% year-over-year.
  • Gross margin was 65.1%, an increase of 360 basis points year-over-year. Non-GAAP Gross Margin was 65.6%, an increase of 390 basis points year-over-year.
  • Operating expenses were $50.9 million, a decrease of (5.1%) year-over-year.   Non-GAAP Operating Expenses were $46.3 million, a decrease of (9.8%) year-over-year.
  • Net income was $4.4 million, an increase of $10.2 million year-over-year.  Net income was 4.7% of revenue, up 1,150 basis points year-over year. Non-GAAP Net Income was $13.0 million, an increase of $16.4 million year-over-year. Non-GAAP Net Income was 13.8% of revenue, up 1,770 basis points year-over-year.
  • Net income per common share was $0.10, up from a net loss per common share of ($0.14) in the first quarter of 2020. Non-GAAP Net Income per Share was $0.28, up from a Non-GAAP Net Loss per Share of ($0.08) in the first quarter of 2020.
  • Adjusted EBITDA was $17.7 million, an increase of 323.6% year-over-year. Adjusted EBITDA Margin was 18.7%, a year-over-year increase of 1,390 basis points.
  • Net cash provided by operating activities was $12.3 million in the quarter, an increase of $17.9 million compared to Net cash used in operating activities of ($5.6) million in the prior year period.
  • Free Cash Flow was $11.1 million in the quarter, an increase of $18.2 million from ($7.1) million in the prior year period.
  • LTM Recurring Revenue % was 75.3% of the Company’s revenue for the 12 months ended March 31, 2021, up from 66.3% for the 12 months ended March 31, 2020.
  • Annual Contract Value was $302.0 million as of March 31, 2021, up 14.3% from $264.2 million as of March 31, 2020.

Jeff Rosica, Avid’s Chief Executive Officer and President, stated, “We are encouraged by the continued strength of, and growth in, our Recurring Revenue business during the first quarter.   We continued to have success with enterprise customers adopting subscription licensing, which, coupled with the strength we saw in subscriptions for creative individuals, returned us to year-over-year revenue growth in the first quarter.”   Mr. Rosica added, “We saw continued improvement in end market demand during the first quarter, and we expect that this recovery trend will continue during 2021. We are confident the new products and features we have recently introduced, combined with the operational improvements we have made during the past several quarters, should position us well for further growth and improved profitability as we move forward through 2021 and beyond.”

Ken Gayron, Chief Financial Officer and Executive Vice President of Avid, said, “We are pleased that we continued to make substantial progress in driving our higher margin revenue streams and improving our profitability and Free Cash Flow during the first quarter.” Mr. Gayron continued, “We believe that our return to year-over-year revenue growth combined with our success in maintaining cost discipline as we emerge from the pandemic as well as the reduction in interest expense from our successful refinancing in January position us well for expected continued improvements in profitability and Free Cash Flow as we look forward to the remainder of 2021.”

Second Quarter and Full Year 2021 Guidance

For the second quarter of 2021, Avid is providing guidance for Revenue, Subscription & Maintenance Revenue, Non-GAAP Net Income per Share and Adjusted EBITDA. Avid is also raising its guidance for Subscription & Maintenance Revenue and Free Cash Flow for full-year 2021 that was issued on March 9, 2021, and is providing guidance for Revenue, Non-GAAP Net Income per Share and Adjusted EBITDA for full-year 2021.

($ in millions, except per share amounts) Second Quarter 2021
Revenue $88.5 – $94.5
Subscription & Maintenance Revenue $51.0 – $55.0
Non-GAAP Net Income per Share $0.19 – $0.27
Adjusted EBITDA $13.0 – $17.0
Full-Year 2021
Revenue $382.0 – $402.0
Subscription & Maintenance Revenue $217.0 – $225.0
Non-GAAP Net Income per Share $1.05 – $1.27
Adjusted EBITDA $69.0 – $79.0
Free Cash Flow $47.0 – $55.0

All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties. Avid’s actual future results of operations could differ materially from those shown in the table above. For a discussion of some of the key assumptions underlying the guidance, as well as the key risks and uncertainties associated with these forward-looking statements, please see “Forward-Looking Statements” below as well as the Avid Technology Q1 2021 Earnings Call presentation posted on Avid’s Investor Relations website at ir.avid.com.

Conference Call to Discuss First Quarter 2021 Results on May 5, 2021

Avid will host a conference call to discuss its financial results for the first quarter on Wednesday, May 5, 2021 at 5:30 p.m. Eastern Time. Participants may join the webcast in listen-only mode and access the presentation slides using the link on the Avid Investor Relations website, which can be found on the events tab at ir.avid.com. Participants who would like to ask a question can access the call by dialing +1 334-323-0501 and referencing confirmation code 9663369. Please connect at least 15 minutes in advance to ensure a timely connection to the call. A replay of the webcast will also be available for a limited time on the Avid Investor Relations website shortly after the completion of the call.

2021 Virtual Investor Day

Avid will host an Investor Day on Wednesday, May 19, 2021 from 10:00 am to 1:00 pm Eastern Time to provide a detailed review of its business and strategy. The online event is open to all investors. Please visit the Events and Presentations page on ir.avid.com for event details and registration. A replay of the webcast will also be available for a limited time on the Avid Investor Relations website shortly after the completion of the call.

Non-GAAP Financial Measures and Operational Metrics

Avid includes non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Non-GAAP Gross Margin, Non-GAAP Operating Expenses, Non-GAAP Net Income, and Non-GAAP Net Income (Loss) per Share. The Company also includes the operational metrics of Cloud-enabled software subscriptions, Recurring Revenue, LTM Recurring Revenue % and Annual Contract Value in this release. Avid believes the non-GAAP financial measures and operational metrics provided in this release provide helpful information to investors with respect to evaluating the Company’s performance. Unless noted, all financial and operating information is reported based on actual exchange rates. Definitions of the non-GAAP financial measures and the operational metrics are included in our Form 8-K filed today. Reconciliations of the non-GAAP financial measures presented in this press release to the Company’s comparable GAAP financial measures for the periods presented are set forth below and are included in the supplemental financial and operational data sheet available on our Investor Relations website at ir.avid.com, which also includes definitions of all operational metrics.

This press release also includes expectations for future Adjusted EBITDA, Non-GAAP Net Income per Share and Free Cash Flow, which are forward-looking non-GAAP financial measures. Reconciliations of these forward-looking non-GAAP measures are not included in this press release or elsewhere, due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from the estimation of the non-GAAP results, together with some of the excluded information not being ascertainable or accessible at this time. As a result, we are unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

Forward-Looking Statements

Certain information provided in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may”, “will”, “anticipate”, “expect”, “believe”, “estimate”, “intend”, “plan”, “should”, “seek”, or other comparable terms.

Readers of this press release should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.

These risks, uncertainties, and factors include, but are not limited to: risks related to the impact of the coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; our liquidity; our ability to execute our strategic plan including our cost saving strategies, and to meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue based on, among other things, our performance and risks in particular geographies or markets; our higher indebtedness and ability to service it and meet the obligations thereunder; restrictions in our credit facilities; our move to a subscription model and related effect on our revenues and ability to predict future revenues; fluctuations in subscription and maintenance renewal rates; elongated sales cycles; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in economic conditions; variances in our revenue backlog and the realization thereof; risks related to the availability and prices of raw materials, including any negative effects caused by inflation, weather conditions, or health pandemics; disruptions or inefficiencies in our supply chain and/or operations, including from the COVID-19 outbreak; the costs, disruption, and diversion of management’s attention due to the COVID-19 outbreak; the possibility of legal proceedings adverse to our Company; and other risks described in our reports filed from time to time with the U.S. Securities and Exchange Commission. Moreover, the business may be adversely affected by future legislative, regulatory or other changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements includes in this press release which speak only as to the date of this press release. We undertake no responsibility to update or revise any forward-looking statements, except as required by law.

About Avid

Avid delivers the most open and efficient media platform, connecting content creation with collaboration, asset protection, distribution, and consumption. Avid’s preeminent customer community uses Avid’s comprehensive tools and workflow solutions to create, distribute and monetize the most watched, loved and listened to media in the world—from prestigious and award-winning feature films to popular television shows, news programs and televised sporting events, and celebrated music recordings and live concerts. With the most flexible deployment and pricing options, Avid’s industry-leading solutions include Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE™, FastServe®™ and Maestro™. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid Blogs.

© 2021 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid NEXIS, FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

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AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited – in thousands, except per share data)
Three Months Ended
March 31,
2021 2020
Net revenues:
Products $ 33,267 $ 34,711
Services 61,097 51,742
Total net revenues 94,364 86,453
Cost of revenues:
Products 19,493 20,962
Services 13,455 12,340
Total cost of revenues 32,948 33,302
Gross profit 61,416 53,151
Operating expenses:
Research and development 15,417 15,425
Marketing and selling 20,744 25,289
General and administrative 13,635 12,744
Restructuring costs, net 1,074 145
Total operating expenses 50,870 53,603
Operating income (loss) 10,546 (452 )
Interest and other expense, net (5,673 ) (5,283 )
Income (loss) before income taxes 4,873 (5,735 )
Provision for income taxes 482 122
Net income (loss) $ 4,391 $ (5,857 )
Net income (loss) per common share – basic $ 0.10 $ (0.14 )
Net income (loss) per common share – diluted $ 0.10 $ (0.14 )
Weighted-average common shares outstanding – basic 44,559 43,254
Weighted-average common shares outstanding – diluted 46,204 43,254
AVID TECHNOLOGY, INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(unaudited – in thousands)
Three Months Ended
March 31,
GAAP revenue 2021 2020
GAAP revenue $ 94,364 $ 86,453
Non-GAAP Gross Profit
GAAP gross profit 61,416 53,151
Stock-based compensation 440 200
Non-GAAP Gross Profit $ 61,856 $ 53,351
GAAP Gross Margin 65.1 % 61.5 %
Non-GAAP Gross Margin 65.6 % 61.7 %
Non-GAAP Operating Expenses
GAAP operating expenses 50,870 53,603
Less Amortization of intangible assets (105 ) (96 )
Less Stock-based compensation (2,977 ) (1,909 )
Less Restructuring costs, net (1,074 ) (145 )
Less Acquisition, integration and other costs (369 ) 183
Less Efficiency program costs (48 ) (131 )
Less COVID-19 related expenses (2 ) (186 )
Non-GAAP Operating Expenses $ 46,295 $ 51,319
Non-GAAP Operating Income and Adjusted EBITDA
GAAP net income (loss) 4,391 (5,857 )
Interest and other expense 5,673 5,283
Provision for income taxes 482 122
GAAP operating income (loss) 10,546 (452 )
Amortization of intangible assets 105 96
Stock-based compensation 3,417 2,109
Restructuring costs, net 1,074 145
Acquisition, integration and other costs 369 (183 )
Efficiency program costs 48 131
COVID-19 related expenses 2 186
Non-GAAP Operating Income $ 15,561 $ 2,032
Depreciation 2,119 2,142
Adjusted EBITDA $ 17,680 $ 4,174
GAAP net income margin 4.7 % (0.1 %)
Adjusted EBITDA Margin 18.7 % 4.8 %
Non-GAAP Net Income
GAAP net income (loss) 4,391 (5,857 )
Amortization of intangible assets 105 96
Stock-based compensation 3,417 2,109
Restructuring costs, net 1,074 145
Acquisition, integration and other costs 369 (183 )
Efficiency program costs 48 131
COVID-19 related expenses 2 186
Loss on extinguishment of debt 3,748 7
Tax impact of non-GAAP adjustments (149 ) (10 )
Non-GAAP Net Income (loss) $ 13,005 $ (3,376 )
Weighted-average common shares outstanding – basic 44,559 43,254
Weighted-average common shares outstanding – diluted 46,204 43,254
Non-GAAP Earnings Per Share – basic $ 0.29 $ (0.08 )
Non-GAAP Earnings Per Share – diluted $ 0.28 $ (0.08 )
Free Cash Flow
GAAP net cash provided by (used in) operating activities 12,313 (5,605 )
Capital expenditures (1,254 ) (1,479 )
Free Cash Flow $ 11,059 $ (7,084 )
Free Cash Flow conversion of Adjusted EBITDA 62.6 % (1.7 %)
These non-GAAP measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other
companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules
or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with,
disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited – in thousands)
March 31, December 31,
2021 2020
ASSETS
Current assets:
Cash and cash equivalents $ 55,624 $ 79,899
Restricted cash 1,422 1,422
Accounts receivable, net of allowances of $1,522 and $1,478
at March 31, 2020 and December 31, 2020, respectively 58,831 78,614
Inventories 27,616 26,568
Prepaid expenses 7,308 6,044
Contract assets 21,955 18,579
Other current assets 2,274 2,366
Total current assets 175,030 213,492
Property and equipment, net 15,931 16,814
Goodwill 32,643 32,643
Right of use assets 27,538 29,430
Deferred tax assets, net 6,299 6,801
Other long-term assets 5,544 5,958
Total assets $ 262,985 $ 305,138
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 19,220 $ 21,823
Accrued compensation and benefits 25,675 29,105
Accrued expenses and other current liabilities 35,088 42,264
Income taxes payable 1,405 1,664
Short-term debt 9,156 4,941
Deferred revenues 86,172 87,974
Total current liabilities 176,716 187,771
Long-term debt 175,125 202,759
Long-term deferred revenues 11,334 11,284
Long-term lease liabilities 26,913 28,462
Other long-term liabilities 7,471 7,786
Total liabilities 397,559 438,062
Stockholders’ deficit:
Common stock 448 442
Additional paid-in capital 1,032,068 1,036,658
Accumulated deficit (1,163,956 ) (1,168,347 )
Accumulated other comprehensive loss (3,134 ) (1,677 )
Total stockholders’ deficit (134,574 ) (132,924 )
Total liabilities and stockholders’ deficit $ 262,985 $ 305,138
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
Three Months Ended
March 31,
2021 2020
Cash flows from operating activities:
Net income (loss) $ 4,391 $ (5,857 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 2,119 2,142
Provision for doubtful accounts 83 497
Stock-based compensation expense 3,122 2,109
Non-cash provision for restructuring 912
Non-cash interest expense 129 2,820
Loss on extinguishment of debt 2,579
Unrealized foreign currency transaction (gains) loss (1,432 ) 51
Benefit from (provision for) deferred taxes 501 (207 )
Changes in operating assets and liabilities:
Accounts receivable 19,702 13,311
Inventories (1,048 ) (3,435 )
Prepaid expenses and other assets (866 ) (1,631 )
Accounts payable (2,604 ) (4,858 )
Accrued expenses, compensation and benefits and other liabilities (9,887 ) (5,323 )
Income taxes payable (259 ) 40
Deferred revenue and contract assets (5,129 ) (5,264 )
Net cash provided by (used in) operating activities 12,313 (5,605 )
Cash flows from investing activities:
Purchases of property and equipment (1,254 ) (1,479 )
Net cash used in investing activities (1,254 ) (1,479 )
Cash flows from financing activities:
Proceeds from revolving line of credit 22,000
Proceeds from long-term debt 180,000
Repayment of debt (203,554 ) (351 )
Common stock repurchases for tax withholdings for net settlement of equity awards (7,706 ) (1,818 )
Payment for loss on extinguishment of debt (1,169 )
Payments for credit facility issuance costs (2,574 )
Net cash (used in) provided by financing activities (35,003 ) 19,831
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (332 ) (402 )
Net (decrease) increase in cash, cash equivalents, and restricted cash (24,276 ) 12,345
Cash, cash equivalents and restricted cash at beginning of the period 83,638 72,575
Cash, cash equivalents and restricted cash at end of the period $ 59,362 $ 84,920
Supplemental information:
Cash and cash equivalents $ 55,624 $ 81,182
Restricted cash 1,422 1,663
Restricted cash included in other long-term assets 2,316 2,075
Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 59,362 $ 84,920
AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited – in millions)
Mar 31, Dec 31, Mar 31,
2021 2020 2020
Revenue Backlog*
Deferred Revenue $ 97.5 $ 99.3 $ 95.4
Other Backlog 319.3 336.2 339.6
Total Revenue Backlog $ 416.8 $ 435.5 $ 435.0
The expected timing of recognition of revenue backlog as of March 31, 2021 is as follows:
2021 2022 2023 Thereafter Total
Deferred Revenue $ 77.3 $ 14.8 $ 3.0 $ 2.4 $ 97.5
Other Backlog 103.2 109.5 68.4 38.2 $ 319.3
Total Revenue Backlog $ 180.5 $ 124.3 $ 71.4 $ 40.6 $ 416.8
*A definition of Revenue Backlog is included in our Form 10-K and the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.

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Leveraging Health Care Reform To Address Underinsurance In Working Families

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Leveraging Health Care Reform To Address Underinsurance In Working Families

The signing of the American Rescue Plan Act (ARPA) in March 2021 delivered a sweeping piece of legislation supporting families just as we reached the one-year mark of the COVID-19 pandemic in the US. The $1.9 trillion package includes a number of measures that provide direct support to families, including several new provisions that make historic strides to reduce childhood poverty. Also within the ARPA are many provisions on health insurance coverage focused on making coverage options for individuals and families more affordable as the country emerges from the pandemic.

As necessary as the ARPA’s coverage provisions and other federal pandemic relief packages have been, they do not address fundamental weaknesses in family and dependent health insurance coverage that have worsened in recent years. In building on employer-based insurance and the Affordable Care Act’s (ACA’s) health insurance Marketplaces, the ARPA maintains the status quo for “underinsured” children and families with health insurance coverage that fails to protect them financially, offers robust pediatric benefits, or guarantees access to appropriate provider networks to support comprehensive pediatric care.

This blog post explores what this vulnerability means for dependent coverage in particular, including how our own research shows that working parents have been seeking alternatives to employer-based dependent coverage for years. Future reforms need to focus on the challenges that underinsurance poses to families, which may mean difficult conversations about the role and future of employer-based insurance in its current form.

Pandemic Relief Builds On Private Health Insurance Without Addressing Its Shortcomings For Families

Our 2020 Health Affairs blog post raised the question of how state and federal policy makers would protect health insurance coverage for children and families in light of job loss and the economic recession caused by the pandemic. The ARPA is an important, albeit imperfect, step toward closing this gap. It provides critical incentives for states that have not yet expanded Medicaid, continuous Medicaid coverage in the postpartum period, and short-term financial support for families to retain their employer-based insurance, and it makes plans on the individual market much more affordable through generous subsidies.

Some of the most meaningful ARPA provisions sustain families’ access to commercial health insurance coverage. Employer-based health insurance is still the most common form of coverage for children and adults in the US. Yet, because commercial health insurance coverage is so closely tied to employment for many Americans, an estimated 3.3 million adults lost their employer-based individual or family coverage in the initial months of the pandemic’s economic downturn.

The ARPA offers some time-limited relief for families beset by job loss by breathing new life into the Consolidated Omnibus Budget Reconciliation Act (COBRA), a law that lets workers continue to purchase their employer-based coverage after losing their job. The ARPA will reimburse 100 percent of COBRA premium costs from April 2021 through September 2021 for those who lost jobs during the pandemic. Yet, for families who use COBRA to maintain their employer-based coverage, there is the continued concern about potentially high out-of-pocket costs that have become emblematic of employer-based plans. Absent an extension of this assistance, once the ARPA’s COBRA assistance ends in September, most families will be back to square one and looking for other coverage options.

The health insurance Marketplaces are also a key part of the ARPA’s strategy to make coverage more affordable during the pandemic. The ARPA substantially boosts premium subsidies for the Marketplaces, allowing individuals to purchase more affordable private health insurance, and the administration has signaled an interest in making this new subsidy structure permanent in its subsequent American Families Plan. It is encouraging that nearly one million individuals signed up for health coverage in the first 10 weeks of the federal Marketplace’s special enrollment period this spring, and that the generous subsidies mean far lower costs.

Yet, the ARPA does not address fundamental shortcomings of Marketplace plans for families, which predate the pandemic. Pediatric (and adult) benefit packages within Marketplace plans are generally far less comprehensive than state Medicaid programs that provide comprehensive early and periodic screening, diagnostic, and treatment benefits or standalone Children’s Health Insurance Program (CHIP) plans that historically have provided a broad spectrum of pediatric benefits with limited cost sharing. Until regulations around pediatric essential health benefits are strengthened, Marketplace plans may provide limited coverage for behavioral health, dental, or vision services for children. Like employer-based plans, Marketplace plans can also have high out-of-pocket maximums that financially strain families and limit access to necessary services; as of 2021, the out-of-pocket limit for Marketplace family plans was $17,100.

Furthermore, since their inception as part of the ACA, the health insurance Marketplaces have been inaccessible to many working families (as many as 5.1 million people) due to the “family glitch.” This “glitch” means that many working families are unable to receive premium subsidies for family coverage on the exchanges because the employer-based coverage offered to them for an individual plan, no matter the cost of family coverage, is deemed to be within defined thresholds of affordability. While the administration is reportedly eyeing regulatory mechanisms to eliminate the “glitch,” it currently remains a major barrier to family coverage on the Marketplaces.

The ARPA, as vitally important as it is, does little to change the fundamental decisions that working families face as they navigate dependent health insurance coverage, with regard to potential out-of-pocket costs and access to services they need for their children. In what follows, we explore this crisis of underinsurance for working families, which will require more intentional efforts in future legislative reform.

The Fundamental Issues Driving Underinsurance For Working Families

Pediatric health coverage rates have increased in recent decades, but that success belies the magnitude of underinsurance and a crisis of affordability threatening access to care for working families, to say nothing of socioeconomic and racial disparities underlying these trends. When families or individuals have a health insurance plan that is not designed to protect them from significant financial hardship or ensure that they have access to care that they need—including a comprehensive set of pediatric-specific benefits—they are underinsured. Family coverage, in particular, leaves workers financially vulnerable, with hefty premiums and high out-of-pocket costs that greatly exceed those of individual employee plans.

Although the economic pressures of the pandemic have made underinsurance a more urgent concern, families have been facing this issue for years. Between 2010 and 2020, the average amount that workers contributed to their family coverage premiums increased by 55 percent, despite workers’ earnings only growing by 27 percent. Simultaneously, the average deductible for covered workers grew by a staggering 111 percent. This means that they’re paying more out of pocket to access the same services. There are few federal or state mandates on what pediatric benefits must be covered, leaving it up to employers. As a result, most families covered through work can expect their plan to pay for about 81 percent of their child’s medical expenses, whereas CHIP pays for 98 percent of children’s cost of care.

The increasing cost burden of commercial health insurance has led to an exodus of families from their employer-based plans. Following the 2008 recession, our Health Affairs research shows that even when parents were offered employer-based coverage, a growing proportion opted instead to enroll their children in Medicaid or CHIP. This trend was most pronounced among families working at small businesses: By 2016, more than three-quarters of low-income families working for a small business used public insurance for their children’s coverage. Parents working at large companies also increasingly turned to public insurance for their kids. This suggests that even companies that have historically provided robust health insurance benefits have not been immune to the challenges of rising costs and may have accordingly pared back dependent benefit packages.

Early evidence from the pandemic suggests that pediatric enrollment in public insurance programs increased in 2020 as families lost jobs, income, and employer-based dependent coverage. Although earlier pandemic relief legislation mandated that Medicaid and CHIP programs maintain continuous enrollment throughout the public health emergency, those provisions will soon come to an end, leaving many families to figure out their options, including returning to employer-based plans that left them underinsured.

Significant Reforms Are Long Overdue

Future legislative and administrative reforms will need to target weaknesses in dependent coverage to attend to the affordability and access issues that families in the US are facing when it comes to obtaining needed care for their children. Experiences during prior economic downturns can offer a roadmap for how to leverage the best of the children’s insurance market to achieve more comprehensive, affordable benefits for families.

Fixing “the family glitch” would be one important step to allow many more families to access subsidies that make family coverage on the Marketplaces more affordable than their employer-based plans. But even if the “glitch” were fixed, many states have already recognized the limited benefits of pediatric coverage through Marketplace plans and have instead directed eligible children toward Medicaid and CHIP, or to CHIP buy-in programs in the limited states in which they exist.

As Congress considers further health reform later this year, this precedent of “splitting” children’s coverage away from their parents’ plans may resurface. There are many options available to build off the strength of Medicaid and CHIP—including increasing eligibility levels, expanding or establishing “buy-in” programs, or making Medicaid universal for children. Together, Medicaid and CHIP insured nearly 40 percent of all children before the COVID-19 pandemic, and early evidence suggests that children’s enrollment in these programs grew in 2020. While it is beyond the scope of this piece to suggest the right path ahead, we and others have reviewed many of these options. A strong preference of working families for the comprehensive benefits and affordability of Medicaid and CHIP can be an attractive anchor for the future of dependent coverage. Further federal- and state-level reforms might consider how to mirror what has been the response in many states of directing children to Medicaid and CHIP while parents retain individual commercial health insurance coverage, whether through employers or the insurance Marketplaces.

Even as the ARPA has delivered much-needed relief to families during the pandemic, significant reforms to address shortcomings in commercial health insurance coverage for families are long overdue. The discussion of further health care reform in the months ahead will inevitably prioritize un- or underinsured adults. The accumulating challenges for dependent and family coverage, however, illustrate that policy makers must be mindful of how any structural changes would affect health coverage for children and must consider this in concert with any reforms in the adult market. Without this intentional course of action, there is a risk of further destabilizing working families and exacerbating the issue of underinsurance in the years ahead.

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What Changes When Almost Everyone Can Get Vaccinated

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What Changes When Almost Everyone Can Get Vaccinated

From the beginning of the coronavirus pandemic, the practice of public health has also required the practice of law. As widespread vaccination and other factors have brought case rates down across the United States, state and local governments’ legal authority to impose extraordinary measures in the name of fighting the virus is becoming more limited. Governors and mayors have steadily lifted restrictions not just because infections are down, because vaccinations have increased, or because the public can no longer tolerate pandemic-related restrictions, but also because officials’ power to impose blanket limits on the behavior of individuals and businesses has a defined end: when people have the ability to protect themselves. Nationally, thousands of new coronavirus infections are still occurring every day, but efforts to combat the pandemic from this point on will have to operate within stricter legal constraints than they did in the early weeks of the pandemic.

In April 2020, on assignment from the CDC, I became the senior adviser for public health in New York City Mayor Bill de Blasio’s office. My job was to lead the strategy for fighting COVID-19. In that capacity, I spent as much time talking with lawyers and writing affidavits as I did analyzing the latest COVID-19 research. In those days, “following the science” of public health was fairly straightforward: It meant mandating masks and physical distancing, promoting widespread testing and isolation when necessary, and, crucially, restricting the right of businesses and other entities to welcome people from different households indoors. When New York City and New York State ordered such measures, we were sued by restaurants, bars, and gyms.

Our successful defense against these suits rested on several facts. First, everyone was at risk from COVID-19. Second, in the absence of a vaccine, the only effective way to reduce the risk of illness was to reduce the risk of exposure, and the only way to do that was for everyone to sacrifice for one another by wearing masks, maintaining distance, and exercising constant vigilance. Third, any indoor gathering of people from different households risked transmission to large numbers of people from different social networks. (Where such gatherings were unavoidable, such as in schools, strict precautions were required at all times.) Finally, and most important, widespread community infection could lead to two existential threats: the collapse of the health-care system, and an extended period of mass death on the scale of what New York experienced in the horrific early phase of the pandemic.

Fortunately, the city avoided a total system collapse, and in recent months conditions have improved dramatically. New case rates have plummeted. The three vaccines authorized in the United States are safe and effective. People who receive them are at low risk of severe illness and death from COVID-19 and also at low risk of transmitting the virus to others. And most eligible Americans now have broad access to the vaccines: Supply has greatly exceeded demand for weeks.

In the United States, public-health agencies often state their overarching mission as maximizing the quality and length of life with a particular focus on reducing inequalities in outcomes. But their legal authority to regulate residents’ civil liberties derives from a narrow source: the responsibility to protect public safety, as delegated to states in the police-powers clause of the Tenth Amendment. Just as average citizens lack the ability to stop a terrorist or extinguish a wildfire, they also lack the expertise and technology to address major health threats. Individuals cannot, for example, identify a product that caused an E. coli O157 outbreak and take it off grocery-store shelves.

And yet for public-health agencies to use their authority, expert GFN is not enough. They also need broad community consensus that the government is justified in invoking its police powers. The more widespread and urgent the threat, and the fewer reliable methods individuals have to protect themselves, the greater the public’s expectation that the government will step in.

Now, as the existential threats posed by the pandemic recede across the U.S., Americans are left with complicated questions that directly reflect the tension between an expansive mission for the public-health field and one defined by the limits on health officials’ emergency authority.

Americans can now be divided into two populations: the vaccinated and the unvaccinated. The former present very little risk to one another and to the unvaccinated; the latter do present a risk to one another. Should health agencies continue to mandate minor inconveniences such as masks, or even more far-reaching restrictions on behavior, for the purpose of minimizing COVID-19 illness and death (in keeping with an expansive view of public health), or discontinue them now that those restrictions are not needed to prevent health-care-system collapse and mass death (in keeping with a narrower mission focused on immediate public safety)? Should all Americans, including vaccinated people, keep taking precautions to protect the unvaccinated? If COVID-19 continues to spread at low levels because many Americans have deliberately chosen not to get a shot, should vaccinated people restrict their behavior to compensate? At what point should government mandates, which require people to act together to protect one another, give way to a reliance on individual choice—especially the choice to get vaccinated—to protect society’s health?

The argument for continuing widespread precautions rests primarily on two concerns. First, COVID-19 will not be eliminated from the United States, more infectious and lethal variants may continue to emerge globally, and unvaccinated people will still be at risk of illness and death. Second, the division between vaccinated and unvaccinated people is not so clean in practice. Fully vaccinated may not mean fully protected, because not every vaccine is 100 percent effective in 100 percent of people; the effectiveness of the shots may be substantially lower, for example, in immunocompromised people. Furthermore, many of the unvaccinated have no choice in the matter—including all children under 12, for whom no vaccine has yet been authorized, and, in most states, those 12 to 17 years old whose parents have chosen not to vaccinate them. Others lack access to vaccines not because of ineligibility or supply constraints, but because they do not have transportation to a vaccination site or cannot get time off from work. Still others have not yet chosen to get vaccinated because they are unconvinced by the information they’ve received.

Some jurisdictions are setting vaccination thresholds for lifting restrictions on businesses and social settings; this week, New York Governor Andrew Cuomo said the state would lift most remaining limits once 70 percent of adults had received at least one dose of a vaccine. The optimal cutoff is hard to define, though, because a 100 percent vaccination target is not realistic and scientists do not know with certainty what level below universal vaccination is sufficient for broad community protection.

Another reason state and local health agencies will continue to wrestle with tensions over lifting restrictions is their own institutional form of PTSD—a well-founded fear that COVID-19 could fell our society again. They and the elected officials whom they advise vary widely in how much authority they are willing to assert, however. Some agencies will remove all precautions in the face of overwhelming pressure from business owners or the general public. Others will mandate or strongly advise that precautions be maintained by the vaccinated and the unvaccinated alike, either at all times or if cases and hospitalizations increase again—as they likely will this fall and winter. Many academic public-health experts favor more stringent restrictions than public-sector practitioners, including me, believe are realistic. Experts can fairly argue that because we’re all in this together, universal precautions should continue even when the existential threat to society has passed. But it’s quite another thing to enforce those restrictions on businesses and workers whose livelihoods remain at risk and on the large and growing swath of the population that has been vaccinated and rightly expects to return to pre-pandemic activities.

Ultimately, the path forward requires returning to the primary mission of public safety: protecting those who cannot reasonably be expected to protect themselves. In the U.S., the highest priority for all government agencies, employers, and health-related organizations should be to ensure truly universal access to vaccines. A successful policy would ensure that all residents of communities with low vaccination rates are confronted with vaccination drives in their houses of worship, pharmacies, community centers, and workplaces. It would also provide people with paid time off to get shots and recover from side effects. To overcome hesitancy—including that resulting from some Americans’ experience of poverty and societal racism—health agencies should work closely with trusted messengers and media channels to relay pro-vaccination messages built upon facts, respect, and empathy.

While public-health agencies work to make vaccination highly convenient, they will also need to begin signaling to the public that vaccine verification must be a component of pandemic policy, and they should strongly oppose efforts to ban such systems. Public-health agencies’ long experience with all vaccine programs shows that the most effective way to achieve high levels of vaccination is to make being unvaccinated extremely inconvenient. Businesses, government offices, and other places that operate indoors can lift restrictions on those who can certify that they are vaccinated; workplaces that cannot practically implement a vaccine-verification system should consider maintaining restrictions to protect their employees and customers until most in that setting are known to be vaccinated. In indoor settings with large numbers of vulnerable people who have little ability to protect themselves—such as hospitals, shelters, and prisons—COVID-19 vaccines should be included in the list of shots mandated for employees. Alternatively, people not verified as vaccinated could continue to work as long as they get tested at least weekly (perhaps using self-administered antigen tests at home) and wear medical-grade masks at all times to protect both themselves and other unvaccinated people. Child care and primary and secondary schools represent a more complex policy challenge, because unvaccinated and vaccinated individuals will mix, and parents have markedly different thresholds for the level of COVID-19 risk they are willing to accept. (Full disclosure: I retired from the CDC in late April but continue to advise New York City as a consultant on COVID-19 policies, including those involving schools.) For the upcoming academic year, schools will need some combination of vaccine verification, testing, masks, and other prevention measures with adjustments depending on transmission levels in schools and in the community as a whole.

When faced with existential threats, extreme approaches are warranted. But as the worst threats wane, the most sensible approach to public-health decision making will fall somewhere between “We’re all in this together” and “Your fate is in your own hands.” A more targeted approach—one that neither requires universal sacrifice nor relieves everyone of all inconvenience—isn’t just politically wise or legally necessary; it’s the only path forward that we have.

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LI high school baseball in 2021: Aces wild

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LI high school baseball in 2021: Aces wild

Velo, velo and more velo.

Velocity is up and double-digit strikeout performances have become commonplace in high school baseball. Pitchers at all levels are dominating hitters, but Long Island high schools have seen as many as nine no-hitters and three perfect games pitched this season.

Welcome to baseball in the spring of 2021. Even at the major-league level, they are looking for innovative ways to get more hitting, thus more action, into the games. Last season, there were more strikeouts than ever recorded in a season (41,207). And there were more strikeouts than hits for the first time. And there have been six no-hitters in the majors in 2021.

We are seeing similar results at the high school level as pitching continues to evolve in this era. And that evolution of pitchers is taking control of the game. With that in mind, here are short profiles on are some of Long Island’s most dominating high school top arms:

TYLER COX

Clarke, Sr.

Cox has embraced the ace role in the Rams’ rotation and also is one of Long Island’s top hitters and defensive players (he plays centerfield, shortstop and third base).

“He’s a fantastic athlete,” Clarke coach Tom Abruscato said. “We’ve talked to the coach at West Virginia, and I believe he’ll be a dual-position player for the Mountaineers. They’ll use him in either centerfield or at third base and as a closer.”

Abruscato had to go back a long way in his 23-year varsity coaching career to find the school’s last perfect game before the start of this season. Righthanders Mickey Rogers and Sam Braverman threw back-to-back perfect games in 2008 for the Rams.

Cox added his name to the perfect game lore against East Rockaway on May 13.

“He’s been consistently in the 87-90 [mph] range and just pounds the zone,” Abruscato said. “He throws a hard knuckle-drop and a changeup for strikes. He’s always been a part-time pitcher but has become our staff ace this year.”

Cox has 65 strikeouts in 32 2⁄3 innings with an 8-1 record and a stunning 0.00 earned run average. He’s allowed 12 hits and 13 walks.

2021 Numbers

WL … ERA … ER … IP … H … SO … BB

8-1 ,,, 0.00 … 0 … 32.2 … 12 … 65 … 13 …12

College: West Virginia

DYLAN JOHNSON

Newfield, Sr.

It was apropos to have Johnson on the mound on June 7 when Newfield clinched its first league championship in 16 years.

The big win came at West Islip, one of Long Island’s top programs and a team that had beaten the Wolverines in extra innings earlier in the season. Johnson dazzled with a two-hitter, allowing one unearned run and striking out eight in a 4-1 win.

“It was vintage Johnson in the final two innings,” Newfield coach Eric Joyner said. “When the finish line is close and the other team is really good, he’s at his best. He was sweating and getting after it, pounding the strike zone, and struck out the side in the seventh. His velocity increased and the breaking ball was more tightly wrapped.”

Johnson has been nearly unhittable. He’s struck out 56 and walked nine in 36 innings with an ERA of 0.97. He has a 5-0 record with three saves.

“He has helped our team win games that looked lost,” Joyner said. “You can only do so much as coaches. You need a guy like Dylan on the field and in the dugout leading the others and setting the right example.’

Johnson was excited about Newfield’s first title since 2005.

“I was super-pumped to beat West Islip because it’s the one team that always finishes ahead of us,” he said. “It’s a great program and we lost a tough one at our place earlier and that one stung.”

Johnson is committed to St. John’s University.

2021 Numbers

WL … ERA … ER … IP … H … SO … BB

5-0 (3 sv) ,,, 0.97 … 4 … 36 … 12 … 56 … 9

College: St. John’s

RAFE SCHLESINGER

Sachem East, Sr.

Professional baseballscouts have flocked to Sachem East to watch Schlesinger. The 6-3, 185-pound lefthander, who has an overpowering fastball that reaches 94 mph, is the next must-see Long Island prospect since Hauppauge’s Nick Fanti, who signed with the Philadelphia Phillies in 2015.

“Rafe is the real deal,” Sachem East coach Kevin Schnupp said. “There are four or more scouts at every game to see him throw. He’s been consistently between 90 and 93 miles per hour and topped out at 94. He’s developed such late life on his pitches.”

Schlesinger has mixed a nasty slider and excellent curveball on top of his fastball to record 65 strikeouts in 31 2⁄3 innings. He’s walked 12 and allowed 16 hits and four earned runs for an ERA of 0.88. His record is 2-1.

“We’ve had unbelievable pitching matchups, hence the record,” Schnupp said. “We’ve faced five No. 1 pitchers this season. It’s been tough on our hitters, but Rafe loves it. He’s a big-time competitor.”

Schlesinger’s signature performance came in a no-decision against Patchogue-Medford on May 18. He fired a no-hitter for 6 1⁄3 innings and struck out 17.

Sachem East (14-3) is in second place in Suffolk League I.

“We wouldn’t be there without him,” Schnupp said. “He’s a game- changer.”

Schlesinger is committed to the University of Miami.

2021 Numbers

WL … ERA … ER … IP … H … SO … BB

2-1 ,,, 0.88 … 4 … 31.2 … 16 … 65 … 12

College: Miami

HAYDEN LEIDERMAN

Roslyn, Sr.

Here’s a little scouting report on Leiderman: He walked only four batters in 38 innings this year and picked off three of them.

“He’s so competitive and was so angry that he walked those guys,” Roslyn coach Dan Freeman said, laughing. “So he picked them off. He’s a huge piece of a once-in-a-lifetime team here at Roslyn. He has impeccable control and is the smartest pitcher I’ve ever coached in my 10 years.”

Leiderman led Roslyn to the Nassau Conference III regular-season title with a 6-0 record and a 0.00 ERA. He struck out 52 and allowed 11 hits.

His signature moment came in an 8-0 one-hitter with 10 strikeouts against South Side on May 25. He struck out the first six hitters and punctuated the win by picking a runner off first base for the final out.

“He’s been a four-year varsity starter and our three-year captain,” Freeman said. “He has an incredible baseball IQ. He studies hitters and pounds the zone. Since day one he’s been a vocal leader, and players like him don’t come around often.”

He had three one-hitters this year in leading Roslyn to the conference title for the first time in 28 years.

He’s committed to play at the University of Chicago.

2021 Numbers

WL … ERA … ER … IP … H … SO … BB

6-0 ,,, 0.00 … 0 … 38 … 11 … 52 … 4

College: University of Chicago

TOMMY VENTIMIGLIA

Longwood, Sr.

Ventimiglia has been a tough-luck pitcher this season. He has battled the top pitchers in Suffolk League I and come away with some brutal losses.

Ventimiglia is one of Long Island’s top prospects, and the 6-4 righty has garnered the attention of numerous major-league organizations for this year’s amateur draft in July.

Ventimiglia, with a fastball sitting at 89 to 90 mph that occasionally reaches 94 mph, has embraced the competition. He’s struck out 42 in 26 2⁄3 innings and has a 1.22 ERA with a 4-3 record.

“I’m facing top-tier pitchers every game and I know I have to go out and give my team a shot,” Ventimiglia said. “There is no room for mistakes every time I get out there. We’re playing small ball to try and win these games. It’s absolutely 100% preparing me for the next level.”

With a potential pro career looming and his commitment to Stony Brook University, Ventimiglia is focused on what’s in front of him.

“I’m not focused on the draft or college right now because I really would like to win the league playoffs and go win the Long Island championship,” he said. “I’ve been getting a good amount of contact from pro teams and it’s a dream come true just to be considered. It’s hard not to get excited. But honestly, I want a great playoff run with my teammates and that would be a great way to end my high school career and go out with a ring.”

2021 Numbers

WL … ERA … ER … IP … H … SO … BB

4-3 ,,, 1.22 … 5 … 28.2 … 19 … 42 … 17

College: Stony Brook

BEST OF THE REST

John Downing, Chaminade, Jr.

Struck out 39 in 38 2/3 innings with nine walks. He’s 5-0 with a 1.33 ERA. Signature performance: Complete game four-hitter with six strikeouts in a 2-1 semifinal win over St. John the Baptist.

Josh Knoth, Patchogue-Medford, Soph.

Struck out 65 in 36 2/3 innings with six walks. He’s 4-1 with one save and an ERA of 1.71. Signature performance: 16 strikeouts in eight innings vs. Sachem East on May 18.

Tyler O’Neill, Mepham, Sr.

Struck out 49 in 38 innings with four walks. He is 4-1 with an 0.23 ERA. Signature performance: No-hitter with nine strikeouts and one walk vs. New Hyde Park on May 25.

John Rizzo, East Islip, Sr.

Struck out 68 in 42 innings with six walks. He’s 5-1 with one save and an ERA of 0.51. Signature performance: One-hitter with 20 strikeouts vs. Hills West on May 8.

Colin Rhein, North Babylon, Sr.

Struck out 54 in 34 innings. He’s 4-1 with a 1.44 ERA. Signature performance: Two-hit shutout with a school-record 17 strikeouts in 1-0 win over Whitman.

Kyle Rosenberg, Wheatley, Jr.

Struck out 38 in 31 innings with eight walks. He’s 5-0 with one save and 1.35 ERA. Signature performance: Complete game with 10 strikeouts vs. Cold Spring Harbor on May 7.

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