CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the second quarter ended June 30, 2023.
“We continued to deliver on our growth strategy, ending the quarter with 102,500 Medicare Advantage members, up 177% year-over-year, and have confidence in achieving both our near and long-term membership targets that we announced at our investor day in March. Our second quarter performance was strong, excluding the impact of an unfavorable $7 million prior year development related to a Medicaid contract from 2022. Looking ahead, we are encouraged by the underlying performance of our business in the first half of the year and are raising our full year 2023 revenue guidance while reaffirming our adjusted EBITDA guidance range,” said Carlos de Solo, Chief Executive Officer.
Mr. de Solo continues, “At CareMax, our mission is to provide better care to seniors across the country. We believe our fully-integrated care model, powered by our proprietary built technology platform and highly scalable operating model, positions us well to achieve the long term goals we announced in March. We are excited for the next few years as we expect to continue to accelerate our growth and expand access to high-quality care for seniors nationwide.”
Second Quarter 2023 Results
- Total membership of 272,500, up 210% year-over-year.
- Medicare Advantage Membership of 102,500, up 177% year-over-year.
- Total revenue was $224.4 million, up 30% year-over-year.
- Net loss was $32.4 million, compared to net loss of $9.4 million for the second quarter of 2022.
- Adjusted EBITDA was $7.0 million, compared to $7.2 million for the second quarter of 2022.1
- Platform Contribution was $28.6 million, compared to $21.6 million for the second quarter of 2022.1
- Medical Expense Ratio was 84.6%, compared to 73.6% for the second quarter of 2022.
- De novo pre-opening costs and post-opening losses for the second quarter of 2023 were $5.8 million.2
Financial Outlook for Full Year 2023
CareMax is raising the following full year 2023 financial guidance:
- Total revenue of $750 to $800 million, up 19% to 27% year-over-year, from prior guidance of $700 million to $750 million.
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.
- Adjusted EBITDA of $25 million to $35 million, up 31% to 83% year-over-year, compared to $19.1 million for the year-ended December 31, 2022.1
- De novo pre-opening costs and post-opening losses are anticipated to be approximately $25 million in 2023.
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 second quarter of 2022 included an addback of $0.7 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.
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) | ||||||||
June 30,
| December 31,
| |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 54,605 | $ | 41,626 | ||||
Accounts receivable, net | 159,812 | 151,036 | ||||||
Risk settlement assets | 717 | 707 | ||||||
Other current assets | 3,516 | 3,968 | ||||||
Total Current Assets | 218,650 | 197,336 | ||||||
Property and equipment, net | 24,628 | 21,006 | ||||||
Operating lease right-of-use assets | 131,207 | 108,937 | ||||||
Goodwill, net | 602,643 | 700,643 | ||||||
Intangible assets, net | 112,537 | 123,585 | ||||||
Deferred debt issuance costs | 1,052 | 1,685 | ||||||
Other assets | 60,249 | 17,550 | ||||||
Total Assets | $ | 1,150,965 | $ | 1,170,743 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 8,677 | $ | 7,687 | ||||
Accrued expenses | 12,634 | 16,854 | ||||||
Risk settlement liabilities | 15,656 | 14,171 | ||||||
Related party liabilities | 13,410 | 1,777 | ||||||
Related party debt, net | 32,997 | 30,277 | ||||||
Current portion of third-party debt, net | 276 | 253 | ||||||
Current portion of operating lease liabilities | 7,116 | 5,512 | ||||||
Other current liabilities | 7,303 | 790 | ||||||
Total Current Liabilities | 98,069 | 77,322 | ||||||
Derivative warrant liabilities | 2,434 | 3,974 | ||||||
Long-term debt, net | 298,481 | 230,725 | ||||||
Long-term operating lease liabilities | 116,187 | 96,539 | ||||||
Contingent earnout liability | - | 134,561 | ||||||
Other liabilities | 11,297 | 8,075 | ||||||
Total Liabilities | 526,469 | 551,196 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of June 30, 2023 and December 31, 2022) | - | - | ||||||
Class A common stock ($0.0001 par value; 250,000,000 shares authorized; 112,072,237 and 111,332,584 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively) | 11 | 11 | ||||||
Additional paid-in-capital | 776,533 | 657,126 | ||||||
Accumulated deficit | (152,048 | ) | (37,590 | ) | ||||
Total Stockholders' Equity | 624,496 | 619,547 | ||||||
Total Liabilities and Stockholders' Equity | $ | 1,150,965 | $ | 1,170,743 | ||||
CAREMAX, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | |||||||||||||||
Medicare risk-based revenue | $ | 155,486 | $ | 143,664 | $ | 277,079 | $ | 251,410 | |||||||
Medicaid risk-based revenue | 30,054 | 19,896 | 55,680 | 40,062 | |||||||||||
Government value-based care revenue | 22,206 | - | 32,216 | - | |||||||||||
Other revenue | 16,694 | 8,719 | 32,449 | 17,727 | |||||||||||
Total revenue | 224,440 | 172,279 | 397,424 | 309,199 | |||||||||||
Operating expenses | |||||||||||||||
External provider costs | 156,995 | 120,348 | 267,668 | 213,204 | |||||||||||
Cost of care | 40,192 | 30,364 | 78,819 | 57,712 | |||||||||||
Sales and marketing | 3,327 | 2,299 | 7,092 | ||||||||||||
