SELECTIS HEALTH, INC. (GBCS)

Selectis Health (GBCS), trading on the NASDAQ, is a public company filing with the SEC under CIK 727346. The company manages health plans that assume full financial risk for medical costs among a defined population of dually eligible individuals—those covered by both Medicare and Medicaid. Its unit economics center on the spread between the per-member-per-month (PMPM) capitated fee received from the Centers for Medicare and Medicaid Services and the actual medical and administrative costs incurred.

The Foundation: Capitated Risk Contracts

Selectis Health does not charge per-service or per-claim. Instead, it negotiates fixed monthly fees from CMS and state Medicaid programs for each member enrolled. For every month a person remains on its health plan, Selectis receives a PMPM rate—perhaps $1,200 to $1,500 per member per month for a dually eligible senior, depending on geography, health risk, and contract terms. This is the entire revenue stream: count of active members multiplied by PMPM rate, often with risk adjustment mechanisms that tie payment to demographic and health severity factors.

The economics hinge entirely on whether Selectis can deliver actual medical care—hospitalizations, prescription drugs, specialist visits, primary care—at a total cost below that PMPM payment. If a cohort costs the plan an average of $1,100 per month, the plan retains margin. If it costs $1,300, the plan absorbs the loss. There is no opportunity to bill higher fees if utilization exceeds projections. This is why the unit—the cost per member per month to care for that individual—is the discipline that structures the entire business.

Member Mix and Risk Segmentation

Selectis enrolls primarily dually eligible members, individuals who are both aged (65+) or disabled and sufficiently poor to qualify for Medicaid. These members are inherently complex and high-cost: they suffer from multiple chronic conditions, have little capacity to pay out-of-pocket, and are sensitive to even modest copayments that reduce their access to care. The average cost of caring for a dually eligible member runs well above the general Medicare population, but the capitated rate is set to reflect that risk.

Within this population, Selectis segments by health risk. A member newly enrolled with hypertension and stable diabetes will be assigned a different risk score than a member with advanced cancer, dementia, and multiple comorbidities. The PMPM rate Selectis receives is adjusted upward for higher-risk members via CMS risk-adjustment formulas. This creates an internal unit-economics discipline: the plan’s margins vary member by member, and it must manage the mix and the cost of high-risk care closely.

The Cost Side: Medical Loss Ratio

For each cohort, Selectis incurs five categories of cost: inpatient hospital days, ambulatory services (office visits, urgent care), pharmacy, behavioral health, and long-term services. It also retains administrative overhead—underwriting, customer service, claims processing, compliance. Together, these make up the “medical loss ratio,” or MLR—the percentage of premium that goes to medical costs and administrative spending. Regulators typically require that an insurer spend at least 85 percent of premium on medical care (the rest is profit and overhead), but managed-care plans serving Medicaid and Medicare populations often report MLRs near 95 percent or higher, meaning margins are thin.

Selectis’ profitability therefore turns on precise cost forecasting, network management, and utilization control. If it can negotiate lower rates with hospitals and specialists, or if it can successfully manage chronic conditions through preventive care and care coordination, it lowers its PMPM cost and widens its margin. Every dollar saved in unnecessary ER visits or avoidable readmissions drops directly to the bottom line.

Geography and Contract Dynamics

Selectis operates health plans in multiple states, and each state’s Medicaid environment is distinct. Some states pay higher PMPM rates but demand tighter quality metrics and network adequacy. Others are more competitive, with lower rates but faster enrollment growth. The unit economics—the cost to deliver care in that state, the capitated rate offered, the expected utilization patterns—differ sharply by market.

Contracts with states are often multi-year but subject to renegotiation. If a state ratchets down the PMPM rate at renewal because competitors bid lower, Selectis faces immediate margin pressure unless it can reduce its cost structure. Conversely, if a state raises rates due to higher-than-expected utilization or quality penalties, the plan’s unit economics improve. This contract-level volatility means Selectis must be disciplined about which markets to pursue and which to exit.

Scale and Margin Leverage

A key driver of unit economics in managed care is scale. As enrollment grows, administrative costs per member fall—the denominator grows while overhead stays roughly flat. A health plan with 50,000 members can spread compliance, IT, and management costs more thinly than one with 10,000 members. Selectis’ growth strategy thus aims to add members at margins above its fully-loaded average cost per member, a process that over time improves overall PMPM profitability.

However, rapid enrollment growth also carries risk: if new members in a new market have higher-than-forecasted utilization, the plan can swing from profitable to loss-making in a single contract year. Selectis must balance growth with underwriting discipline and continuous cost monitoring.

Closures and Exit Economics

When Selectis decides to exit or close a health plan line, it faces a one-time cost: it must continue covering existing members through the end of the plan year, fund run-off claims, and manage the wind-down. This is why exits are rare and carefully timed. An unprofitable line closed mid-year leaves the plan liable for a full year of claims with no corresponding premium, whereas the plan can sometimes negotiate orderly transition to a competitor and receive a final reconciliation payment.