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 First Quarter 2024 Results By: CareMax, Inc. via Business Wire May 09, 2024 at 17:09 PM EDT First Quarter Medicare Advantage Membership of 107,000, up 12% year-over-year First Quarter Total Revenue of $232.2 million, up 34% year-over-year Continuing to Explore 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 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, 2024 December 31, 2023 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, 2023 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 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240509152415/en/Contacts Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.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 First Quarter 2024 Results By: CareMax, Inc. via Business Wire May 09, 2024 at 17:09 PM EDT First Quarter Medicare Advantage Membership of 107,000, up 12% year-over-year First Quarter Total Revenue of $232.2 million, up 34% year-over-year Continuing to Explore 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 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, 2024 December 31, 2023 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, 2023 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 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240509152415/en/Contacts Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com
First Quarter Medicare Advantage Membership of 107,000, up 12% year-over-year First Quarter Total Revenue of $232.2 million, up 34% year-over-year Continuing to Explore 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 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, 2024 December 31, 2023 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, 2023 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 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240509152415/en/
Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com