CMAX CareMax Inc

• Met 2023 Guidance for Medicare Advantage Membership and Total Revenue
• Year-end 2023 Medicare Advantage Membership of 111,500, up 19% year-over-year
• Full Year 2023 Total Revenue of $751.1 million, up 19% year-over-year
• Exploring Strategic Options to Maximize Value of Certain Assets and Generate Further Liquidity

CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the fourth quarter and full year ended December 31, 2023.

“In the fourth quarter, we began taking major steps with the goal of solidifying the long-term viability of our business,” said Carlos de Solo, Chief Executive Officer. “We have made difficult but necessary decisions to de-emphasize certain longer duration investments, such as de novo centers, and to refocus efforts on driving medical margin within our core centers and management services organization while implementing cost saving initiatives across the organization. Our lenders have also granted us limited waivers of certain financial covenants in our credit facility in the short term to help provide us with flexibility as we explore strategic options across our lines of business to maximize the value of certain assets. In short, we are taking the actions we believe are necessary to reposition CareMax for future success.”

Mr. de Solo continued, “What has not changed is our commitment to clinical excellence. Having achieved a 5-Star quality rating across our centers for the third consecutive year, CareMax remains at the forefront of enabling physicians to succeed under value-based care. We thank our team members for their dedication to our mission and for upholding the high standards of care our organization was founded upon.”

Fourth Quarter 2023 Results

• Total membership of 270,000, up 4% year-over-year.
• Medicare Advantage membership of 111,500, up 19% year-over-year.
• Total revenue was $151.8 million, down 8% year-over-year.
• Net loss was $465.8 million, including $369.2 million of non-cash goodwill impairment, compared to net income of $10.4 million for the fourth quarter of 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $20.1 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment.
• Adjusted EBITDA was ($71.8) million, compared to $4.5 million for the fourth quarter of 2022.1
• Platform Contribution was ($55.6) million, compared to $25.6 million for the fourth quarter of 2022.1
• Medical Expense Ratio was 122.7%, compared to 69.5% for the fourth quarter of 2022, primarily due to the impacts of prior period developments and a provision for adverse deviation.
• De novo pre-opening costs and post-opening losses for the fourth quarter of 2023 were $5.9 million.2

Full Year 2023 Results

• Total revenue was $751.1 million, up 19% year-over-year.
• Medical Expense Ratio was 91.5%, compared to 72.7% for the year ended December 31, 2022.
• Net loss was $683.3 million, including $547.2 million of non-cash goodwill impairment, compared to net loss of $37.8 million for the year ended December 31, 2022, which included a $76.3 million non-cash gain on remeasurement of contingent earnout liabilities and a $19.5 million non-cash income tax benefit, partially offset by a $70.0 million non-cash goodwill impairment.
• Adjusted EBITDA was ($63.1) million for the year ended December 31, 2023 and $19.1 million for the year ended December 31, 2022.1
• Platform Contribution was $18.8 million, compared to $85.1 for the year ended December 31, 2022.1

Forward-Looking Commentary for Full Year 2024

CareMax is in the process of exploring strategic options across its business to maximize the value of certain of its assets and help generate further liquidity. While management believes that these efforts will result in financial benefits to the Company, the exact impacts of the outcomes of these processes on the Company’s financial performance are uncertain. Accordingly, the Company is not providing a 2024 financial outlook at this time.

1 Adjusted EBITDA and Platform Contribution are non-GAAP financial metrics. A reconciliation of non-GAAP metrics to the most directly comparable GAAP financial measures is included in the appendix to this earnings release. Beginning with the three months ended June 30, 2023, the Company has updated its calculation of Adjusted EBITDA on a retrospective basis to no longer add back certain compensation costs for stay-on bonuses and duplicative salaries previously included within the Business Combination integration costs adjustment.

2 De novo pre-opening costs represent (1) incremental payroll costs from employees specifically associated with the operational, contractual, physical, or regulatory infrastructure for de novo centers, prior to their opening; (2) legal costs directly associated with the de novo centers, incurred prior to their opening, which includes services such as execution of leases, health plan contracts and other agreements; (3) other expenses related to diligence, design, permitting, and other “soft costs” at new sites; and (4) rent and facility expenses prior to center opening. De novo post-opening losses include center-level operating losses recognized at a de novo center until the center breaks even, which consist of revenue, external provider costs and cost of care allocated to the de novo center.

Conference Call Details

Management will host a conference call at 8:30 AM ET today to discuss the results. The conference call can be accessed by dialing (888) 330-2508 for U.S. participants, or (240) 789-2735 for international participants, and referencing conference ID 7874605. A live audio webcast will also be available on the “Events & Presentations” section of CareMax’s investor relations website at ir.caremax.com. Following the live call, a replay will be available on the Company's website.

About CareMax

Founded in 2011, CareMax is a value-based care delivery system that utilizes a proprietary technology-enabled platform and multi-specialty, whole person health model to deliver comprehensive, preventative and coordinated care for its members. With over 200,000 Medicare Value-Based Care Members across 10 states, and fully integrated, Five-Star Quality rated health and wellness centers, CareMax is redefining healthcare across the country by reducing costs, improving overall outcomes and promoting health equity for seniors. Learn more at www.caremax.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth, strategy and financial performance. Words such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro forma," "project," "seek," "should," "target," or "will," or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important risks and uncertainties that could cause the Company's actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the Company’s net losses, level of indebtedness and significant cash used in operating activities have raised substantial doubt regarding its ability to continue as a going concern; the Company's future capital requirements and sources and uses of cash, including funds to satisfy its liquidity needs and the Company’s ability to comply with the covenants under the agreements governing its indebtedness; the Company’s ability to successfully execute its strategy, which may include divesting certain assets or businesses; the Company’s ability to successfully implement cost-saving measures or achieve expected benefits under its plans to optimize performance of the MSO network and its centers; the impact of restrictions on the Company’s current and future operations contained in certain of its agreements; risks relating to lease termination, lease expense escalators, lease extensions, special charges and the Company’s inability to comply with provisions of its lease agreements; the Company’s ability to integrate acquired businesses and realize expected benefits of any such transactions; the Company’s ability to attract new patients; changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to the Company's services; changes in laws and regulations applicable to the Company's business, in particular with respect to Medicare Advantage and Medicaid; the Company's ability to maintain its relationships with health plans and other key payers; any delay, modification or cancellation of government contracts; the impact of COVID-19 or any variant thereof or any other pandemic or epidemic on the Company's business and results of operation; insolvency, credit problems or other financial difficulties that could confront the Company’s counterparties in strategic acquisitions, investments and other collaborations could expose the Company to significant financial risk and significantly impact the Company’s ability to expand its overall profitability; the Company’s ability to address the material weakness in its internal control over financial reporting; the Company's ability to recruit and retain qualified team members and independent physicians; risks related to future acquisitions; the Company’s ability to develop and maintain proper and effective internal control over financial reporting and the impact of any prior period developments. For a detailed discussion of the risk factors that could affect the Company's actual results, please refer to the risk factors identified in the Company's reports filed with the SEC. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update or revise this information unless required by law, and forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release.

Use of Non-GAAP Financial Information

Certain financial information and data contained in this press release is unaudited and does not conform to Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in, or may be presented differently in, any periodic filing, information or proxy statement, or prospectus or registration statement to be filed by the Company with the SEC. Some of the financial information and data contained in this press release, such as Adjusted EBITDA and Platform Contribution and margin thereof have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). These non-GAAP measures of financial results are not GAAP measures of our financial results or liquidity and should not be considered as an alternative to net income (loss) as a measure of financial results, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company’s management uses these non-GAAP measures for trend analyses and for budgeting and planning purposes.

The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing the Company’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. For this reason, these non-GAAP measures may not be comparable to other companies’ similarly labeled non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results.

A reconciliation for Adjusted EBITDA and Platform Contribution to the most directly comparable GAAP financial measures is included below.

CAREMAX, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

 

 

 

December 31, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

65,528

 

 

$

41,626

 

Accounts receivable, net

 

 

114,754

 

 

 

151,743

 

Other current assets

 

 

3,066

 

 

 

3,968

 

Total Current Assets

 

 

183,348

 

 

 

197,336

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

47,918

 

 

 

21,006

 

Operating lease right-of-use assets

 

 

109,215

 

 

 

108,937

 

Goodwill, net

 

 

156,841

 

 

 

700,643

 

Intangible assets, net

 

 

101,243

 

 

 

123,585

 

Deferred debt issuance costs

 

 

—

 

 

 

1,685

 

Other assets

 

 

24,737

 

 

 

17,550

 

Total Assets

 

$

623,301

 

 

$

1,170,743

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

6,275

 

 

$

7,687

 

Accrued expenses

 

 

16,224

 

 

 

16,854

 

Risk settlement liabilities

 

 

42,602

 

 

 

14,171

 

Related party liabilities

 

 

190

 

 

 

1,777

 

Related party debt, net

 

 

—

 

 

 

30,277

 

Current portion of third-party debt, net

 

 

364,380

 

 

 

253

 

Current portion of operating lease liabilities

 

 

8,975

 

 

 

5,512

 

Other current liabilities

 

 

165

 

 

 

790

 

Total Current Liabilities

 

 

438,812

 

 

 

77,322

 

Derivative warrant liabilities

 

 

22

 

 

 

3,974

 

Long-term debt, net

 

 

21,443

 

 

 

230,725

 

Long-term operating lease liabilities

 

 

97,136

 

 

 

96,539

 

Contingent earnout liability

 

 

—

 

 

 

134,561

 

Other liabilities

 

 

4,443

 

 

 

8,075

 

Total Liabilities

 

 

561,856

 

 

 

551,196

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

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

 

 

—

 

 

 

—

 

Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,744,732 and 3,711,086 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 1

 

 

11

 

 

 

11

 

Additional paid-in-capital

 

 

782,371

 

 

 

657,126

 

Accumulated deficit

 

 

(720,938

)

 

 

(37,590

)

Total Stockholders' Equity

 

 

61,444

 

 

 

619,547

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

623,301

 

 

$

1,170,743

 

 

 

 

 

 

 

 

1 Share amounts have been restated to reflect the 1-for-30 reverse stock split that the Company completed on January 31, 2024.

 

CAREMAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

 

Years Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

Medicare risk-based revenue

$

108,650

 

 

$

113,041

 

 

$

519,834

 

 

$

486,718

 

Medicaid risk-based revenue

 

26,263

 

 

 

36,620

 

 

 

105,893

 

 

 

96,534

 

Government value-based care revenue

 

7,425

 

 

 

6,389

 

 

 

67,708

 

 

 

6,389

 

Other revenue

 

9,497

 

 

 

8,213

 

 

 

57,667

 

 

 

41,492

 

Total revenue

 

151,835

 

 

 

164,263

 

 

 

751,102

 

 

 

631,132

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

External provider costs

 

165,522

 

 

 

104,078

 

 

 

572,329

 

 

 

424,182

 

Cost of care

 

42,226

 

 

 

38,723

 

 

 

164,872

 

 

 

126,648

 

Sales and marketing

 

3,681

 

 

 

3,806

 

 

 

14,274

 

 

 

11,761

 

Corporate, general and administrative

 

16,662

 

 

 

17,096

 

 

 

80,684

 

 

 

75,824

 

Depreciation and amortization

 

7,550

 

 

 

7,180

 

 

 

27,787

 

 

 

21,719

 

Goodwill impairment

 

369,200

 

 

 

70,000

 

 

 

547,200

 

 

 

70,000

 

Acquisition related costs

 

—

 

 

 

9,616

 

 

 

108

 

 

 

13,165

 

Total operating expenses

 

604,841

 

 

 

250,498

 

 

 

1,407,254

 

 

 

743,297

 

Operating loss

 

(453,006

)

 

 

(86,235

)

 

 

(656,152

)

 

 

(112,165

)

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(16,526

)

 

 

(8,743

)

 

 

(54,434

)

 

 

(20,455

)

Change in fair value of derivative warrant liabilities

 

961

 

 

 

7,877

 

 

 

3,952

 

 

 

4,401

 

Gain on remeasurement of contingent earnout liabilities

 

—

 

 

 

76,295

 

 

 

19,916

 

 

 

76,295

 

Loss on extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,172

)

Other income, net

 

1,410

 

 

 

1,168

 

 

 

2,507

 

 

 

759

 

 

 

(14,155

)

 

 

76,597

 

 

 

(28,059

)

 

 

54,828

 

Loss before income tax

 

(467,162

)

 

 

(9,640

)

 

 

(684,211

)

 

 

(57,337

)

Income tax benefit

 

(1,395

)

 

 

(20,074

)

 

 

(863

)

 

 

(19,542

)

Net (loss) income

$

(465,766

)

 

$

10,434

 

 

$

(683,348

)

 

$

(37,796

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding 1

 

3,740,304

 

 

 

3,362,890

 

 

 

3,727,725

 

 

 

3,026,644

 

Net (loss) income per share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(124.53

)

 

$

3.10

 

 

$

(183.31

)

 

$

(12.49

)

 

1 Share amounts have been restated to reflect the 1-for-30 reverse stock split that the Company completed on January 31, 2024.

CAREMAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(683,348

)

 

$

(37,796

)

Adjustments to reconcile net loss to cash and cash equivalents:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

27,787

 

 

 

21,719

 

Amortization of debt issuance costs and discounts

 

 

8,314

 

 

 

2,382

 

Stock-based compensation expense

 

 

10,599

 

 

 

10,271

 

Income tax benefit

 

 

(863

)

 

 

(19,542

)

Change in fair value of derivative warrant liabilities

 

 

(3,952

)

 

 

(4,401

)

Gain on remeasurement of contingent earnout liabilities

 

 

(19,916

)

 

 

(76,295

)

Loss on extinguishment of debt

 

 

—

 

 

 

6,172

 

Payment-in-kind interest expense

 

 

12,064

 

 

 

5,277

 

Non-cash finance lease expense

 

 

419

 

 

 

—

 

Provision for credit losses

 

 

(1,588

)

 

 

1,243

 

Goodwill impairment

 

 

547,200

 

 

 

70,000

 

Amortization of right-of-use assets

 

 

11,527

 

 

 

—

 

Other non-cash, net

 

 

1,488

 

 

 

853

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

25,941

 

 

 

(66,561

)

Other current assets

 

 

902

 

 

 

2,505

 

Risk settlement liabilities

 

 

32,560

 

 

 

6,775

 

Other assets

 

 

(6,501

)

 

 

(3,127

)

Operating lease liabilities

 

 

(5,897

)

 

 

4,386

 

Accounts payable

 

 

413

 

 

 

1,730

 

Accrued expenses

 

 

(2,601

)

 

 

4,722

 

Related party liabilities

 

 

(1,069

)

 

 

—

 

Other liabilities

 

 

(393

)

 

 

1,470

 

Net cash used in operating activities

 

 

(46,913

)

 

 

(68,216

)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchase of property and equipment

 

 

(14,611

)

 

 

(7,450

)

Return of cash held in escrow

 

 

—

 

 

 

785

 

Acquisition of businesses, net of cash acquired

 

 

—

 

 

 

(55,837

)

Net cash used in investing activities

 

 

(14,611

)

 

 

(62,502

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from borrowings

 

 

122,000

 

 

 

229,241

 

Proceeds from related party borrowings

 

 

—

 

 

 

29,876

 

Principal payments of related party debt

 

 

(35,510

)

 

 

(121,977

)

Principal payments of third-party debt

 

 

(253

)

 

 

—

 

Payments of debt issuance costs

 

 

(810

)

 

 

(7,272

)

Collateral for letters of credit

 

 

—

 

 

 

(5,439

)

Net cash provided by financing activities

 

 

85,427

 

 

 

124,428

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

23,903

 

 

 

(6,290

)

Cash and cash equivalents - beginning of period

 

 

41,626

 

 

 

47,917

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

 

$

65,528

 

 

$

41,626

 

Non-GAAP Financial Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

Three Months Ended 

(in thousands)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

Medicare risk-based revenue

$

91,277

 

$

107,747

 

$

143,664

 

$

122,267

 

$

113,041

 

$

121,593

 

$

155,486

 

$

134,105

 

$

108,650

Medicaid risk-based revenue

 

20,160

 

 

20,165

 

 

19,896

 

 

19,852

 

 

36,620

 

 

25,626

 

 

30,054

 

 

23,950

 

 

26,263

 

Government value-based care revenue

 

—

 

 

—

 

 

—

 

 

—

 

 

6,389

 

 

10,010

 

 

22,206

 

 

28,067

 

 

7,425

 

Other revenue

 

6,869

 

 

9,008

 

 

8,719

 

 

15,551

 

 

8,213

 

 

15,754

 

 

16,694

 

 

15,721

 

 

9,497

 

Total revenue

 

118,306

 

 

136,920

 

 

172,279

 

 

157,670

 

 

164,263

 

 

172,983

 

 

224,440

 

 

201,843

 

 

151,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External provider costs

 

79,724

 

 

92,856

 

 

120,348

 

 

106,900

 

 

104,078

 

 

110,673

 

 

156,995

 

 

139,139

 

 

165,522

Cost of care

 

22,606

 

 

26,854

 

 

30,293

 

 

30,150

 

 

34,581

 

 

37,627

 

 

38,865

 

 

41,599

 

 

41,915

 

Platform contribution

 

15,977

 

 

17,210

 

 

21,638

 

 

20,620

 

 

25,604

 

 

24,683

 

 

28,580

 

 

21,106

 

 

(55,602

)

Platform contribution margin (%)

 

13.5

%

 

12.6

%

 

12.6

%

 

13.1

%

 

15.6

%

 

14.3

%

 

12.7

%

 

10.5

%

 

(36.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

2,615

 

3,301

 

 

2,299

 

 

2,355

 

 

3,806

 

 

3,765

 

 

3,381

 

 

3,501

 

 

3,627

Corporate, general and administrative

 

11,228

 

 

10,873

 

 

12,165

 

 

13,877

 

 

17,263

 

 

21,329

 

 

18,158

 

 

15,527

 

 

12,531

 

Adjusted operating expenses

 

13,843

 

 

14,174

 

 

14,464

 

 

16,232

 

 

21,069

 

 

25,094

 

 

21,539

 

 

19,028

 

 

16,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

2,134

$

3,035

 

$

7,175

 

$

4,388

 

$

4,535

 

$

(411

)

$

7,042

 

$

2,077

 

$

(71,759

)

Reconciliation to Adjusted EBITDA

Three Months Ended 

 

(in thousands)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Net loss

$

(3,553

)

$

(16,797

)

$

(9,381

)

$

(22,053

)

$

10,434

 

$

(82,082

)

$

(32,376

)

$

(103,123

)

$

(465,766

)

Interest expense

 

1,905

 

 

1,728

 

 

3,896

 

 

6,088

 

 

8,743

 

 

10,711

 

 

13,197

 

 

14,000

 

 

16,526

 

Depreciation and amortization

 

6,089

 

 

5,062

 

 

4,903

 

 

4,573

 

 

7,180

 

 

6,576

 

 

6,828

 

 

6,833

 

 

7,550

 

Remeasurement of warrant and contingent earnout liabilities

 

(8,734

)

 

3,536

 

 

(7,391

)

 

7,331

 

 

(84,171

)

 

(37,242

)

 

15,786

 

 

(1,450

)

 

(961

)

Goodwill impairment

 

—

 

 

—

 

 

—

 

 

—

 

 

70,000

 

 

98,000

 

 

—

 

 

80,000

 

 

369,200

 

Stock-based compensation

 

375

 

 

1,087

 

 

2,788

 

 

3,611

 

 

2,786

 

 

2,298

 

 

2,464

 

 

3,243

 

 

2,595

 

Loss on extinguishment of debt

 

7

 

 

—

 

 

6,172

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Business Combination integration costs (1)

 

2,277

 

 

4,379

 

 

1,887

 

 

2,586

 

 

163

 

 

716

 

 

686

 

 

483

 

 

833

 

Acquisition and integration related costs (2)

 

2,325

 

 

3,429

 

 

4,074

 

 

2,118

 

 

10,632

 

 

622

 

 

815

 

 

652

 

 

1,069

 

DeSpac costs

 

742

 

 

9

 

 

10

 

 

11

 

 

10

 

 

—

 

 

—

 

 

—

 

 

—

 

Other (3)

 

543

 

 

421

 

 

46

 

 

(58

)

 

(1,168

)

 

(187

)

 

(535

)

 

1,263

 

 

(1,409

)

Income tax provision (benefit)

 

159

 

 

181

 

 

171

 

 

181

 

 

(20,074

)

 

177

 

 

177

 

 

177

 

 

(1,395

)

Adjusted EBITDA

$

2,134

 

$

3,035

 

$

7,175

 

$

4,388

 

$

4,535

 

$

(411

)

$

7,042

 

$

2,077

 

$

(71,759

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

De novo pre-opening costs

$

806

 

$

973

 

$

506

 

$

2,426

 

$

3,205

 

$

1,975

 

$

1,560

 

$

1,880

 

$

1,323

 

De novo post-opening losses

 

489

 

 

1,119

 

 

993

 

 

1,533

 

 

2,274

 

 

3,885

 

 

4,228

 

 

3,906

 

 

4,558

 

(1)

 

Represents initial costs to set up public company processes, incremental vendor expenses identified as temporary or duplicative and expected to be rationalized in the short term, and legal and professional expenses outside of the ordinary course of business, which are being incurred as part of the Company’s efforts as it integrates the two privately held companies that were combined in the Business Combination. Significant components of Business Combination integration costs were as follows:

 

Three Months Ended

 

(in thousands)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Consulting and legal fees (a)

$

1,639

 

$

3,190

 

$

887

 

$

725

 

$

257

 

$

282

 

$

237

 

$

69

 

$

451

 

Severance costs

 

949

 

 

25

 

 

252

 

 

1,080

 

 

167

 

 

11

 

 

13

 

 

—

 

 

—

 

Other (b)

 

(311

)

 

1,164

 

 

748

 

 

782

 

 

(261

)

 

423

 

 

436

 

 

414

 

 

382

 

 

$

2,277

 

$

4,379

 

$

1,887

 

$

2,586

 

$

163

 

$

716

 

$

686

 

$

483

 

$

833

 

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

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

(2)

 

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

Three Months Ended

 

(in thousands)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Advisor and other professional fees (a)

$

1,183

 

$

1,622

 

$

2,359

 

$

1,219

 

$

9,877

 

$

(258

)

$

(34

)

$

94

 

$

352

 

Compensation costs (b)

 

1,142

 

 

1,808

 

 

1,715

 

 

899

 

 

755

 

 

880

 

 

849

 

 

558

 

 

717

 

 

$

2,325

 

$

3,429

 

$

4,074

 

$

2,118

 

$

10,632

 

$

622

 

$

815

 

$

652

 

$

1,069

 

(a) Includes payments to our third-party transaction advisory firm associated with transaction contracts, including the Steward transaction that closed in November 2022. Also, costs include legal and accounting fees directly associated with contemplated or closed transactions. (b) Includes incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions.

(3)

 

Components of other were as follows:

 

Three Months Ended

 

(in thousands)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Other income

$

—

 

$

—

 

$

—

 

$

—

 

$

(1,000

)

$

—

 

$

—

 

$

—

 

$

(874

)

Tax-related costs

 

95

 

 

265

 

 

69

 

 

(178

)

 

46

 

 

—

 

 

—

 

 

—

 

 

—

 

Legal settlement

 

229

 

 

—

 

 

(43

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Interest income

 

—

 

 

—

 

 

—

 

 

(12

)

 

(201

)

 

(253

)

 

(602

)

 

(433

)

 

(560

)

Severance costs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

1,639

 

 

—

 

Other

 

219

 

 

156

 

 

19

 

 

133

 

 

(13

)

 

66

 

 

67

 

 

58

 

 

25

 

 

$

543

 

$

421

 

$

46

 

$

(58

)

$

(1,168

)

$

(187

)

$

(535

)

$

1,263

 

$

(1,409

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Metrics

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Centers

 

45

 

 

48

 

 

48

 

 

51

 

 

62

 

 

62

 

 

62

 

 

62

 

 

56

 

Markets

 

4

 

 

6

 

 

6

 

 

7

 

 

7

 

 

7

 

 

7

 

 

7

 

 

7

 

Patients (MCREM)*

 

50,100

 

 

50,600

 

 

54,000

 

 

57,400

 

 

221,500

 

 

225,100

 

 

226,500

 

 

228,700

 

 

229,300

 

Patients in value-based care arrangements (MCREM)

 

79.3

%

 

79.8

%

 

81.0

%

 

78.2

%

 

97.6

%

 

99.0

%

 

99.4

%

 

98.8

%

 

98.8

%

Platform Contribution ($, millions)

$

16.0

 

$

17.2

 

$

21.6

 

$

20.6

 

$

25.6

 

$

24.7

 

$

28.6

 

$

21.1

 

$

(55.6

)

* MCREM defined as Medicare Equivalent Members, which assumes the level of support received by a Medicare patient is equivalent to that received by three Medicaid or Commercial patients.

 

 

Reconciliation to Platform Contribution

(in millions)

Dec 31, 2021

 

Mar 31, 2022

 

Jun 30, 2022

 

Sep 30, 2022

 

Dec 31, 2022

 

Mar 31, 2023

 

Jun 30, 2023

 

Sep 30, 2023

 

Dec 31, 2023

 

Gross profit (a)

$

9.6

 

$

11.2

 

$

15.4

 

$

14.8

 

$

17.2

 

$

17.1

 

$

20.4

 

$

12.0

 

$

(63.5

)

Depreciation and amortization

 

6.1

 

 

5.1

 

 

4.9

 

 

4.6

 

 

7.2

 

 

6.6

 

 

6.8

 

 

6.8

 

 

7.6

 

Stock-based compensation

 

0.1

 

 

0.4

 

 

1.3

 

 

1.2

 

 

1.2

 

 

1.0

 

 

1.3

 

 

1.2

 

 

0.1

 

Other adjustments (b)

 

0.2

 

 

0.5

 

 

0.1

 

 

0.1

 

 

—

 

 

—

 

 

—

 

 

1.0

 

 

0.2

 

Platform Contribution

$

16.0

 

$

17.2

 

$

21.6

 

$

20.6

 

$

25.6

 

$

24.7

 

$

28.6

 

$

21.1

 

$

(55.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(b) Other adjustments include incremental costs related to post-Business Combination integration initiatives and other one-time center-level costs. Other adjustments reflected during the three months ended March 31, 2022, include $0.3 million of costs for a pilot project regarding outsourcing. During the three months ended September 30, 2023 and December 31, 2023, other adjustments include $1.0 million and $0.2 million, respectively, of severance costs related to center staff.

 

Calculation of the Medical Expense Ratio

 

Three Months Ended December 31,

 

Years Ended December 31,

 

(in thousands, except ratio)

2023

 

 

2022

 

2023

 

 

2022

External provider costs

$

165,522

 

 

$

104,078

 

$

572,329

 

 

$

424,182

Medicare and Medicaid risk-based revenue

 

134,913

 

 

 

149,661

 

 

625,727

 

 

583,252

 

Medical Expense Ratio

 

122.7

%

 

 

69.5

%

 

91.5

%

 

 

72.7

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318654271/en/

Investor Relations Roger Ou SVP of Finance and Investor Relations CareMaxInvestorRelations@caremax.com Media Conchita Topinka Conchita@thinkbsg.com