- First Quarter Medicare Advantage Membership of 95,500, up 181%
year-over-year
- First Quarter Total Revenue of $173.0 million, up 26%
year-over-year
- Reaffirming Full Year 2023 Guidance
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, 2023.
“We continued to execute on our national expansion strategy and
delivered strong operational performance during the quarter.
However, we had two prior period developments that had an
unfavorable financial impact on our first quarter results. Looking
ahead, we’re encouraged by our run-rates for revenue and adjusted
EBITDA exiting the quarter, and are reaffirming our full year 2023
guidance,” said Carlos de Solo, Chief Executive Officer.
First Quarter 2023 Results
- Total Value-Based Care membership of 268,000, up 274%
year-over-year.
- Medicare Advantage Membership of 95,500, up 181%
year-over-year.
- Total revenue was $173.0 million, up 26% year-over-year.
- Net loss was $82.1 million, compared to net loss of $16.8
million for the first quarter of 2022.1
- Adjusted EBITDA was negative $0.1 million, compared to $3.8
million for the first quarter of 2022.2
- Platform Contribution was $24.7 million, compared to $17.2
million for the first quarter of 2022.2
- Medical Expense Ratio was 75.2%, compared to 72.6% for the
first quarter of 2022.
- De novo pre-opening costs and post-opening losses for the first
quarter of 2023 were $5.9 million.3
Financial Outlook for Full Year 2023
CareMax is reaffirming the following full year 2023 financial
guidance:
- Year-end Medicare Advantage membership of 110,000 to 120,000,
up 18% to 28% year-over-year.
- Total revenue of $700 million to $750 million, up 11% to 19%
year-over-year.
- Adjusted EBITDA of $25 million to $35 million, up 13% to 59%
year-over-year, compared to $22 million for the year-ended December
31, 2022. De novo pre-opening costs and post-opening losses are no
longer added back to the Company’s calculation of Adjusted EBITDA,
and are anticipated to be approximately $25 million in 2023.
1 Net loss in the first quarter of 2023
includes a $98.0 million non-cash goodwill impairment, partially
offset by a $36.1 million non-cash gain on remeasurement of
contingent earnout liabilities.
2 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.
3 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 incurred directly associated with the de novo centers,
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, up to 18 months after opening, which consist of
revenue, external provider costs and cost of care allocated for 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 as well as related presentation materials 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 ability to integrate acquired businesses,
including the ability to implement business plans, forecasts, and
other expectations after the completion of the Steward transaction;
the failure to realize anticipated benefits of the Steward
transaction or to realize estimated pro forma results and
underlying assumptions; the impact of COVID-19 or any variant
thereof or any other pandemic or epidemic on the Company's business
and results of operation; the Company’s ability to attract new
patients; the availability of sites for de novo centers and the
costs of opening such de novo centers; changes in market or
industry conditions, regulatory environment, competitive
conditions, and receptivity to the Company's services; the
Company's ability to continue its growth, including in new markets;
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 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 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. A reconciliation of projected 2023 Adjusted EBITDA to the
most directly comparable GAAP financial measure is not included in
this press release because, without unreasonable efforts, the
Company is unable to predict with reasonable certainty the amount
or timing of non-GAAP adjustments that are used to calculate this.
In addition, the Company believes such a reconciliation would imply
a degree of precision and certainty that could be confusing to
investors. The variability of the specified items may have a
significant and unpredictable impact on the Company’s future GAAP
results.
Use of Pro Forma Financial Information and Pro Forma Non-GAAP
Financial Information
Certain of the information presented in the Non-GAAP Financial
Summary and in the reconciliations to non-GAAP financial measures
includes pro forma information derived from the unaudited pro forma
statements of operations which are provided for informational
purposes only and are not necessarily indicative of the operating
results or financial position that would have occurred if the
acquisitions of IMC and Care Holdings had occurred in the stated
historical periods, nor are they indicative of the future results
or financial position of the combined company. The unaudited pro
forma statements of operations do not give effect to the potential
impact of any anticipated synergies, operating efficiencies or cost
savings that may result from the acquisitions of IMC and Care
Holdings, any integration costs or tax deductibility of transaction
costs.
Additionally, Adjusted EBITDA presented on a pro forma basis
gives effect to the acquisitions of IMC and Care Holdings as if
they had occurred in historical periods. Such non-GAAP financial
measures do not necessarily reflect what the Company’s Adjusted
EBITDA would have been had the acquisitions occurred on the dates
indicated.
CAREMAX, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
(Unaudited)
March 31, 2023
December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents
$
44,222
$
41,626
Accounts receivable, net
158,989
151,036
Risk settlement assets
858
707
Other current assets
5,928
3,968
Total Current Assets
209,998
197,336
Property and equipment, net
22,726
21,006
Operating lease right-of-use assets
115,018
108,937
Goodwill, net
602,643
700,643
Intangible assets, net
118,189
123,585
Deferred debt issuance costs
1,842
1,685
Other assets
27,286
17,550
Total Assets
$
1,097,701
$
1,170,743
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Accounts payable
$
8,134
$
7,687
Accrued expenses
18,602
18,631
Risk settlement liabilities
13,868
14,171
Related party debt, net
31,548
30,277
Current portion of third-party debt,
net
274
253
Current portion of operating lease
liabilities
3,898
5,512
Other current liabilities
4,103
790
Total Current Liabilities
80,428
77,322
Derivative warrant liabilities
2,868
3,974
Long-term debt, net
260,642
230,725
Long-term operating lease liabilities
106,291
96,539
Contingent earnout liability
98,425
134,561
Other liabilities
9,283
8,075
Total Liabilities
557,938
551,196
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock (1,000,000 shares
authorized; one share issued and outstanding as of March 31, 2023
and December 31, 2022)
-
-
Class A common stock ($0.0001 par value;
250,000,000 shares authorized; 111,360,802 and 111,332,584 shares
issued and outstanding as of March 31, 2023 and December 31, 2022,
respectively)
11
11
Additional paid-in-capital
659,424
657,126
Accumulated deficit
(119,672
)
(37,590
)
Total Stockholders' Equity
539,763
619,547
Total Liabilities and Stockholders'
Equity
$
1,097,701
$
1,170,743
CAREMAX, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except share
and per share data)
(Unaudited)
Three Months Ended March
31,
2023
2022
Revenue
Medicare risk-based revenue
$
121,593
$
107,747
Medicaid risk-based revenue
25,626
20,165
Government value-based care revenue
10,010
-
Other revenue
15,754
9,008
Total revenue
172,983
136,920
Operating expenses
External provider costs
110,673
92,856
Cost of care
38,627
27,349
Sales and marketing
3,765
3,301
Corporate, general and administrative
23,945
18,978
Depreciation and amortization
6,576
5,062
Goodwill impairment
98,000
-
Acquisition related costs
20
266
Total operating expenses
281,606
147,811
Operating loss
(108,623
)
(10,890
)
Nonoperating income (expense)
Interest expense, net
(10,458
)
(1,728
)
Change in fair value of derivative warrant
liabilities
1,107
(3,536
)
Gain (loss) on remeasurement of contingent
earnout liabilities
36,136
-
Other income (expense), net
(66
)
(462
)
26,718
(5,726
)
Loss before income tax
(81,904
)
(16,616
)
Income tax expense
(177
)
(181
)
Net loss
$
(82,082
)
$
(16,797
)
Weighted-average basic shares
outstanding
111,360,802
87,367,972
Weighted-average diluted shares
outstanding
111,360,802
87,367,972
Net loss per share
Basic
$
(0.74
)
$
(0.19
)
Diluted
$
(0.74
)
$
(0.19
)
CAREMAX, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended March
31,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(82,082
)
$
(16,797
)
Adjustments to reconcile net loss to net
cash and cash equivalents
Depreciation and amortization expense
6,576
5,062
Amortization of debt issuance costs and
discounts
1,839
378
Stock-based compensation expense
2,298
1,087
Income tax provision
177
181
Change in fair value of derivative warrant
liabilities
(1,107
)
3,536
Loss (gain) on remeasurement of contingent
earnout liabilities
(36,136
)
-
Payment-in-kind interest expense
2,453
-
Provision for credit losses
(104
)
-
Goodwill impairment
98,000
-
Other non-cash, net
1,080
21
Changes in operating assets and
liabilities:
Accounts receivable
(7,850
)
(10,992
)
Other current assets
(1,961
)
(627
)
Risk settlement assets and liabilities
(454
)
(84
)
Other assets
(9,735
)
(52
)
Operating lease assets and liabilities
1,445
-
Accounts payable
(500
)
1,470
Accrued expenses
(29
)
3,675
Other liabilities
4,343
1,002
Net cash used in operating activities
(21,746
)
(12,139
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment
(2,286
)
(1,467
)
Net cash used in investing activities
(2,286
)
(1,467
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from borrowings on long-term
debt, net
27,000
-
Principal payments of debt
(25
)
(1,570
)
Payments of debt issuance costs
(348
)
-
Net cash provided by (used in) financing
activities
26,627
(1,570
)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
2,596
(15,176
)
Cash and cash equivalents - beginning of
period
41,626
47,917
CASH AND CASH EQUIVALENTS - END OF
PERIOD
$
44,222
$
32,740
Non-GAAP Financial Summary
Three Months Ended March
31,
$ in thousands
2023
2022
Medicare risk-based revenue
$
121,593
$
107,747
Medicaid risk-based revenue
25,626
20,165
Government value-based care revenue
10,010
-
Other revenue
15,754
9,008
Total revenue
172,983
136,920
External provider costs
110,673
92,856
Cost of care
37,627
26,854
Platform contribution
24,683
17,210
Platform contribution margin (%)
14.3
%
12.6
%
Sales and marketing
$
3,765
$
3,301
Corporate, general and administrative
20,979
10,139
Adjusted operating expenses
24,744
13,440
Adjusted EBITDA
$
(61
)
$
3,769
Reconciliation to Adjusted
EBITDA
Three Months Ended March
31,
(in thousands)
2023
2022
Net Loss
$
(82,082
)
$
(16,797
)
Interest expense, net
10,458
1,728
Depreciation and amortization
6,576
5,062
Remeasurement of warrant and contingent
earnout liabilities
(37,242
)
3,536
Goodwill impairment
98,000
-
Stock-based compensation
2,298
1,087
Business Combination integration costs
(1)
1,066
5,114
Acquisition and integration related costs
(2)
622
3,429
Other (3)
66
430
Income tax provision (benefit)
177
181
Adjusted EBITDA
$
(61
)
$
3,769
Memo:
De Novo Pre-Opening Costs
$
1,975
$
973
De Novo Post-Opening Costs
3,885
1,119
(1)
Represents initial costs to set up public
company processes, incremental compensation and 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 March
31,
2023
2022
Consulting and legal fees (a)
$
282
$
3,190
Compensation costs (b)
351
760
Other (c)
433
1,164
$
1,066
$
5,114
(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 incremental compensation
expense directly associated with efforts related to integration of
the two privately held companies that were combined in the Business
Combination.
(c) 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 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 March
31,
2023
2022
Advisor and other professional fees
(a)
$
42
$
1,622
Compensation costs (b)
580
1,808
$
622
$
3,429
(a) Includes payments to our third-party
transaction advisory firm associated with transaction contracts,
including the Steward transaction that was 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 March
31,
(in thousands)
2023
2022
Tax-related costs
$
-
$
265
Other
66
165
$
66
$
430
Non-GAAP Operating Metrics
Mar 31, 2023
Mar 31, 2022
Centers
62
48
Markets
7
6
Patients (MCREM)*
225,100
50,600
Patients in value-based care arrangements
(MCREM)
99.0
%
79.8
%
Platform Contribution ($, millions)
$
24.7
$
17.2
* 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
Three Months Ended March
31,
(in millions)
2023
2022
Gross profit (a)
$
17.1
$
11.2
Depreciation and amortization
6.6
5.1
Stock-based compensation
1.0
0.4
Other adjustments (b)
-
0.5
Platform Contribution
$
24.7
$
17.2
(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 for the three months ended
March 31, 2022.
(b) Represents incremental costs relating
to one-time operational projects.
Calculation of the Medical Expense
Ratio
Three Months Ended March
31,
2023
2022
External provider costs
$
110,673
$
92,856
Medicare and Medicaid risk-based
revenue
147,219
127,912
Medical Expense Ratio
75.2
%
72.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005445/en/
Investor Relations Samantha Swerdlin (847) 924-8980
samantha.swerdlin@caremax.com
Media Christine Bucan (305) 542-8855
Christine@thinkbsg.com
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