CMAX CareMax Inc

• Third Quarter Medicare Advantage Membership of 107,000, up 171% year-over-year
• Third Quarter Total Revenue of $201.8 million, up 28% year-over-year
• Reaffirming Full Year 2023 Revenue Guidance; Updating Full Year 2023 Medicare Advantage Membership and Adjusted EBITDA 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 third quarter ended September 30, 2023.

“Tomorrow marks one year since the acquisition of our national MSO and nearly two and a half years of rapid growth in our patient and provider base. Over that period, we experienced fluctuations in our revenue and EBITDA as we underwent numerous initiatives to integrate that membership. With significant progress made in many of those initiatives, we have increased confidence in our ability to effectively manage our members on their glidepath to risk and operate toward more consistent financial outcomes. Looking ahead, we feel well positioned to navigate the evolving utilization environment and execute on the embedded value in our platform,” said Carlos de Solo, Chief Executive Officer.

Third Quarter 2023 Results

• Total membership of 273,000, up 194% year-over-year.
• Medicare Advantage membership of 107,000, up 171% year-over-year.
• Total revenue was $201.8 million, up 28% year-over-year.
• Net loss was $103.1 million, including $80.0 million of non-cash goodwill impairment, compared to net loss of $22.1 million for the third quarter of 2022.
• Adjusted EBITDA was $2.1 million, compared to $4.4 million for the third quarter of 2022.1
• Platform Contribution was $21.1 million, compared to $20.6 million for the third quarter of 2022.1
• Medical Expense Ratio was 88.0%, compared to 75.2% for the third quarter of 2022.
• De novo pre-opening costs and post-opening losses for the third quarter of 2023 were $5.8 million.2

Financial Outlook for Full Year 2023

CareMax is reaffirming the following full year 2023 guidance:

• Total revenue of $750 million to $800 million, up 19% to 27% year-over-year.
• De novo pre-opening costs and post-opening losses are anticipated to be approximately $25 million in 2023.

CareMax is updating the following full year 2023 guidance:

• Year-end Medicare Advantage membership of approximately 110,000, up 18% year-over-year.
• Adjusted EBITDA of $15 million to $25 million, compared to $19.1 million for the year-ended December 31, 2022.1

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. Adjusted EBITDA as previously reported for the third quarter of 2022 included an addback of $0.9 million for stay-on bonuses and duplicative salaries. Adjusted EBITDA as previously reported for the year ended December 31, 2022 included an addback of $2.9 million for stay-on bonuses and duplicative salaries.

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, 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.

CAREMAX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,264

 

 

$

41,626

 

Accounts receivable, net

 

 

139,573

 

 

 

151,036

 

Risk settlement receivables

 

 

251

 

 

 

707

 

Related party receivables

 

 

754

 

 

 

—

 

Other current assets

 

 

3,820

 

 

 

3,968

 

Total Current Assets

 

 

176,662

 

 

 

197,336

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

27,837

 

 

 

21,006

 

Operating lease right-of-use assets

 

 

130,826

 

 

 

108,937

 

Goodwill, net

 

 

522,643

 

 

 

700,643

 

Intangible assets, net

 

 

106,889

 

 

 

123,585

 

Deferred debt issuance costs

 

 

896

 

 

 

1,685

 

Other assets

 

 

92,363

 

 

 

17,550

 

Total Assets

 

$

1,058,117

 

 

$

1,170,743

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

9,345

 

 

$

7,687

 

Accrued expenses

 

 

14,999

 

 

 

16,854

 

Risk settlement liabilities

 

 

21,934

 

 

 

14,171

 

Related party liabilities

 

 

47

 

 

 

1,777

 

Related party debt, net

 

 

34,517

 

 

 

30,277

 

Current portion of third-party debt, net

 

 

355

 

 

 

253

 

Current portion of operating lease liabilities

 

 

8,555

 

 

 

5,512

 

Other current liabilities

 

 

8,589

 

 

 

790

 

Total Current Liabilities

 

 

98,341

 

 

 

77,322

 

Derivative warrant liabilities

 

 

983

 

 

 

3,974

 

Long-term debt, net

 

 

302,612

 

 

 

230,725

 

Long-term operating lease liabilities

 

 

117,668

 

 

 

96,539

 

Contingent earnout liability

 

 

—

 

 

 

134,561

 

Other liabilities

 

 

13,897

 

 

 

8,075

 

Total Liabilities

 

 

533,501

 

 

 

551,196

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of September 30, 2023 and December 31, 2022)

 

 

—

 

 

 

—

 

Class A common stock ($0.0001 par value; 250,000,000 shares authorized; 112,096,998 and 111,332,584 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)

 

 

11

 

 

 

11

 

Additional paid-in-capital

 

 

779,776

 

 

 

657,126

 

Accumulated deficit

 

 

(255,171

)

 

 

(37,590

)

Total Stockholders' Equity

 

 

524,616

 

 

 

619,547

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

1,058,117

 

 

$

1,170,743

 

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Medicare risk-based revenue

$

134,105

 

 

$

122,267

 

 

$

411,184

 

 

$

373,677

 

Medicaid risk-based revenue

 

23,950

 

 

 

19,852

 

 

 

79,630

 

 

 

59,914

 

Government value-based care revenue

 

28,067

 

 

 

—

 

 

 

60,284

 

 

 

—

 

Other revenue

 

15,721

 

 

 

15,551

 

 

 

48,169

 

 

 

33,278

 

Total revenue

 

201,843

 

 

 

157,670

 

 

 

599,267

 

 

 

466,869

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

External provider costs

 

139,139

 

 

 

106,900

 

 

 

406,807

 

 

 

320,104

 

Cost of care

 

43,826

 

 

 

30,213

 

 

 

122,645

 

 

 

87,925

 

Sales and marketing

 

3,501

 

 

 

2,355

 

 

 

10,593

 

 

 

7,955

 

Corporate, general and administrative

 

19,282

 

 

 

21,687

 

 

 

64,021

 

 

 

58,728

 

Depreciation and amortization

 

6,833

 

 

 

4,573

 

 

 

20,237

 

 

 

14,538

 

Goodwill impairment

 

80,000

 

 

 

—

 

 

 

178,000

 

 

 

—

 

Acquisition related costs

 

34

 

 

 

494

 

 

 

108

 

 

 

3,549

 

Total operating expenses

 

292,615

 

 

 

166,222

 

 

 

802,412

 

 

 

492,799

 

Operating loss

 

(90,772

)

 

 

(8,552

)

 

 

(203,145

)

 

 

(25,930

)

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(14,000

)

 

 

(6,088

)

 

 

(37,908

)

 

 

(11,712

)

Change in fair value of derivative warrant liabilities

 

1,450

 

 

 

(7,331

)

 

 

2,991

 

 

 

(3,476

)

Gain on remeasurement of contingent earnout liabilities

 

—

 

 

 

—

 

 

 

19,916

 

 

 

—

 

Loss on extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,172

)

Other income (expense), net

 

376

 

 

 

99

 

 

 

1,097

 

 

 

(408

)

 

 

(12,174

)

 

 

(13,320

)

 

 

(13,904

)

 

 

(21,768

)

Loss before income tax

 

(102,946

)

 

 

(21,872

)

 

 

(217,049

)

 

 

(47,698

)

Income tax expense

 

(177

)

 

 

(181

)

 

 

(532

)

 

 

(532

)

Net loss

$

(103,123

)

 

$

(22,053

)

 

$

(217,581

)

 

$

(48,230

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

112,085,154

 

 

 

87,408,605

 

 

 

111,704,585

 

 

 

87,415,801

 

Weighted-average diluted shares outstanding

 

112,085,154

 

 

 

87,408,605

 

 

 

111,704,585

 

 

 

87,415,801

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.92

)

 

$

(0.25

)

 

$

(1.95

)

 

$

(0.55

)

Diluted

$

(0.92

)

 

$

(0.25

)

 

$

(1.95

)

 

$

(0.55

)

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(217,581

)

 

$

(48,230

)

Adjustments to reconcile net loss to cash and cash equivalents:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

20,237

 

 

 

14,538

 

Amortization of debt issuance costs and discounts

 

 

6,422

 

 

 

1,093

 

Stock-based compensation expense

 

 

8,004

 

 

 

7,486

 

Income tax provision

 

 

532

 

 

 

532

 

Change in fair value of derivative warrant liabilities

 

 

(2,991

)

 

 

3,476

 

Gain on remeasurement of contingent earnout liabilities

 

 

(19,916

)

 

 

—

 

Loss on extinguishment of debt

 

 

—

 

 

 

6,172

 

Payment-in-kind interest expense

 

 

8,643

 

 

 

3,038

 

Provision for credit losses

 

 

382

 

 

 

—

 

Goodwill impairment

 

 

178,000

 

 

 

—

 

Amortization of right-of-use assets

 

 

8,872

 

 

 

—

 

Other non-cash, net

 

 

1,140

 

 

 

(774

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

2,121

 

 

 

(43,109

)

Other current assets

 

 

148

 

 

 

(69

)

Risk settlement receivables and liabilities

 

 

11,020

 

 

 

(144

)

Other assets

 

 

(74,024

)

 

 

(1,037

)

Operating lease liabilities

 

 

(4,390

)

 

 

—

 

Accounts payable

 

 

(410

)

 

 

9,291

 

Accrued expenses

 

 

(1,855

)

 

 

6,705

 

Related party receivables and payables

 

 

(1,212

)

 

 

—

 

Other liabilities

 

 

14,414

 

 

 

1,222

 

Net cash used in operating activities

 

 

(62,446

)

 

 

(39,811

)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchase of property and equipment

 

 

(8,007

)

 

 

(4,862

)

Return of cash held in escrow

 

 

—

 

 

 

785

 

Acquisition of businesses, net of cash acquired

 

 

—

 

 

 

(892

)

Net cash used in investing activities

 

 

(8,007

)

 

 

(4,969

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from borrowings

 

 

62,000

 

 

 

184,000

 

Principal payments of debt

 

 

(189

)

 

 

(121,926

)

Payments of debt issuance costs

 

 

(720

)

 

 

(6,456

)

Collateral for letters of credit

 

 

—

 

 

 

(5,439

)

Net cash provided by financing activities

 

 

61,091

 

 

 

50,179

 

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(9,361

)

 

 

5,399

 

Cash and cash equivalents - beginning of period

 

 

41,626

 

 

 

47,917

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

 

$

32,264

 

 

$

53,315

 

Non-GAAP Financial Summary

Three Months Ended

 

(in thousands)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Medicare risk-based revenue

$

76,428

 

$

91,277

 

$

107,747

 

$

143,664

 

$

122,267

 

$

113,041

 

$

121,593

 

$

155,486

 

$

134,105

 

Medicaid risk-based revenue

 

20,884

 

 

20,160

 

 

20,165

 

 

19,896

 

 

19,852

 

 

36,620

 

 

25,626

 

 

30,054

 

 

23,950

 

Government value-based care revenue

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

10,010

 

 

22,206

 

 

28,067

 

Other revenue

 

7,308

 

 

6,869

 

 

9,008

 

 

8,719

 

 

15,551

 

 

14,602

 

 

15,754

 

 

16,694

 

 

15,721

 

Total revenue

 

104,620

 

 

118,306

 

 

136,920

 

 

172,279

 

 

157,670

 

 

164,263

 

 

172,983

 

 

224,440

 

 

201,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External provider costs

 

73,329

 

 

79,724

 

 

92,856

 

 

120,348

 

 

106,900

 

 

104,078

 

 

110,673

 

 

156,995

 

 

139,139

 

Cost of care

 

20,315

 

 

22,606

 

 

26,854

 

 

30,293

 

 

30,150

 

 

34,581

 

 

37,627

 

 

38,865

 

 

41,599

 

Platform contribution

 

10,976

 

 

15,977

 

 

17,210

 

 

21,638

 

 

20,620

 

 

25,604

 

 

24,683

 

 

28,580

 

 

21,106

 

Platform contribution margin (%)

 

10.5

%

 

13.5

%

 

12.6

%

 

12.6

%

 

13.1

%

 

15.6

%

 

14.3

%

 

12.7

%

 

10.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

1,274

 

 

2,615

 

 

3,301

 

 

2,299

 

 

2,355

 

 

3,806

 

 

3,765

 

 

3,381

 

 

3,501

 

Corporate, general and administrative

 

9,715

 

 

11,228

 

 

10,873

 

 

12,165

 

 

13,877

 

 

17,263

 

 

21,329

 

 

18,158

 

 

15,527

 

Adjusted operating expenses

 

10,988

 

 

13,843

 

 

14,174

 

 

14,464

 

 

16,232

 

 

21,069

 

 

25,094

 

 

21,539

 

 

19,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

(13

)

$

2,134

 

$

3,035

 

$

7,175

 

$

4,388

 

$

4,535

 

$

(411

)

$

7,042

 

$

2,077

 

Reconciliation to Adjusted EBITDA

Three Months Ended

 

(in thousands)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Net Income (loss)

$

(14,479

)

$

(3,553

)

$

(16,797

)

$

(9,381

)

$

(22,053

)

$

10,434

 

$

(82,082

)

$

(32,376

)

$

(103,123

)

Interest expense

 

1,291

 

 

1,905

 

 

1,728

 

 

3,896

 

 

6,076

 

 

8,542

 

 

10,711

 

 

13,197

 

 

14,000

 

Depreciation and amortization

 

5,176

 

 

6,089

 

 

5,062

 

 

4,903

 

 

4,573

 

 

7,180

 

 

6,576

 

 

6,828

 

 

6,833

 

Remeasurement of warrant and contingent earnout liabilities

 

1,398

 

 

(8,734

)

 

3,536

 

 

(7,391

)

 

7,331

 

 

(84,171

)

 

(37,242

)

 

15,786

 

 

(1,450

)

Goodwill impairment

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

70,000

 

 

98,000

 

 

—

 

 

80,000

 

Stock-based compensation

 

966

 

 

375

 

 

1,087

 

 

2,788

 

 

3,611

 

 

2,786

 

 

2,298

 

 

2,464

 

 

3,243

 

Loss (gain) on extinguishment of debt, net

 

(279

)

 

7

 

 

—

 

 

6,172

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Business Combination integration costs (1)

 

3,176

 

 

2,277

 

 

4,379

 

 

1,887

 

 

2,586

 

 

163

 

 

716

 

 

686

 

 

483

 

Acquisition and integration related costs (2)

 

1,871

 

 

2,325

 

 

3,429

 

 

4,074

 

 

2,118

 

 

10,632

 

 

622

 

 

815

 

 

652

 

DeSpac costs

 

27

 

 

742

 

 

9

 

 

10

 

 

11

 

 

10

 

 

—

 

 

—

 

 

—

 

Other (3)

 

840

 

 

543

 

 

421

 

 

46

 

 

(46

)

 

(967

)

 

(187

)

 

(535

)

 

1,263

 

Income tax provision (benefit)

 

—

 

 

159

 

 

181

 

 

171

 

 

181

 

 

(20,074

)

 

177

 

 

177

 

 

177

 

Adjusted EBITDA

$

(13

)

$

2,134

 

$

3,035

 

$

7,175

 

$

4,388

 

$

4,535

 

$

(411

)

$

7,042

 

$

2,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

De novo pre-opening costs

$

544

 

$

806

 

$

973

 

$

506

 

$

2,426

 

$

3,205

 

$

1,975

 

$

1,560

 

$

1,880

 

De novo post-opening costs

 

195

 

 

489

 

 

1,119

 

 

993

 

 

1,533

 

 

2,274

 

 

3,885

 

 

4,228

 

 

3,906

 

(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)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Consulting and legal fees (a)

$

2,204

 

$

1,639

 

$

3,190

 

$

887

 

$

725

 

$

257

 

$

282

 

$

237

 

$

69

 

Severance costs

 

—

 

 

949

 

 

25

 

 

252

 

 

1,080

 

 

167

 

 

11

 

 

13

 

 

—

 

Other (b)

 

972

 

 

(311

)

 

1,164

 

 

748

 

 

782

 

 

(261

)

 

423

 

 

436

 

 

414

 

 

$

3,176

 

$

2,277

 

$

4,379

 

$

1,887

 

$

2,586

 

$

163

 

$

716

 

$

686

 

$

483

 

(a) Represents consulting and legal costs directly associated with efforts related to integration of the two privately held companies that were combined in the Business Combination.

(b) Represents primarily vendor expenses identified as temporary or duplicative and/or expenses outside the ordinary course of business and not necessary to run the Company's business.

  (2)

Includes all costs recognized in acquisition related costs in our condensed consolidated statements of operations and incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions. Significant components of acquisition and integration related costs were as follows:

 

Three Months Ended

 

(in thousands)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Advisor and other professional fees (a)

$

1,183

 

$

1,183

 

$

1,622

 

$

2,359

 

$

1,219

 

$

9,877

 

$

(258

)

$

(34

)

$

94

 

Compensation costs (b)

 

688

 

 

1,142

 

 

1,808

 

 

1,715

 

 

899

 

 

755

 

 

880

 

 

849

 

 

558

 

 

$

1,871

 

$

2,325

 

$

3,429

 

$

4,074

 

$

2,118

 

$

10,632

 

$

622

 

$

815

 

$

652

 

(a) Includes payments to our third-party transaction advisory firm associated with transaction contracts, including the Steward transaction that closed in November 2022. Also, costs include legal and accounting fees directly associated with contemplated or closed transactions.

(b) Includes incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions.

  (3)

Components of other were as follows:

 

Three Months Ended

 

(in thousands)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Software sale

$

—

 

$

—

 

$

—

 

$

—

 

$

—

 

$

(1,000

)

$

—

 

$

—

 

$

—

 

Tax-related costs

 

266

 

 

95

 

 

265

 

 

69

 

 

(178

)

 

46

 

 

—

 

 

—

 

 

—

 

Legal settlement

 

75

 

 

229

 

 

—

 

 

(43

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Interest income

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(253

)

 

(602

)

 

(433

)

Severance costs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

1,639

 

Other

 

499

 

 

219

 

 

156

 

 

19

 

 

133

 

 

(13

)

 

66

 

 

67

 

 

58

 

 

$

840

 

$

543

 

$

421

 

$

46

 

$

(46

)

$

(967

)

$

(187

)

$

(535

)

$

1,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Metrics

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Centers

 

40

 

 

45

 

 

48

 

 

48

 

 

51

 

 

62

 

 

62

 

 

62

 

 

62

 

Markets

 

3

 

 

4

 

 

6

 

 

6

 

 

7

 

 

7

 

 

7

 

 

7

 

 

7

 

Patients (MCREM)*

 

40,400

 

 

50,100

 

 

50,600

 

 

54,000

 

 

57,400

 

 

221,500

 

 

225,100

 

 

226,500

 

 

228,700

 

Patients in value-based care arrangements (MCREM)

 

87.2

%

 

79.3

%

 

79.8

%

 

81.0

%

 

78.2

%

 

97.6

%

 

99.0

%

 

99.4

%

 

98.8

%

Platform Contribution ($, millions)

$

11.0

 

$

16.0

 

$

17.2

 

$

21.6

 

$

20.6

 

$

25.6

 

$

24.7

 

$

28.6

 

$

21.1

 

* 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.

 

Reconciliation to Platform Contribution

 

 

 

 

Three Months Ended

 

(in millions)

Sep 30, 2021

 

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Gross profit (a)

$

4.5

 

$

9.6

 

$

11.2

 

$

15.4

 

$

14.8

 

$

17.2

 

$

17.1

 

$

20.4

 

$

12.0

 

Depreciation and amortization

 

5.2

 

 

6.1

 

 

5.1

 

 

4.9

 

 

4.6

 

 

7.2

 

 

6.6

 

 

6.8

 

 

6.8

 

Stock-based compensation

 

—

 

 

0.1

 

 

0.4

 

 

1.3

 

 

1.2

 

 

1.2

 

 

1.0

 

 

1.3

 

 

1.2

 

Other adjustments (b)

 

1.3

 

 

0.2

 

 

0.5

 

 

0.1

 

 

0.1

 

 

—

 

 

—

 

 

—

 

 

1.0

 

Platform Contribution

$

11.0

 

$

16.0

 

$

17.2

 

$

21.6

 

$

20.6

 

$

25.6

 

$

24.7

 

$

28.6

 

$

21.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.1 million during the three months ended December 31, 2021, $0.4 million during the three months ended March 31, 2022, $1.3 million during the three months ended June 30, 2022, $1.2 million during the three months ended September 30, 2022, and $1.2 million during the three months ended December 31, 2022.

 

(b) Other adjustments include incremental costs related to post-Business Combination integration initiatives and other one-time center-level costs. Other adjustments reflected during the three months ended September 30, 2021 include $0.6 million of incremental costs relating to one-time operational projects and $0.3 million of non-cash true-up of deferred rent expense. Other adjustments reflected during the three months ended March 31, 2022 include $0.3 million of costs for a pilot project regarding outsourcing and during the three months ended September 30, 2023 include $1.0 million of severance costs related to center staff.

 

Calculation of the Medical Expense Ratio

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except ratio)

2023

 

2022

 

 

2023

 

2022

 

External provider costs

$

139,139

 

$

106,900

 

 

$

406,807

 

$

320,104

 

Medicare and Medicaid risk-based revenue

 

158,055

 

 

142,119

 

 

 

490,814

 

 

433,591

 

Medical Expense Ratio

 

88.0

%

 

75.2

%

 

 

82.9

%

 

73.8

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231109049422/en/

Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com

Media Conchita Topinka Conchita@thinkbsg.com