Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CareMax Reports Fourth Quarter and Full Year 2023 Results By: CareMax, Inc. via Business Wire March 18, 2024 at 06:55 AM EDT Met 2023 Guidance for Medicare Advantage Membership and Total Revenue Year-end 2023 Medicare Advantage Membership of 111,500, up 19% year-over-year Full Year 2023 Total Revenue of $751.1 million, up 19% year-over-year Exploring Strategic Options to Maximize Value of Certain Assets and Generate Further Liquidity CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the fourth quarter and full year ended December 31, 2023. “In the fourth quarter, we began taking major steps with the goal of solidifying the long-term viability of our business,” said Carlos de Solo, Chief Executive Officer. “We have made difficult but necessary decisions to de-emphasize certain longer duration investments, such as de novo centers, and to refocus efforts on driving medical margin within our core centers and management services organization while implementing cost saving initiatives across the organization. Our lenders have also granted us limited waivers of certain financial covenants in our credit facility in the short term to help provide us with flexibility as we explore strategic options across our lines of business to maximize the value of certain assets. In short, we are taking the actions we believe are necessary to reposition CareMax for future success.” Mr. de Solo continued, “What has not changed is our commitment to clinical excellence. Having achieved a 5-Star quality rating across our centers for the third consecutive year, CareMax remains at the forefront of enabling physicians to succeed under value-based care. We thank our team members for their dedication to our mission and for upholding the high standards of care our organization was founded upon.” Fourth Quarter 2023 Results Total membership of 270,000, up 4% year-over-year. Medicare Advantage membership of 111,500, up 19% year-over-year. Total revenue was $151.8 million, down 8% year-over-year. Net loss was $465.8 million, including $369.2 million of non-cash goodwill impairment, compared to net income of $10.4 million for the fourth quarter of 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $20.1 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($71.8) million, compared to $4.5 million for the fourth quarter of 2022.1 Platform Contribution was ($55.6) million, compared to $25.6 million for the fourth quarter of 2022.1 Medical Expense Ratio was 122.7%, compared to 69.5% for the fourth quarter of 2022, primarily due to the impacts of prior period developments and a provision for adverse deviation. De novo pre-opening costs and post-opening losses for the fourth quarter of 2023 were $5.9 million.2 Full Year 2023 Results Total revenue was $751.1 million, up 19% year-over-year. Medical Expense Ratio was 91.5%, compared to 72.7% for the year ended December 31, 2022. Net loss was $683.3 million, including $547.2 million of non-cash goodwill impairment, compared to net loss of $37.8 million for the year ended December 31, 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $19.5 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($63.1) million for the year ended December 31, 2023 and $19.1 million for the year ended December 31, 2022.1 Platform Contribution was $18.8 million, compared to $85.1 for the year ended December 31, 2022.1 Forward-Looking Commentary for Full Year 2024 CareMax is in the process of exploring strategic options across its business to maximize the value of certain of its assets and help generate further liquidity. While management believes that these efforts will result in financial benefits to the Company, the exact impacts of the outcomes of these processes on the Company’s financial performance are uncertain. Accordingly, the Company is not providing a 2024 financial outlook at this time. 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. Conference Call Details Management will host a conference call at 8:30 AM ET today to discuss the results. The conference call can be accessed by dialing (888) 330-2508 for U.S. participants, or (240) 789-2735 for international participants, and referencing conference ID 7874605. A live audio webcast will also be available on the “Events & Presentations” section of CareMax’s investor relations website at ir.caremax.com. Following the live call, a replay will be available on the Company's website. 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. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) December 31, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 65,528 $ 41,626 Accounts receivable, net 114,754 151,743 Other current assets 3,066 3,968 Total Current Assets 183,348 197,336 Property and equipment, net 47,918 21,006 Operating lease right-of-use assets 109,215 108,937 Goodwill, net 156,841 700,643 Intangible assets, net 101,243 123,585 Deferred debt issuance costs — 1,685 Other assets 24,737 17,550 Total Assets $ 623,301 $ 1,170,743 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 6,275 $ 7,687 Accrued expenses 16,224 16,854 Risk settlement liabilities 42,602 14,171 Related party liabilities 190 1,777 Related party debt, net — 30,277 Current portion of third-party debt, net 364,380 253 Current portion of operating lease liabilities 8,975 5,512 Other current liabilities 165 790 Total Current Liabilities 438,812 77,322 Derivative warrant liabilities 22 3,974 Long-term debt, net 21,443 230,725 Long-term operating lease liabilities 97,136 96,539 Contingent earnout liability — 134,561 Other liabilities 4,443 8,075 Total Liabilities 561,856 551,196 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of December 31, 2023 and December 31, 2022) — — Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,744,732 and 3,711,086 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 1 11 11 Additional paid-in-capital 782,371 657,126 Accumulated deficit (720,938 ) (37,590 ) Total Stockholders' Equity 61,444 619,547 Total Liabilities and Stockholders' Equity $ 623,301 $ 1,170,743 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. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Revenue Medicare risk-based revenue $ 108,650 $ 113,041 $ 519,834 $ 486,718 Medicaid risk-based revenue 26,263 36,620 105,893 96,534 Government value-based care revenue 7,425 6,389 67,708 6,389 Other revenue 9,497 8,213 57,667 41,492 Total revenue 151,835 164,263 751,102 631,132 Operating expenses External provider costs 165,522 104,078 572,329 424,182 Cost of care 42,226 38,723 164,872 126,648 Sales and marketing 3,681 3,806 14,274 11,761 Corporate, general and administrative 16,662 17,096 80,684 75,824 Depreciation and amortization 7,550 7,180 27,787 21,719 Goodwill impairment 369,200 70,000 547,200 70,000 Acquisition related costs — 9,616 108 13,165 Total operating expenses 604,841 250,498 1,407,254 743,297 Operating loss (453,006 ) (86,235 ) (656,152 ) (112,165 ) Nonoperating income (expense) Interest expense (16,526 ) (8,743 ) (54,434 ) (20,455 ) Change in fair value of derivative warrant liabilities 961 7,877 3,952 4,401 Gain on remeasurement of contingent earnout liabilities — 76,295 19,916 76,295 Loss on extinguishment of debt — — — (6,172 ) Other income, net 1,410 1,168 2,507 759 (14,155 ) 76,597 (28,059 ) 54,828 Loss before income tax (467,162 ) (9,640 ) (684,211 ) (57,337 ) Income tax benefit (1,395 ) (20,074 ) (863 ) (19,542 ) Net (loss) income $ (465,766 ) $ 10,434 $ (683,348 ) $ (37,796 ) Weighted-average basic shares outstanding 1 3,740,304 3,362,890 3,727,725 3,026,644 Net (loss) income per share Basic $ (124.53 ) $ 3.10 $ (183.31 ) $ (12.49 ) 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. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (683,348 ) $ (37,796 ) Adjustments to reconcile net loss to cash and cash equivalents: Depreciation and amortization expense 27,787 21,719 Amortization of debt issuance costs and discounts 8,314 2,382 Stock-based compensation expense 10,599 10,271 Income tax benefit (863 ) (19,542 ) Change in fair value of derivative warrant liabilities (3,952 ) (4,401 ) Gain on remeasurement of contingent earnout liabilities (19,916 ) (76,295 ) Loss on extinguishment of debt — 6,172 Payment-in-kind interest expense 12,064 5,277 Non-cash finance lease expense 419 — Provision for credit losses (1,588 ) 1,243 Goodwill impairment 547,200 70,000 Amortization of right-of-use assets 11,527 — Other non-cash, net 1,488 853 Changes in operating assets and liabilities: Accounts receivable 25,941 (66,561 ) Other current assets 902 2,505 Risk settlement liabilities 32,560 6,775 Other assets (6,501 ) (3,127 ) Operating lease liabilities (5,897 ) 4,386 Accounts payable 413 1,730 Accrued expenses (2,601 ) 4,722 Related party liabilities (1,069 ) — Other liabilities (393 ) 1,470 Net cash used in operating activities (46,913 ) (68,216 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (14,611 ) (7,450 ) Return of cash held in escrow — 785 Acquisition of businesses, net of cash acquired — (55,837 ) Net cash used in investing activities (14,611 ) (62,502 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 122,000 229,241 Proceeds from related party borrowings — 29,876 Principal payments of related party debt (35,510 ) (121,977 ) Principal payments of third-party debt (253 ) — Payments of debt issuance costs (810 ) (7,272 ) Collateral for letters of credit — (5,439 ) Net cash provided by financing activities 85,427 124,428 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 23,903 (6,290 ) Cash and cash equivalents - beginning of period 41,626 47,917 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 65,528 $ 41,626 Non-GAAP Financial Summary (Unaudited) Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Medicare risk-based revenue $ 91,277 $ 107,747 $ 143,664 $ 122,267 $ 113,041 $ 121,593 $ 155,486 $ 134,105 $ 108,650 Medicaid risk-based revenue 20,160 20,165 19,896 19,852 36,620 25,626 30,054 23,950 26,263 Government value-based care revenue — — — — 6,389 10,010 22,206 28,067 7,425 Other revenue 6,869 9,008 8,719 15,551 8,213 15,754 16,694 15,721 9,497 Total revenue 118,306 136,920 172,279 157,670 164,263 172,983 224,440 201,843 151,835 External provider costs 79,724 92,856 120,348 106,900 104,078 110,673 156,995 139,139 165,522 Cost of care 22,606 26,854 30,293 30,150 34,581 37,627 38,865 41,599 41,915 Platform contribution 15,977 17,210 21,638 20,620 25,604 24,683 28,580 21,106 (55,602 ) Platform contribution margin (%) 13.5 % 12.6 % 12.6 % 13.1 % 15.6 % 14.3 % 12.7 % 10.5 % (36.6 %) Sales and marketing 2,615 3,301 2,299 2,355 3,806 3,765 3,381 3,501 3,627 Corporate, general and administrative 11,228 10,873 12,165 13,877 17,263 21,329 18,158 15,527 12,531 Adjusted operating expenses 13,843 14,174 14,464 16,232 21,069 25,094 21,539 19,028 16,158 Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Reconciliation to Adjusted EBITDA Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Net loss $ (3,553 ) $ (16,797 ) $ (9,381 ) $ (22,053 ) $ 10,434 $ (82,082 ) $ (32,376 ) $ (103,123 ) $ (465,766 ) Interest expense 1,905 1,728 3,896 6,088 8,743 10,711 13,197 14,000 16,526 Depreciation and amortization 6,089 5,062 4,903 4,573 7,180 6,576 6,828 6,833 7,550 Remeasurement of warrant and contingent earnout liabilities (8,734 ) 3,536 (7,391 ) 7,331 (84,171 ) (37,242 ) 15,786 (1,450 ) (961 ) Goodwill impairment — — — — 70,000 98,000 — 80,000 369,200 Stock-based compensation 375 1,087 2,788 3,611 2,786 2,298 2,464 3,243 2,595 Loss on extinguishment of debt 7 — 6,172 — — — — — — Business Combination integration costs (1) 2,277 4,379 1,887 2,586 163 716 686 483 833 Acquisition and integration related costs (2) 2,325 3,429 4,074 2,118 10,632 622 815 652 1,069 DeSpac costs 742 9 10 11 10 — — — — Other (3) 543 421 46 (58 ) (1,168 ) (187 ) (535 ) 1,263 (1,409 ) Income tax provision (benefit) 159 181 171 181 (20,074 ) 177 177 177 (1,395 ) Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Memo: De novo pre-opening costs $ 806 $ 973 $ 506 $ 2,426 $ 3,205 $ 1,975 $ 1,560 $ 1,880 $ 1,323 De novo post-opening losses 489 1,119 993 1,533 2,274 3,885 4,228 3,906 4,558 (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Consulting and legal fees (a) $ 1,639 $ 3,190 $ 887 $ 725 $ 257 $ 282 $ 237 $ 69 $ 451 Severance costs 949 25 252 1,080 167 11 13 — — Other (b) (311 ) 1,164 748 782 (261 ) 423 436 414 382 $ 2,277 $ 4,379 $ 1,887 $ 2,586 $ 163 $ 716 $ 686 $ 483 $ 833 (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) Includes all costs recognized in acquisition related costs in our condensed consolidated statements of operations and incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions. Significant components of acquisition and integration related costs were as follows: Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Advisor and other professional fees (a) $ 1,183 $ 1,622 $ 2,359 $ 1,219 $ 9,877 $ (258 ) $ (34 ) $ 94 $ 352 Compensation costs (b) 1,142 1,808 1,715 899 755 880 849 558 717 $ 2,325 $ 3,429 $ 4,074 $ 2,118 $ 10,632 $ 622 $ 815 $ 652 $ 1,069 (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. (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Other income $ — $ — $ — $ — $ (1,000 ) $ — $ — $ — $ (874 ) Tax-related costs 95 265 69 (178 ) 46 — — — — Legal settlement 229 — (43 ) — — — — — — Interest income — — — (12 ) (201 ) (253 ) (602 ) (433 ) (560 ) Severance costs — — — — — — — 1,639 — Other 219 156 19 133 (13 ) 66 67 58 25 $ 543 $ 421 $ 46 $ (58 ) $ (1,168 ) $ (187 ) $ (535 ) $ 1,263 $ (1,409 ) Non-GAAP Operating Metrics Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Centers 45 48 48 51 62 62 62 62 56 Markets 4 6 6 7 7 7 7 7 7 Patients (MCREM)* 50,100 50,600 54,000 57,400 221,500 225,100 226,500 228,700 229,300 Patients in value-based care arrangements (MCREM) 79.3 % 79.8 % 81.0 % 78.2 % 97.6 % 99.0 % 99.4 % 98.8 % 98.8 % Platform Contribution ($, millions) $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) * 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. Reconciliation to Platform Contribution (in millions) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Gross profit (a) $ 9.6 $ 11.2 $ 15.4 $ 14.8 $ 17.2 $ 17.1 $ 20.4 $ 12.0 $ (63.5 ) Depreciation and amortization 6.1 5.1 4.9 4.6 7.2 6.6 6.8 6.8 7.6 Stock-based compensation 0.1 0.4 1.3 1.2 1.2 1.0 1.3 1.2 0.1 Other adjustments (b) 0.2 0.5 0.1 0.1 — — — 1.0 0.2 Platform Contribution $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) (a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.1 million during the three months ended December 31, 2021, $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 and December 31, 2023, other adjustments include $1.0 million and $0.2 million, respectively, of severance costs related to center staff. Calculation of the Medical Expense Ratio Three Months Ended December 31, Years Ended December 31, (in thousands, except ratio) 2023 2022 2023 2022 External provider costs $ 165,522 $ 104,078 $ 572,329 $ 424,182 Medicare and Medicaid risk-based revenue 134,913 149,661 625,727 583,252 Medical Expense Ratio 122.7 % 69.5 % 91.5 % 72.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240318654271/en/Contacts Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com Media Conchita Topinka Conchita@thinkbsg.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CareMax Reports Fourth Quarter and Full Year 2023 Results By: CareMax, Inc. via Business Wire March 18, 2024 at 06:55 AM EDT Met 2023 Guidance for Medicare Advantage Membership and Total Revenue Year-end 2023 Medicare Advantage Membership of 111,500, up 19% year-over-year Full Year 2023 Total Revenue of $751.1 million, up 19% year-over-year Exploring Strategic Options to Maximize Value of Certain Assets and Generate Further Liquidity CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the fourth quarter and full year ended December 31, 2023. “In the fourth quarter, we began taking major steps with the goal of solidifying the long-term viability of our business,” said Carlos de Solo, Chief Executive Officer. “We have made difficult but necessary decisions to de-emphasize certain longer duration investments, such as de novo centers, and to refocus efforts on driving medical margin within our core centers and management services organization while implementing cost saving initiatives across the organization. Our lenders have also granted us limited waivers of certain financial covenants in our credit facility in the short term to help provide us with flexibility as we explore strategic options across our lines of business to maximize the value of certain assets. In short, we are taking the actions we believe are necessary to reposition CareMax for future success.” Mr. de Solo continued, “What has not changed is our commitment to clinical excellence. Having achieved a 5-Star quality rating across our centers for the third consecutive year, CareMax remains at the forefront of enabling physicians to succeed under value-based care. We thank our team members for their dedication to our mission and for upholding the high standards of care our organization was founded upon.” Fourth Quarter 2023 Results Total membership of 270,000, up 4% year-over-year. Medicare Advantage membership of 111,500, up 19% year-over-year. Total revenue was $151.8 million, down 8% year-over-year. Net loss was $465.8 million, including $369.2 million of non-cash goodwill impairment, compared to net income of $10.4 million for the fourth quarter of 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $20.1 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($71.8) million, compared to $4.5 million for the fourth quarter of 2022.1 Platform Contribution was ($55.6) million, compared to $25.6 million for the fourth quarter of 2022.1 Medical Expense Ratio was 122.7%, compared to 69.5% for the fourth quarter of 2022, primarily due to the impacts of prior period developments and a provision for adverse deviation. De novo pre-opening costs and post-opening losses for the fourth quarter of 2023 were $5.9 million.2 Full Year 2023 Results Total revenue was $751.1 million, up 19% year-over-year. Medical Expense Ratio was 91.5%, compared to 72.7% for the year ended December 31, 2022. Net loss was $683.3 million, including $547.2 million of non-cash goodwill impairment, compared to net loss of $37.8 million for the year ended December 31, 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $19.5 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($63.1) million for the year ended December 31, 2023 and $19.1 million for the year ended December 31, 2022.1 Platform Contribution was $18.8 million, compared to $85.1 for the year ended December 31, 2022.1 Forward-Looking Commentary for Full Year 2024 CareMax is in the process of exploring strategic options across its business to maximize the value of certain of its assets and help generate further liquidity. While management believes that these efforts will result in financial benefits to the Company, the exact impacts of the outcomes of these processes on the Company’s financial performance are uncertain. Accordingly, the Company is not providing a 2024 financial outlook at this time. 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. Conference Call Details Management will host a conference call at 8:30 AM ET today to discuss the results. The conference call can be accessed by dialing (888) 330-2508 for U.S. participants, or (240) 789-2735 for international participants, and referencing conference ID 7874605. A live audio webcast will also be available on the “Events & Presentations” section of CareMax’s investor relations website at ir.caremax.com. Following the live call, a replay will be available on the Company's website. 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. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) December 31, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 65,528 $ 41,626 Accounts receivable, net 114,754 151,743 Other current assets 3,066 3,968 Total Current Assets 183,348 197,336 Property and equipment, net 47,918 21,006 Operating lease right-of-use assets 109,215 108,937 Goodwill, net 156,841 700,643 Intangible assets, net 101,243 123,585 Deferred debt issuance costs — 1,685 Other assets 24,737 17,550 Total Assets $ 623,301 $ 1,170,743 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 6,275 $ 7,687 Accrued expenses 16,224 16,854 Risk settlement liabilities 42,602 14,171 Related party liabilities 190 1,777 Related party debt, net — 30,277 Current portion of third-party debt, net 364,380 253 Current portion of operating lease liabilities 8,975 5,512 Other current liabilities 165 790 Total Current Liabilities 438,812 77,322 Derivative warrant liabilities 22 3,974 Long-term debt, net 21,443 230,725 Long-term operating lease liabilities 97,136 96,539 Contingent earnout liability — 134,561 Other liabilities 4,443 8,075 Total Liabilities 561,856 551,196 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of December 31, 2023 and December 31, 2022) — — Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,744,732 and 3,711,086 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 1 11 11 Additional paid-in-capital 782,371 657,126 Accumulated deficit (720,938 ) (37,590 ) Total Stockholders' Equity 61,444 619,547 Total Liabilities and Stockholders' Equity $ 623,301 $ 1,170,743 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. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Revenue Medicare risk-based revenue $ 108,650 $ 113,041 $ 519,834 $ 486,718 Medicaid risk-based revenue 26,263 36,620 105,893 96,534 Government value-based care revenue 7,425 6,389 67,708 6,389 Other revenue 9,497 8,213 57,667 41,492 Total revenue 151,835 164,263 751,102 631,132 Operating expenses External provider costs 165,522 104,078 572,329 424,182 Cost of care 42,226 38,723 164,872 126,648 Sales and marketing 3,681 3,806 14,274 11,761 Corporate, general and administrative 16,662 17,096 80,684 75,824 Depreciation and amortization 7,550 7,180 27,787 21,719 Goodwill impairment 369,200 70,000 547,200 70,000 Acquisition related costs — 9,616 108 13,165 Total operating expenses 604,841 250,498 1,407,254 743,297 Operating loss (453,006 ) (86,235 ) (656,152 ) (112,165 ) Nonoperating income (expense) Interest expense (16,526 ) (8,743 ) (54,434 ) (20,455 ) Change in fair value of derivative warrant liabilities 961 7,877 3,952 4,401 Gain on remeasurement of contingent earnout liabilities — 76,295 19,916 76,295 Loss on extinguishment of debt — — — (6,172 ) Other income, net 1,410 1,168 2,507 759 (14,155 ) 76,597 (28,059 ) 54,828 Loss before income tax (467,162 ) (9,640 ) (684,211 ) (57,337 ) Income tax benefit (1,395 ) (20,074 ) (863 ) (19,542 ) Net (loss) income $ (465,766 ) $ 10,434 $ (683,348 ) $ (37,796 ) Weighted-average basic shares outstanding 1 3,740,304 3,362,890 3,727,725 3,026,644 Net (loss) income per share Basic $ (124.53 ) $ 3.10 $ (183.31 ) $ (12.49 ) 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. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (683,348 ) $ (37,796 ) Adjustments to reconcile net loss to cash and cash equivalents: Depreciation and amortization expense 27,787 21,719 Amortization of debt issuance costs and discounts 8,314 2,382 Stock-based compensation expense 10,599 10,271 Income tax benefit (863 ) (19,542 ) Change in fair value of derivative warrant liabilities (3,952 ) (4,401 ) Gain on remeasurement of contingent earnout liabilities (19,916 ) (76,295 ) Loss on extinguishment of debt — 6,172 Payment-in-kind interest expense 12,064 5,277 Non-cash finance lease expense 419 — Provision for credit losses (1,588 ) 1,243 Goodwill impairment 547,200 70,000 Amortization of right-of-use assets 11,527 — Other non-cash, net 1,488 853 Changes in operating assets and liabilities: Accounts receivable 25,941 (66,561 ) Other current assets 902 2,505 Risk settlement liabilities 32,560 6,775 Other assets (6,501 ) (3,127 ) Operating lease liabilities (5,897 ) 4,386 Accounts payable 413 1,730 Accrued expenses (2,601 ) 4,722 Related party liabilities (1,069 ) — Other liabilities (393 ) 1,470 Net cash used in operating activities (46,913 ) (68,216 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (14,611 ) (7,450 ) Return of cash held in escrow — 785 Acquisition of businesses, net of cash acquired — (55,837 ) Net cash used in investing activities (14,611 ) (62,502 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 122,000 229,241 Proceeds from related party borrowings — 29,876 Principal payments of related party debt (35,510 ) (121,977 ) Principal payments of third-party debt (253 ) — Payments of debt issuance costs (810 ) (7,272 ) Collateral for letters of credit — (5,439 ) Net cash provided by financing activities 85,427 124,428 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 23,903 (6,290 ) Cash and cash equivalents - beginning of period 41,626 47,917 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 65,528 $ 41,626 Non-GAAP Financial Summary (Unaudited) Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Medicare risk-based revenue $ 91,277 $ 107,747 $ 143,664 $ 122,267 $ 113,041 $ 121,593 $ 155,486 $ 134,105 $ 108,650 Medicaid risk-based revenue 20,160 20,165 19,896 19,852 36,620 25,626 30,054 23,950 26,263 Government value-based care revenue — — — — 6,389 10,010 22,206 28,067 7,425 Other revenue 6,869 9,008 8,719 15,551 8,213 15,754 16,694 15,721 9,497 Total revenue 118,306 136,920 172,279 157,670 164,263 172,983 224,440 201,843 151,835 External provider costs 79,724 92,856 120,348 106,900 104,078 110,673 156,995 139,139 165,522 Cost of care 22,606 26,854 30,293 30,150 34,581 37,627 38,865 41,599 41,915 Platform contribution 15,977 17,210 21,638 20,620 25,604 24,683 28,580 21,106 (55,602 ) Platform contribution margin (%) 13.5 % 12.6 % 12.6 % 13.1 % 15.6 % 14.3 % 12.7 % 10.5 % (36.6 %) Sales and marketing 2,615 3,301 2,299 2,355 3,806 3,765 3,381 3,501 3,627 Corporate, general and administrative 11,228 10,873 12,165 13,877 17,263 21,329 18,158 15,527 12,531 Adjusted operating expenses 13,843 14,174 14,464 16,232 21,069 25,094 21,539 19,028 16,158 Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Reconciliation to Adjusted EBITDA Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Net loss $ (3,553 ) $ (16,797 ) $ (9,381 ) $ (22,053 ) $ 10,434 $ (82,082 ) $ (32,376 ) $ (103,123 ) $ (465,766 ) Interest expense 1,905 1,728 3,896 6,088 8,743 10,711 13,197 14,000 16,526 Depreciation and amortization 6,089 5,062 4,903 4,573 7,180 6,576 6,828 6,833 7,550 Remeasurement of warrant and contingent earnout liabilities (8,734 ) 3,536 (7,391 ) 7,331 (84,171 ) (37,242 ) 15,786 (1,450 ) (961 ) Goodwill impairment — — — — 70,000 98,000 — 80,000 369,200 Stock-based compensation 375 1,087 2,788 3,611 2,786 2,298 2,464 3,243 2,595 Loss on extinguishment of debt 7 — 6,172 — — — — — — Business Combination integration costs (1) 2,277 4,379 1,887 2,586 163 716 686 483 833 Acquisition and integration related costs (2) 2,325 3,429 4,074 2,118 10,632 622 815 652 1,069 DeSpac costs 742 9 10 11 10 — — — — Other (3) 543 421 46 (58 ) (1,168 ) (187 ) (535 ) 1,263 (1,409 ) Income tax provision (benefit) 159 181 171 181 (20,074 ) 177 177 177 (1,395 ) Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Memo: De novo pre-opening costs $ 806 $ 973 $ 506 $ 2,426 $ 3,205 $ 1,975 $ 1,560 $ 1,880 $ 1,323 De novo post-opening losses 489 1,119 993 1,533 2,274 3,885 4,228 3,906 4,558 (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Consulting and legal fees (a) $ 1,639 $ 3,190 $ 887 $ 725 $ 257 $ 282 $ 237 $ 69 $ 451 Severance costs 949 25 252 1,080 167 11 13 — — Other (b) (311 ) 1,164 748 782 (261 ) 423 436 414 382 $ 2,277 $ 4,379 $ 1,887 $ 2,586 $ 163 $ 716 $ 686 $ 483 $ 833 (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) Includes all costs recognized in acquisition related costs in our condensed consolidated statements of operations and incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions. Significant components of acquisition and integration related costs were as follows: Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Advisor and other professional fees (a) $ 1,183 $ 1,622 $ 2,359 $ 1,219 $ 9,877 $ (258 ) $ (34 ) $ 94 $ 352 Compensation costs (b) 1,142 1,808 1,715 899 755 880 849 558 717 $ 2,325 $ 3,429 $ 4,074 $ 2,118 $ 10,632 $ 622 $ 815 $ 652 $ 1,069 (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. (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Other income $ — $ — $ — $ — $ (1,000 ) $ — $ — $ — $ (874 ) Tax-related costs 95 265 69 (178 ) 46 — — — — Legal settlement 229 — (43 ) — — — — — — Interest income — — — (12 ) (201 ) (253 ) (602 ) (433 ) (560 ) Severance costs — — — — — — — 1,639 — Other 219 156 19 133 (13 ) 66 67 58 25 $ 543 $ 421 $ 46 $ (58 ) $ (1,168 ) $ (187 ) $ (535 ) $ 1,263 $ (1,409 ) Non-GAAP Operating Metrics Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Centers 45 48 48 51 62 62 62 62 56 Markets 4 6 6 7 7 7 7 7 7 Patients (MCREM)* 50,100 50,600 54,000 57,400 221,500 225,100 226,500 228,700 229,300 Patients in value-based care arrangements (MCREM) 79.3 % 79.8 % 81.0 % 78.2 % 97.6 % 99.0 % 99.4 % 98.8 % 98.8 % Platform Contribution ($, millions) $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) * 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. Reconciliation to Platform Contribution (in millions) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Gross profit (a) $ 9.6 $ 11.2 $ 15.4 $ 14.8 $ 17.2 $ 17.1 $ 20.4 $ 12.0 $ (63.5 ) Depreciation and amortization 6.1 5.1 4.9 4.6 7.2 6.6 6.8 6.8 7.6 Stock-based compensation 0.1 0.4 1.3 1.2 1.2 1.0 1.3 1.2 0.1 Other adjustments (b) 0.2 0.5 0.1 0.1 — — — 1.0 0.2 Platform Contribution $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) (a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.1 million during the three months ended December 31, 2021, $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 and December 31, 2023, other adjustments include $1.0 million and $0.2 million, respectively, of severance costs related to center staff. Calculation of the Medical Expense Ratio Three Months Ended December 31, Years Ended December 31, (in thousands, except ratio) 2023 2022 2023 2022 External provider costs $ 165,522 $ 104,078 $ 572,329 $ 424,182 Medicare and Medicaid risk-based revenue 134,913 149,661 625,727 583,252 Medical Expense Ratio 122.7 % 69.5 % 91.5 % 72.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240318654271/en/Contacts Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com Media Conchita Topinka Conchita@thinkbsg.com
Met 2023 Guidance for Medicare Advantage Membership and Total Revenue Year-end 2023 Medicare Advantage Membership of 111,500, up 19% year-over-year Full Year 2023 Total Revenue of $751.1 million, up 19% year-over-year Exploring Strategic Options to Maximize Value of Certain Assets and Generate Further Liquidity
CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the fourth quarter and full year ended December 31, 2023. “In the fourth quarter, we began taking major steps with the goal of solidifying the long-term viability of our business,” said Carlos de Solo, Chief Executive Officer. “We have made difficult but necessary decisions to de-emphasize certain longer duration investments, such as de novo centers, and to refocus efforts on driving medical margin within our core centers and management services organization while implementing cost saving initiatives across the organization. Our lenders have also granted us limited waivers of certain financial covenants in our credit facility in the short term to help provide us with flexibility as we explore strategic options across our lines of business to maximize the value of certain assets. In short, we are taking the actions we believe are necessary to reposition CareMax for future success.” Mr. de Solo continued, “What has not changed is our commitment to clinical excellence. Having achieved a 5-Star quality rating across our centers for the third consecutive year, CareMax remains at the forefront of enabling physicians to succeed under value-based care. We thank our team members for their dedication to our mission and for upholding the high standards of care our organization was founded upon.” Fourth Quarter 2023 Results Total membership of 270,000, up 4% year-over-year. Medicare Advantage membership of 111,500, up 19% year-over-year. Total revenue was $151.8 million, down 8% year-over-year. Net loss was $465.8 million, including $369.2 million of non-cash goodwill impairment, compared to net income of $10.4 million for the fourth quarter of 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $20.1 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($71.8) million, compared to $4.5 million for the fourth quarter of 2022.1 Platform Contribution was ($55.6) million, compared to $25.6 million for the fourth quarter of 2022.1 Medical Expense Ratio was 122.7%, compared to 69.5% for the fourth quarter of 2022, primarily due to the impacts of prior period developments and a provision for adverse deviation. De novo pre-opening costs and post-opening losses for the fourth quarter of 2023 were $5.9 million.2 Full Year 2023 Results Total revenue was $751.1 million, up 19% year-over-year. Medical Expense Ratio was 91.5%, compared to 72.7% for the year ended December 31, 2022. Net loss was $683.3 million, including $547.2 million of non-cash goodwill impairment, compared to net loss of $37.8 million for the year ended December 31, 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $19.5 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment. Adjusted EBITDA was ($63.1) million for the year ended December 31, 2023 and $19.1 million for the year ended December 31, 2022.1 Platform Contribution was $18.8 million, compared to $85.1 for the year ended December 31, 2022.1 Forward-Looking Commentary for Full Year 2024 CareMax is in the process of exploring strategic options across its business to maximize the value of certain of its assets and help generate further liquidity. While management believes that these efforts will result in financial benefits to the Company, the exact impacts of the outcomes of these processes on the Company’s financial performance are uncertain. Accordingly, the Company is not providing a 2024 financial outlook at this time. 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. Conference Call Details Management will host a conference call at 8:30 AM ET today to discuss the results. The conference call can be accessed by dialing (888) 330-2508 for U.S. participants, or (240) 789-2735 for international participants, and referencing conference ID 7874605. A live audio webcast will also be available on the “Events & Presentations” section of CareMax’s investor relations website at ir.caremax.com. Following the live call, a replay will be available on the Company's website. 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. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) December 31, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 65,528 $ 41,626 Accounts receivable, net 114,754 151,743 Other current assets 3,066 3,968 Total Current Assets 183,348 197,336 Property and equipment, net 47,918 21,006 Operating lease right-of-use assets 109,215 108,937 Goodwill, net 156,841 700,643 Intangible assets, net 101,243 123,585 Deferred debt issuance costs — 1,685 Other assets 24,737 17,550 Total Assets $ 623,301 $ 1,170,743 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 6,275 $ 7,687 Accrued expenses 16,224 16,854 Risk settlement liabilities 42,602 14,171 Related party liabilities 190 1,777 Related party debt, net — 30,277 Current portion of third-party debt, net 364,380 253 Current portion of operating lease liabilities 8,975 5,512 Other current liabilities 165 790 Total Current Liabilities 438,812 77,322 Derivative warrant liabilities 22 3,974 Long-term debt, net 21,443 230,725 Long-term operating lease liabilities 97,136 96,539 Contingent earnout liability — 134,561 Other liabilities 4,443 8,075 Total Liabilities 561,856 551,196 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of December 31, 2023 and December 31, 2022) — — Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,744,732 and 3,711,086 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 1 11 11 Additional paid-in-capital 782,371 657,126 Accumulated deficit (720,938 ) (37,590 ) Total Stockholders' Equity 61,444 619,547 Total Liabilities and Stockholders' Equity $ 623,301 $ 1,170,743 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. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Revenue Medicare risk-based revenue $ 108,650 $ 113,041 $ 519,834 $ 486,718 Medicaid risk-based revenue 26,263 36,620 105,893 96,534 Government value-based care revenue 7,425 6,389 67,708 6,389 Other revenue 9,497 8,213 57,667 41,492 Total revenue 151,835 164,263 751,102 631,132 Operating expenses External provider costs 165,522 104,078 572,329 424,182 Cost of care 42,226 38,723 164,872 126,648 Sales and marketing 3,681 3,806 14,274 11,761 Corporate, general and administrative 16,662 17,096 80,684 75,824 Depreciation and amortization 7,550 7,180 27,787 21,719 Goodwill impairment 369,200 70,000 547,200 70,000 Acquisition related costs — 9,616 108 13,165 Total operating expenses 604,841 250,498 1,407,254 743,297 Operating loss (453,006 ) (86,235 ) (656,152 ) (112,165 ) Nonoperating income (expense) Interest expense (16,526 ) (8,743 ) (54,434 ) (20,455 ) Change in fair value of derivative warrant liabilities 961 7,877 3,952 4,401 Gain on remeasurement of contingent earnout liabilities — 76,295 19,916 76,295 Loss on extinguishment of debt — — — (6,172 ) Other income, net 1,410 1,168 2,507 759 (14,155 ) 76,597 (28,059 ) 54,828 Loss before income tax (467,162 ) (9,640 ) (684,211 ) (57,337 ) Income tax benefit (1,395 ) (20,074 ) (863 ) (19,542 ) Net (loss) income $ (465,766 ) $ 10,434 $ (683,348 ) $ (37,796 ) Weighted-average basic shares outstanding 1 3,740,304 3,362,890 3,727,725 3,026,644 Net (loss) income per share Basic $ (124.53 ) $ 3.10 $ (183.31 ) $ (12.49 ) 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. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (683,348 ) $ (37,796 ) Adjustments to reconcile net loss to cash and cash equivalents: Depreciation and amortization expense 27,787 21,719 Amortization of debt issuance costs and discounts 8,314 2,382 Stock-based compensation expense 10,599 10,271 Income tax benefit (863 ) (19,542 ) Change in fair value of derivative warrant liabilities (3,952 ) (4,401 ) Gain on remeasurement of contingent earnout liabilities (19,916 ) (76,295 ) Loss on extinguishment of debt — 6,172 Payment-in-kind interest expense 12,064 5,277 Non-cash finance lease expense 419 — Provision for credit losses (1,588 ) 1,243 Goodwill impairment 547,200 70,000 Amortization of right-of-use assets 11,527 — Other non-cash, net 1,488 853 Changes in operating assets and liabilities: Accounts receivable 25,941 (66,561 ) Other current assets 902 2,505 Risk settlement liabilities 32,560 6,775 Other assets (6,501 ) (3,127 ) Operating lease liabilities (5,897 ) 4,386 Accounts payable 413 1,730 Accrued expenses (2,601 ) 4,722 Related party liabilities (1,069 ) — Other liabilities (393 ) 1,470 Net cash used in operating activities (46,913 ) (68,216 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (14,611 ) (7,450 ) Return of cash held in escrow — 785 Acquisition of businesses, net of cash acquired — (55,837 ) Net cash used in investing activities (14,611 ) (62,502 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 122,000 229,241 Proceeds from related party borrowings — 29,876 Principal payments of related party debt (35,510 ) (121,977 ) Principal payments of third-party debt (253 ) — Payments of debt issuance costs (810 ) (7,272 ) Collateral for letters of credit — (5,439 ) Net cash provided by financing activities 85,427 124,428 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 23,903 (6,290 ) Cash and cash equivalents - beginning of period 41,626 47,917 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 65,528 $ 41,626 Non-GAAP Financial Summary (Unaudited) Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Medicare risk-based revenue $ 91,277 $ 107,747 $ 143,664 $ 122,267 $ 113,041 $ 121,593 $ 155,486 $ 134,105 $ 108,650 Medicaid risk-based revenue 20,160 20,165 19,896 19,852 36,620 25,626 30,054 23,950 26,263 Government value-based care revenue — — — — 6,389 10,010 22,206 28,067 7,425 Other revenue 6,869 9,008 8,719 15,551 8,213 15,754 16,694 15,721 9,497 Total revenue 118,306 136,920 172,279 157,670 164,263 172,983 224,440 201,843 151,835 External provider costs 79,724 92,856 120,348 106,900 104,078 110,673 156,995 139,139 165,522 Cost of care 22,606 26,854 30,293 30,150 34,581 37,627 38,865 41,599 41,915 Platform contribution 15,977 17,210 21,638 20,620 25,604 24,683 28,580 21,106 (55,602 ) Platform contribution margin (%) 13.5 % 12.6 % 12.6 % 13.1 % 15.6 % 14.3 % 12.7 % 10.5 % (36.6 %) Sales and marketing 2,615 3,301 2,299 2,355 3,806 3,765 3,381 3,501 3,627 Corporate, general and administrative 11,228 10,873 12,165 13,877 17,263 21,329 18,158 15,527 12,531 Adjusted operating expenses 13,843 14,174 14,464 16,232 21,069 25,094 21,539 19,028 16,158 Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Reconciliation to Adjusted EBITDA Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Net loss $ (3,553 ) $ (16,797 ) $ (9,381 ) $ (22,053 ) $ 10,434 $ (82,082 ) $ (32,376 ) $ (103,123 ) $ (465,766 ) Interest expense 1,905 1,728 3,896 6,088 8,743 10,711 13,197 14,000 16,526 Depreciation and amortization 6,089 5,062 4,903 4,573 7,180 6,576 6,828 6,833 7,550 Remeasurement of warrant and contingent earnout liabilities (8,734 ) 3,536 (7,391 ) 7,331 (84,171 ) (37,242 ) 15,786 (1,450 ) (961 ) Goodwill impairment — — — — 70,000 98,000 — 80,000 369,200 Stock-based compensation 375 1,087 2,788 3,611 2,786 2,298 2,464 3,243 2,595 Loss on extinguishment of debt 7 — 6,172 — — — — — — Business Combination integration costs (1) 2,277 4,379 1,887 2,586 163 716 686 483 833 Acquisition and integration related costs (2) 2,325 3,429 4,074 2,118 10,632 622 815 652 1,069 DeSpac costs 742 9 10 11 10 — — — — Other (3) 543 421 46 (58 ) (1,168 ) (187 ) (535 ) 1,263 (1,409 ) Income tax provision (benefit) 159 181 171 181 (20,074 ) 177 177 177 (1,395 ) Adjusted EBITDA $ 2,134 $ 3,035 $ 7,175 $ 4,388 $ 4,535 $ (411 ) $ 7,042 $ 2,077 $ (71,759 ) Memo: De novo pre-opening costs $ 806 $ 973 $ 506 $ 2,426 $ 3,205 $ 1,975 $ 1,560 $ 1,880 $ 1,323 De novo post-opening losses 489 1,119 993 1,533 2,274 3,885 4,228 3,906 4,558 (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Consulting and legal fees (a) $ 1,639 $ 3,190 $ 887 $ 725 $ 257 $ 282 $ 237 $ 69 $ 451 Severance costs 949 25 252 1,080 167 11 13 — — Other (b) (311 ) 1,164 748 782 (261 ) 423 436 414 382 $ 2,277 $ 4,379 $ 1,887 $ 2,586 $ 163 $ 716 $ 686 $ 483 $ 833 (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) Includes all costs recognized in acquisition related costs in our condensed consolidated statements of operations and incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions. Significant components of acquisition and integration related costs were as follows: Three Months Ended (in thousands) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Advisor and other professional fees (a) $ 1,183 $ 1,622 $ 2,359 $ 1,219 $ 9,877 $ (258 ) $ (34 ) $ 94 $ 352 Compensation costs (b) 1,142 1,808 1,715 899 755 880 849 558 717 $ 2,325 $ 3,429 $ 4,074 $ 2,118 $ 10,632 $ 622 $ 815 $ 652 $ 1,069 (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. (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) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Other income $ — $ — $ — $ — $ (1,000 ) $ — $ — $ — $ (874 ) Tax-related costs 95 265 69 (178 ) 46 — — — — Legal settlement 229 — (43 ) — — — — — — Interest income — — — (12 ) (201 ) (253 ) (602 ) (433 ) (560 ) Severance costs — — — — — — — 1,639 — Other 219 156 19 133 (13 ) 66 67 58 25 $ 543 $ 421 $ 46 $ (58 ) $ (1,168 ) $ (187 ) $ (535 ) $ 1,263 $ (1,409 ) Non-GAAP Operating Metrics Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Centers 45 48 48 51 62 62 62 62 56 Markets 4 6 6 7 7 7 7 7 7 Patients (MCREM)* 50,100 50,600 54,000 57,400 221,500 225,100 226,500 228,700 229,300 Patients in value-based care arrangements (MCREM) 79.3 % 79.8 % 81.0 % 78.2 % 97.6 % 99.0 % 99.4 % 98.8 % 98.8 % Platform Contribution ($, millions) $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) * 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. Reconciliation to Platform Contribution (in millions) Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Gross profit (a) $ 9.6 $ 11.2 $ 15.4 $ 14.8 $ 17.2 $ 17.1 $ 20.4 $ 12.0 $ (63.5 ) Depreciation and amortization 6.1 5.1 4.9 4.6 7.2 6.6 6.8 6.8 7.6 Stock-based compensation 0.1 0.4 1.3 1.2 1.2 1.0 1.3 1.2 0.1 Other adjustments (b) 0.2 0.5 0.1 0.1 — — — 1.0 0.2 Platform Contribution $ 16.0 $ 17.2 $ 21.6 $ 20.6 $ 25.6 $ 24.7 $ 28.6 $ 21.1 $ (55.6 ) (a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.1 million during the three months ended December 31, 2021, $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 and December 31, 2023, other adjustments include $1.0 million and $0.2 million, respectively, of severance costs related to center staff. Calculation of the Medical Expense Ratio Three Months Ended December 31, Years Ended December 31, (in thousands, except ratio) 2023 2022 2023 2022 External provider costs $ 165,522 $ 104,078 $ 572,329 $ 424,182 Medicare and Medicaid risk-based revenue 134,913 149,661 625,727 583,252 Medical Expense Ratio 122.7 % 69.5 % 91.5 % 72.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240318654271/en/
Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com Media Conchita Topinka Conchita@thinkbsg.com