TechDogs-"CareMax Reports Third Quarter 2023 Results"

Health Care Technology

CareMax Reports Third Quarter 2023 Results

By Business Wire

Business Wire
Overall Rating
  • 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

MIAMI--(BUSINESS WIRE)--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:


Contacts

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

Media
Conchita Topinka
Conchita@thinkbsg.com


Read full story here

First published on Fri, Nov 10, 2023

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