Subjects: EARNINGS, Conference Call, Webcast
CareMax Reports First Quarter 2024 Results
CareMax, Inc. (NASDAQ: CMAX; CMAXW) ("CareMax" or the "Company"), a leading technology-enabled value-based care delivery system, today announced financial results for the first quarter ended March 31, 2024.
"During the first quarter of 2024, we believe we began to see benefits from our fourth quarter clinical efforts which became fully implemented toward the end of last year," said Carlos de Solo, Chief Executive Officer. "While absolute levels of utilization remained elevated, Medicare risk medical expense ratio in the first quarter of 2024 was favorable to our internal projections and improved compared to the prior two quarters, offset by acuity shifts in our Medicaid risk membership. We remain optimistic that these initiatives have the potential to improve our margins over time."
Mr. de Solo continued, "In addition, we continue to take steps described last quarter to maximize the value of certain assets and right-size the capital structure of our organization. As of the end of the first quarter, we had cash and equivalents of approximately $41 million and remain covered under the limited waiver of certain financial covenants in our credit facility. We have since taken further actions to preserve near-term liquidity and remain engaged with our lenders and financial advisors to evaluate strategic options for the company."
First Quarter 2024 Results
- Total membership of 250,000, down 8% year-over-year.
- Medicare Advantage membership of 107,000, up 12% year-over-year.
- Total revenue was $232.2 million, up 34% year-over-year.
- Net loss was $43.4 million, which included a $2.4 million non-cash loss on remeasurement of derivative liabilities, compared to net loss of $82.1 million for the first quarter of 2023.
- Adjusted EBITDA was ($10.5) million, compared to ($0.4) million for the first quarter of 2023.1
- Platform Contribution was $9.1 million, compared to $24.7 million for the first quarter of 2023.1
- Medical Expense Ratio was 87.8%, compared to 75.2% for the first quarter of 2023.
- De novo pre-opening costs and post-opening losses for the first quarter of 2024 were $4.8 million.2
1 Adjusted EBITDA and Platform Contribution are non-GAAP financial metrics. A reconciliation of non-GAAP metrics to the most directly comparable GAAP financial measures is included in the appendix to this earnings release. Beginning with the three months ended June 30, 2023, the Company has updated its calculation of Adjusted EBITDA on a retrospective basis to no longer add back certain compensation costs for stay-on bonuses and duplicative salaries previously included within the Business Combination integration costs adjustment. |
| 2 De novo pre-opening costs represent (1) incremental payroll costs from employees specifically associated with the operational, contractual, physical, or regulatory infrastructure for de novo centers, prior to their opening; (2) legal costs directly associated with the de novo centers, incurred prior to their opening, which includes services such as execution of leases, health plan contracts and other agreements; (3) other expenses related to diligence, design, permitting, and other "soft costs" at new sites; and (4) rent and facility expenses prior to center opening. De novo post-opening losses include center-level operating losses recognized at a de novo center until the center breaks even, which consist of revenue, external provider costs and cost of care allocated to the de novo center. |
About CareMax
Founded in 2011, CareMax is a value-based care delivery system that utilizes a proprietary technology-enabled platform and multi-specialty, whole person health model to deliver comprehensive, preventative and coordinated care for its members. With over 200,000 Medicare Value-Based Care Members across 10 states, and fully integrated, Five-Star Quality rated health and wellness centers, CareMax is redefining healthcare across the country by reducing costs, improving overall outcomes and promoting health equity for seniors. Learn more at www.caremax.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth, strategy and financial performance. Words such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro forma," "project," "seek," "should," "target," or "will," or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements reflect the Company's expectations, plans or forecasts of future events and views as of the date of this press release. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.
Important risks and uncertainties that could cause the Company's actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the Company's net losses, level of indebtedness and significant cash used in operating activities have raised substantial doubt regarding its ability to continue as a going concern; the Company's future capital requirements and sources and uses of cash, including funds to satisfy its liquidity needs and the Company's ability to comply with the covenants under the agreements governing its indebtedness; the Company's ability to successfully execute its strategy, which may include divesting certain assets or businesses; the Company's ability to successfully implement cost-saving measures or achieve expected benefits under its plans to optimize performance of the MSO network and its centers; the impact of restrictions on the Company's current and future operations contained in certain of its agreements; risks relating to lease termination, lease expense escalators, lease extensions, special charges and the Company's inability to comply with provisions of its lease agreements; the Company's ability to integrate acquired businesses and realize expected benefits of any such transactions; the Company's ability to attract new patients; changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to the Company's services; changes in laws and regulations applicable to the Company's business, in particular with respect to Medicare Advantage and Medicaid; the Company's ability to maintain its relationships with health plans and other key payers; any delay, modification or cancellation of government contracts; the impact of COVID-19 or any variant thereof or any other pandemic or epidemic on the Company's business and results of operation; insolvency, credit problems or other financial difficulties that could confront the Company's counterparties in strategic acquisitions, investments and other collaborations could expose the Company to significant financial risk and significantly impact the Company's ability to expand its overall profitability; the Company's ability to address the material weakness in its internal control over financial reporting; the Company's ability to recruit and retain qualified team members and independent physicians; risks related to future acquisitions; the Company's ability to develop and maintain proper and effective internal control over financial reporting and the impact of any prior period developments. For a detailed discussion of the risk factors that could affect the Company's actual results, please refer to the risk factors identified in the Company's reports filed with the SEC. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update or revise this information unless required by law, and forward-looking statements should not be relied upon as representing the Company's assessments as of any date subsequent to the date of this press release.
Use of Non-GAAP Financial Information
Certain financial information and data contained in this press release is unaudited and does not conform to Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in, or may be presented differently in, any periodic filing, information or proxy statement, or prospectus or registration statement to be filed by the Company with the SEC. Some of the financial information and data contained in this press release, such as Adjusted EBITDA and Platform Contribution and margin thereof have not been prepared in accordance with United States generally accepted accounting principles ("GAAP"). These non-GAAP measures of financial results are not GAAP measures of our financial results or liquidity and should not be considered as an alternative to net income (loss) as a measure of financial results, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company's management uses these non-GAAP measures for trend analyses and for budgeting and planning purposes.
The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing the Company's financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. For this reason, these non-GAAP measures may not be comparable to other companies' similarly labeled non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results.
A reconciliation for Adjusted EBITDA and Platform Contribution to the most directly comparable GAAP financial measures is included below.
CAREMAX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) |
||||||||
|
|
March 31,
|
|
December 31,
|
||||
ASSETS |
|
|
|
|
||||
|
|
|
|
|
||||
Current Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
41,479 |
|
|
$ |
65,528 |
|
Accounts receivable, net |
|
|
107,985 |
|
|
|
114,754 |
|
Other current assets |
|
|
6,650 |
|
|
|
3,066 |
|
Total Current Assets |
|
|
156,113 |
|
|
|
183,348 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
47,243 |
|
|
|
47,918 |
|
Operating lease right-of-use assets |
|
|
109,947 |
|
|
|
109,215 |
|
Goodwill, net |
|
|
156,841 |
|
|
|
156,841 |
|
Intangible assets, net |
|
|
96,092 |
|
|
|
101,243 |
|
Other assets |
|
|
47,965 |
|
|
|
24,737 |
|
Total Assets |
|
$ |
614,202 |
|
|
$ |
623,301 |
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||||
|
|
|
|
|
||||
Current Liabilities |
|
|
|
|
||||
Accounts payable |
|
$ |
6,704 |
|
|
$ |
6,275 |
|
Accrued expenses |
|
|
20,172 |
|
|
|
16,224 |
|
Risk settlement liabilities |
|
|
53,599 |
|
|
|
42,602 |
|
Related party liabilities |
|
|
1,229 |
|
|
|
190 |
|
Current portion of third-party debt, net |
|
|
390,995 |
|
|
|
364,380 |
|
Current portion of operating lease liabilities |
|
|
32,062 |
|
|
|
8,975 |
|
Other current liabilities |
|
|
2,354 |
|
|
|
165 |
|
Total Current Liabilities |
|
|
507,114 |
|
|
|
438,812 |
|
Derivative liabilities |
|
|
49 |
|
|
|
22 |
|
Long-term debt, net |
|
|
1,879 |
|
|
|
21,443 |
|
Long-term operating lease liabilities |
|
|
78,417 |
|
|
|
97,136 |
|
Other liabilities |
|
|
6,340 |
|
|
|
4,443 |
|
Total Liabilities |
|
|
593,800 |
|
|
|
561,856 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
||||
STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of March 31, 2024 and December 31, 2023) |
|
|
? |
|
|
|
? |
|
Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,802,883 and 3,744,732 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively) |
|
|
11 |
|
|
|
11 |
|
Additional paid-in-capital |
|
|
784,736 |
|
|
|
782,371 |
|
Accumulated deficit |
|
|
(764,345 |
) |
|
|
(720,938 |
) |
Total Stockholders' Equity |
|
|
20,403 |
|
|
|
61,444 |
|
|
|
|
|
|
||||
Total Liabilities and Stockholders' Equity |
|
$ |
614,202 |
|
|
$ |
623,301 |
|
CAREMAX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
Revenue |
|
|
|
||||
Medicare risk-based revenue |
$ |
168,502 |
|
|
$ |
121,593 |
|
Medicaid risk-based revenue |
|
37,653 |
|
|
|
25,626 |
|
Government value-based care revenue |
|
18,815 |
|
|
|
10,010 |
|
Other revenue |
|
7,276 |
|
|
|
15,754 |
|
Total revenue |
|
232,246 |
|
|
|
172,983 |
|
|
|
|
|
||||
Operating expenses |
|
|
|
||||
External provider costs |
|
180,941 |
|
|
|
110,673 |
|
Cost of care |
|
43,133 |
|
|
|
38,627 |
|
Sales and marketing |
|
3,064 |
|
|
|
3,765 |
|
Corporate, general and administrative |
|
20,108 |
|
|
|
23,965 |
|
Depreciation and amortization |
|
6,705 |
|
|
|
6,576 |
|
Goodwill impairment |
|
? |
|
|
|
98,000 |
|
Total operating expenses |
|
253,951 |
|
|
|
281,606 |
|
Operating loss |
|
(21,705 |
) |
|
|
(108,623 |
) |
Nonoperating (expenses) income |
|
|
|
||||
Interest expense |
|
(19,756 |
) |
|
|
(10,711 |
) |
Change in fair value of derivative liabilities |
|
(2,381 |
) |
|
|
1,107 |
|
Gain on remeasurement of contingent earnout liabilities |
|
? |
|
|
|
36,136 |
|
Other income, net |
|
610 |
|
|
|
187 |
|
Total nonoperating (expenses) income |
|
(21,526 |
) |
|
|
26,718 |
|
Loss before income tax |
|
(43,231 |
) |
|
|
(81,904 |
) |
Income tax expense |
|
(177 |
) |
|
|
(177 |
) |
Net loss |
$ |
(43,408 |
) |
|
$ |
(82,082 |
) |
|
|
|
|
||||
Weighted-average basic shares outstanding 1 |
|
3,778,600 |
|
|
|
3,712,027 |
|
Weighted-average diluted shares outstanding 1 |
|
3,778,600 |
|
|
|
3,712,027 |
|
Net loss per share |
|
|
|
||||
Basic |
$ |
(11.49 |
) |
|
$ |
(22.11 |
) |
Diluted |
$ |
(11.49 |
) |
|
$ |
(22.11 |
) |
|
|
|
|
||||
1 Share amounts have been restated to reflect the 1-for-30 reverse stock split that the Company completed on January 31, 2024. |
|||||||
CAREMAX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) |
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
2023 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
Net loss |
|
$ |
(43,408 |
) |
|
$ |
(82,082 |
) |
Adjustments to reconcile net loss to cash and cash equivalents: |
|
|
|
|
||||
Depreciation and amortization expense |
|
|
6,705 |
|
|
|
6,576 |
|
Amortization of debt issuance costs and discounts |
|
|
931 |
|
|
|
1,839 |
|
Stock-based compensation expense |
|
|
2,365 |
|
|
|
2,298 |
|
Income tax expense |
|
|
177 |
|
|
|
177 |
|
Change in fair value of derivative liabilities |
|
|
2,381 |
|
|
|
(1,107 |
) |
Gain on remeasurement of contingent earnout liabilities |
|
|
? |
|
|
|
(36,136 |
) |
Payment-in-kind interest expense |
|
|
5,915 |
|
|
|
2,453 |
|
Non-cash finance lease expense |
|
|
156 |
|
|
|
? |
|
Provision for credit losses |
|
|
(302 |
) |
|
|
(104 |
) |
Goodwill impairment |
|
|
? |
|
|
|
98,000 |
|
Amortization of right-of-use assets |
|
|
2,675 |
|
|
|
2,725 |
|
Other non-cash, net |
|
|
134 |
|
|
|
1,080 |
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
|
7,072 |
|
|
|
(7,850 |
) |
Other current assets |
|
|
(3,583 |
) |
|
|
(1,961 |
) |
Risk settlement liabilities |
|
|
10,997 |
|
|
|
(454 |
) |
Other assets |
|
|
(23,332 |
) |
|
|
(9,735 |
) |
Operating lease liabilities |
|
|
962 |
|
|
|
(1,280 |
) |
Accounts payable |
|
|
(188 |
) |
|
|
(500 |
) |
Accrued expenses |
|
|
3,948 |
|
|
|
(29 |
) |
Related party liabilities |
|
|
1,039 |
|
|
|
? |
|
Other liabilities |
|
|
1,555 |
|
|
|
4,343 |
|
Net cash used in operating activities |
|
|
(23,802 |
) |
|
|
(21,746 |
) |
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(126 |
) |
|
|
(2,286 |
) |
Net cash used in investing activities |
|
|
(126 |
) |
|
|
(2,286 |
) |
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
Proceeds from borrowings, net |
|
|
? |
|
|
|
27,000 |
|
Principal payments of debt |
|
|
(119 |
) |
|
|
(25 |
) |
Payments of debt issuance costs |
|
|
? |
|
|
|
(348 |
) |
Net cash (used in) provided by financing activities |
|
|
(119 |
) |
|
|
26,627 |
|
|
|
|
|
|
||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(24,047 |
) |
|
|
2,596 |
|
Cash and cash equivalents - beginning of period |
|
|
65,528 |
|
|
|
41,626 |
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
|
$ |
41,479 |
|
|
$ |
44,222 |
|
| The following table represents Non-GAAP Financial Summary: | ||||||||||||||||||||||||||||||||||||
Non-GAAP Financial Summary |
||||||||||||||||||||||||||||||||||||
(Unaudited) |
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(in thousands) |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30,
|
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||||||||||
Medicare risk-based revenue |
$ |
107,747 |
|
$ |
143,664 |
|
$ |
122,267 |
|
$ |
113,041 |
|
$ |
121,593 |
|
$ |
155,486 |
|
$ |
134,105 |
|
$ |
108,650 |
|
$ |
168,502 |
|
|||||||||
Medicaid risk-based revenue |
|
20,165 |
|
|
19,896 |
|
|
19,852 |
|
|
36,620 |
|
|
25,626 |
|
|
30,054 |
|
|
23,950 |
|
|
26,263 |
|
|
37,653 |
|
|||||||||
Government value-based care revenue |
|
? |
|
|
? |
|
|
? |
|
|
6,389 |
|
|
10,010 |
|
|
22,206 |
|
|
28,067 |
|
|
7,425 |
|
|
18,815 |
|
|||||||||
Other revenue |
|
9,008 |
|
|
8,719 |
|
|
15,551 |
|
|
8,213 |
|
|
15,754 |
|
|
16,694 |
|
|
15,721 |
|
|
9,497 |
|
|
7,276 |
|
|||||||||
Total revenue |
|
136,920 |
|
|
172,279 |
|
|
157,670 |
|
|
164,263 |
|
|
172,983 |
|
|
224,440 |
|
|
201,843 |
|
|
151,835 |
|
|
232,246 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
External provider costs |
|
92,856 |
|
|
120,348 |
|
|
106,900 |
|
|
104,078 |
|
|
110,673 |
|
|
156,995 |
|
|
139,139 |
|
|
165,522 |
|
|
180,941 |
|
|||||||||
Cost of care |
|
26,854 |
|
|
30,293 |
|
|
30,150 |
|
|
34,581 |
|
|
37,627 |
|
|
38,865 |
|
|
41,599 |
|
|
41,915 |
|
|
42,229 |
|
|||||||||
Platform contribution |
|
17,210 |
|
|
21,638 |
|
|
20,620 |
|
|
25,604 |
|
|
24,683 |
|
|
28,580 |
|
|
21,106 |
|
|
(55,602 |
) |
|
9,075 |
|
|||||||||
Platform contribution margin (%) |
|
12.6 |
% |
|
12.6 |
% |
|
13.1 |
% |
|
15.6 |
% |
|
14.3 |
% |
|
12.7 |
% |
|
10.5 |
% |
|
(36.6 |
%) |
|
3.9 |
% |
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Sales and marketing |
|
3,301 |
|
|
2,299 |
|
|
2,355 |
|
|
3,806 |
|
|
3,765 |
|
|
3,381 |
|
|
3,501 |
|
|
3,627 |
|
|
3,064 |
|
|||||||||
Corporate, general and administrative |
|
10,873 |
|
|
12,165 |
|
|
13,877 |
|
|
17,263 |
|
|
21,329 |
|
|
18,158 |
|
|
15,527 |
|
|
12,531 |
|
|
16,495 |
|
|||||||||
Adjusted operating expenses |
|
14,174 |
|
|
14,464 |
|
|
16,232 |
|
|
21,069 |
|
|
25,094 |
|
|
21,539 |
|
|
19,028 |
|
|
16,158 |
|
|
19,559 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Adjusted EBITDA |
$ |
3,035 |
|
$ |
7,175 |
|
$ |
4,388 |
|
$ |
4,535 |
|
$ |
(411 |
) |
$ |
7,042 |
|
$ |
2,077 |
|
$ |
(71,759 |
) |
$ |
(10,482 |
) |
|||||||||
The following table provides a reconciliation of GAAP net loss to Adjusted EBITDA: |
||||||||||||||||||||||||||||||||||||
Reconciliation to Adjusted EBITDA |
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(in thousands) |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30, 2023 |
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||||||||||
Net loss |
$ |
(16,797 |
) |
$ |
(9,381 |
) |
$ |
(22,053 |
) |
$ |
10,434 |
|
$ |
(82,082 |
) |
$ |
(32,376 |
) |
$ |
(103,123 |
) |
$ |
(465,766 |
) |
$ |
(43,408 |
) |
|||||||||
Interest expense |
|
1,728 |
|
|
3,896 |
|
|
6,088 |
|
|
8,743 |
|
|
10,711 |
|
|
13,197 |
|
|
14,000 |
|
|
16,526 |
|
|
19,756 |
|
|||||||||
Depreciation and amortization |
|
5,062 |
|
|
4,903 |
|
|
4,573 |
|
|
7,180 |
|
|
6,576 |
|
|
6,828 |
|
|
6,833 |
|
|
7,550 |
|
|
6,705 |
|
|||||||||
Remeasurement of derivative and contingent earnout liabilities |
|
3,536 |
|
|
(7,391 |
) |
|
7,331 |
|
|
(84,171 |
) |
|
(37,242 |
) |
|
15,786 |
|
|
(1,450 |
) |
|
(961 |
) |
|
2,381 |
|
|||||||||
Goodwill impairment |
|
? |
|
|
? |
|
|
? |
|
|
70,000 |
|
|
98,000 |
|
|
? |
|
|
80,000 |
|
|
369,200 |
|
|
? |
|
|||||||||
Stock-based compensation |
|
1,087 |
|
|
2,788 |
|
|
3,611 |
|
|
2,786 |
|
|
2,298 |
|
|
2,464 |
|
|
3,243 |
|
|
2,595 |
|
|
2,365 |
|
|||||||||
Loss on extinguishment of debt |
|
? |
|
|
6,172 |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|||||||||
Business Combination integration costs (1) |
|
4,379 |
|
|
1,887 |
|
|
2,586 |
|
|
163 |
|
|
716 |
|
|
686 |
|
|
483 |
|
|
833 |
|
|
381 |
|
|||||||||
Acquisition and disposition related costs (2) |
|
3,429 |
|
|
4,074 |
|
|
2,118 |
|
|
10,632 |
|
|
622 |
|
|
815 |
|
|
652 |
|
|
1,069 |
|
|
1,052 |
|
|||||||||
Other (3) |
|
430 |
|
|
56 |
|
|
(47 |
) |
|
(1,158 |
) |
|
(187 |
) |
|
(535 |
) |
|
1,263 |
|
|
(1,409 |
) |
|
109 |
|
|||||||||
Income tax expense (benefit) |
|
181 |
|
|
171 |
|
|
181 |
|
|
(20,074 |
) |
|
177 |
|
|
177 |
|
|
177 |
|
|
(1,395 |
) |
|
177 |
|
|||||||||
Adjusted EBITDA |
$ |
3,035 |
|
$ |
7,175 |
|
$ |
4,388 |
|
$ |
4,535 |
|
$ |
(411 |
) |
$ |
7,042 |
|
$ |
2,077 |
|
$ |
(71,759 |
) |
$ |
(10,482 |
) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Memo: |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
De novo pre-opening costs |
$ |
973 |
|
$ |
506 |
|
$ |
2,426 |
|
$ |
3,205 |
|
$ |
1,975 |
|
$ |
1,560 |
|
$ |
1,880 |
|
$ |
1,323 |
|
$ |
1,366 |
|
|||||||||
De novo post-opening losses |
|
1,119 |
|
|
993 |
|
|
1,533 |
|
|
2,274 |
|
|
3,885 |
|
|
4,228 |
|
|
3,906 |
|
|
4,558 |
|
|
3,451 |
|
|||||||||
(1) |
Represents initial costs to set up public company processes, incremental vendor expenses identified as temporary or duplicative and expected to be rationalized in the short term, and legal and professional expenses outside of the ordinary course of business, which are being incurred as part of the Company's efforts as it integrates the two privately held companies that were combined in the Business Combination. Significant components of Business Combination integration costs were as follows: |
|
Three Months Ended |
||||||||||||||||||||||||||||||||||
(in thousands) |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30, 2023 |
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
||||||||||||||||||||||||||
Consulting and legal fees (a) |
$ |
3,190 |
$ |
887 |
$ |
725 |
$ |
257 |
|
$ |
282 |
$ |
237 |
$ |
69 |
$ |
451 |
$ |
371 |
||||||||||||||||
Severance costs |
|
25 |
|
|
252 |
|
|
1,080 |
|
|
167 |
|
|
11 |
|
|
13 |
|
|
? |
|
|
? |
|
|
? |
|
||||||||
Other (b) |
|
1,164 |
|
|
748 |
|
|
782 |
|
|
(261 |
) |
|
423 |
|
|
436 |
|
|
414 |
|
|
382 |
|
|
10 |
|
||||||||
|
$ |
4,379 |
|
$ |
1,887 |
|
$ |
2,586 |
|
$ |
163 |
|
$ |
716 |
|
$ |
686 |
|
$ |
483 |
|
$ |
833 |
|
$ |
381 |
|
||||||||
|
(a) Represents consulting and legal costs directly associated with efforts related to integration of the two privately held companies that were combined in the Business Combination. |
|
|
(b) Represents primarily vendor expenses identified as temporary or duplicative and/or expenses outside the ordinary course of business and not necessary to run the Company's business. |
|
|
|
|
(2) |
Represents legal and incremental compensation payroll costs directly associated with efforts to achieve synergies related to closed transactions and legal and advisory costs related to exploration of potential dispositions. Significant components of the acquisition and disposition related costs were as follows: |
|
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(in thousands) |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30, 2023 |
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||||||||||
Advisor and other professional fees (a) |
$ |
1,622 |
|
$ |
2,359 |
|
$ |
1,219 |
|
$ |
9,877 |
|
$ |
(258 |
) |
$ |
(34 |
) |
$ |
94 |
|
$ |
352 |
|
$ |
524 |
|
|||||||||
Compensation costs (b) |
|
1,808 |
|
1,715 |
|
899 |
|
755 |
|
880 |
|
|
849 |
|
|
558 |
|
717 |
|
528 |
||||||||||||||||
|
$ |
3,429 |
|
$ |
4,074 |
|
$ |
2,118 |
|
$ |
10,632 |
|
$ |
622 |
|
$ |
815 |
|
$ |
652 |
|
$ |
1,069 |
|
$ |
1,052 |
|
|||||||||
|
(a) Includes payments to our third-party transaction advisory firm associated with transaction contracts, including the Steward transaction that closed in November 2022. Also, costs include legal and accounting fees directly associated with contemplated or closed transactions or potential dispositions. |
|
|
(b) Includes incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions. |
|
(3) |
Components of other were as follows: |
|
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(in thousands) |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30, 2023 |
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||||||||||
Other income |
$ |
? |
|
$ |
? |
|
$ |
? |
|
$ |
(1,000 |
) |
$ |
? |
|
$ |
? |
|
$ |
? |
|
$ |
(874 |
) |
$ |
? |
|
|||||||||
Tax-related costs |
|
265 |
|
|
69 |
|
|
(178 |
) |
|
46 |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|||||||||
Legal settlement |
|
? |
|
|
(43 |
) |
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|||||||||
Interest income |
|
? |
|
|
? |
|
|
(12 |
) |
|
(201 |
) |
|
(253 |
) |
|
(602 |
) |
|
(433 |
) |
|
(560 |
) |
|
(668 |
) |
|||||||||
Severance costs |
|
? |
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
1,639 |
|
|
? |
|
|
694 |
|
||||||||||
Other |
|
165 |
|
|
29 |
|
|
144 |
|
|
(3 |
) |
|
66 |
|
|
67 |
|
|
58 |
|
|
25 |
|
|
83 |
|
|||||||||
|
$ |
430 |
|
$ |
56 |
|
$ |
(47 |
) |
$ |
(1,158 |
) |
$ |
(187 |
) |
$ |
(535 |
) |
$ |
1,263 |
|
$ |
(1,409 |
) |
$ |
109 |
|
|||||||||
The following metrics are as of the end of the indicated date, except for Platform Contribution, which is for the three month period ended as of the indicated date:
|
Three Months Ended |
|||||||||||||||||||||||||||||||||||
Non-GAAP Operating Metrics |
Mar 31, 2022 |
Jun 30, 2022 |
Sep 30, 2022 |
Dec 31, 2022 |
Mar 31, 2023 |
Jun 30, 2023 |
Sep 30, 2023 |
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||||||||||
Centers |
|
48 |
|
|
48 |
|
|
51 |
|
|
62 |
|
|
62 |
|
|
62 |
|
|
62 |
|
|
56 |
|
|
55 |
|
|||||||||
Markets |
|
6 |
|
|
6 |
|
|
7 |
|
|
7 |
|
|
7 |
|
|
7 |
|
|
7 |
|
|
7 |
|
|
6 |
|
|||||||||
Patients (MCREM)* |
|
50,600 |
|
|
54,000 |
|
|
57,400 |
|
|
221,500 |
|
|
225,100 |
|
|
226,500 |
|
|
228,700 |
|
|
229,300 |
|
|
218,000 |
|
|||||||||
Patients in value-based care arrangements (MCREM) |
|
79.8 |
% |
|
81.0 |
% |
|
78.2 |
% |
|
97.6 |
% |
|
99.0 |
% |
|
99.4 |
% |
|
98.8 |
% |
|
98.8 |
% |
|
99.1 |
% |
|||||||||
Platform Contribution ($, millions) |
$ |
17.2 |
|
$ |
21.6 |
|
$ |
20.6 |
|
$ |
25.6 |
|
$ |
24.7 |
|
$ |
28.6 |
|
$ |
21.1 |
|
$ |
(55.6 |
) |
$ |
9.1 |
|
|||||||||
* MCREM defined as Medicare Equivalent Members, which assumes the level of support received by a Medicare patient is equivalent to that received by three Medicaid or Commercial patients. |
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to Platform Contribution:
Reconciliation to Platform Contribution |
Three Months Ended |
||||||||||||||||||||||||||||||||||
(in millions) |
Mar 31, 2022 |
|
Jun 30, 2022 |
|
Sep 30, 2022 |
|
Dec 31, 2022 |
|
Mar 31, 2023 |
|
Jun 30, 2023 |
|
Sep 30, 2023 |
|
Dec 31, 2023 |
Mar 31, 2024 |
|||||||||||||||||||
Gross profit (a) |
$ |
11.2 |
|
|
$ |
15.4 |
|
|
$ |
14.8 |
|
|
$ |
17.2 |
|
|
$ |
17.1 |
|
|
$ |
20.4 |
|
|
$ |
12.0 |
|
|
$ |
(63.5 |
) |
$ |
1.5 |
|
|
Depreciation and amortization |
|
5.1 |
|
|
4.9 |
|
|
4.6 |
|
|
7.2 |
|
|
6.6 |
|
|
6.8 |
|
|
6.8 |
|
|
7.6 |
|
|
6.7 |
|||||||||
Stock-based compensation |
|
0.4 |
|
|
|
1.3 |
|
|
|
1.2 |
|
|
|
1.2 |
|
|
|
1.0 |
|
|
|
1.3 |
|
|
|
1.2 |
|
|
|
0.1 |
|
|
0.7 |
|
|
Other adjustments (b) |
|
0.5 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
? |
|
|
|
? |
|
|
|
? |
|
|
|
1.0 |
|
|
|
0.2 |
|
|
0.2 |
|
|
Platform Contribution |
$ |
17.2 |
|
|
$ |
21.6 |
|
|
$ |
20.6 |
|
|
$ |
25.6 |
|
|
$ |
24.7 |
|
|
$ |
28.6 |
|
|
$ |
21.1 |
|
|
$ |
(55.6 |
) |
$ |
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.4 million during the three months ended March 31, 2022, $1.3 million during the three months ended June 30, 2022, $1.2 million during the three months ended September 30, 2022, and $1.2 million during the three months ended December 31, 2022. |
|||||||||||||||||||||||||||||||||||
(b) Other adjustments include incremental costs related to post-Business Combination integration initiatives and other one-time center-level costs. Other adjustments reflected during the three months ended March 31, 2022, include $0.3 million of costs for a pilot project regarding outsourcing. During the three months ended September 30, 2023, December 31, 2023, and March 31, 2024, other adjustments include $1.0 million, $0.2 million and $0.2 million, respectively, of severance costs related to center staff. |
|||||||||||||||||||||||||||||||||||
The following table calculates the medical expense ratio:
|
Three Months Ended March 31, |
||||||
(in thousands, except ratio) |
2024 |
|
2023 |
||||
External provider costs |
$ |
180,941 |
|
|
$ |
110,673 |
|
Medicare and Medicaid risk-based revenue |
|
206,155 |
|
|
|
147,219 |
|
Medical Expense Ratio |
|
87.8 |
% |
|
|
75.2 |
% |
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