CareMax Reports First Quarter 2024 Results

CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology-enabled value-based care delivery system, today announced financial results for the first quarter ended March 31, 2024.

“During the first quarter of 2024, we believe we began to see benefits from our fourth quarter clinical efforts which became fully implemented toward the end of last year,” said Carlos de Solo, Chief Executive Officer. “While absolute levels of utilization remained elevated, Medicare risk medical expense ratio in the first quarter of 2024 was favorable to our internal projections and improved compared to the prior two quarters, offset by acuity shifts in our Medicaid risk membership. We remain optimistic that these initiatives have the potential to improve our margins over time.”

Mr. de Solo continued, “In addition, we continue to take steps described last quarter to maximize the value of certain assets and right-size the capital structure of our organization. As of the end of the first quarter, we had cash and equivalents of approximately $41 million and remain covered under the limited waiver of certain financial covenants in our credit facility. We have since taken further actions to preserve near-term liquidity and remain engaged with our lenders and financial advisors to evaluate strategic options for the company.”

First Quarter 2024 Results

• Total membership of 250,000, down 8% year-over-year.
• Medicare Advantage membership of 107,000, up 12% year-over-year.
• Total revenue was $232.2 million, up 34% year-over-year.
• Net loss was $43.4 million, which included a $2.4 million non-cash loss on remeasurement of derivative liabilities, compared to net loss of $82.1 million for the first quarter of 2023.
• Adjusted EBITDA was ($10.5) million, compared to ($0.4) million for the first quarter of 2023.¹
• Platform Contribution was $9.1 million, compared to $24.7 million for the first quarter of 2023.¹
• Medical Expense Ratio was 87.8%, compared to 75.2% for the first quarter of 2023.
• De novo pre-opening costs and post-opening losses for the first quarter of 2024 were $4.8 million.²

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.

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. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited)
		March 31, 2024				December 31, 2023
ASSETS
Current Assets
Cash and cash equivalents		$	41,479			$	65,528
Accounts receivable, net			107,985				114,754
Other current assets			6,650				3,066
Total Current Assets			156,113				183,348
Property and equipment, net			47,243				47,918
Operating lease right-of-use assets			109,947				109,215
Goodwill, net			156,841				156,841
Intangible assets, net			96,092				101,243
Other assets			47,965				24,737
Total Assets		$	614,202			$	623,301
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		$	6,704			$	6,275
Accrued expenses			20,172				16,224
Risk settlement liabilities			53,599				42,602
Related party liabilities			1,229				190
Current portion of third-party debt, net			390,995				364,380
Current portion of operating lease liabilities			32,062				8,975
Other current liabilities			2,354				165
Total Current Liabilities			507,114				438,812
Derivative liabilities			49				22
Long-term debt, net			1,879				21,443
Long-term operating lease liabilities			78,417				97,136
Other liabilities			6,340				4,443
Total Liabilities			593,800				561,856
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of March 31, 2024 and December 31, 2023)			—				—
Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,802,883 and 3,744,732 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)			11				11
Additional paid-in-capital			784,736				782,371
Accumulated deficit			(764,345	)			(720,938	)
Total Stockholders' Equity			20,403				61,444
Total Liabilities and Stockholders' Equity		$	614,202			$	623,301

CAREMAX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited)
	Three Months Ended March 31,
	2024				2023
Revenue
Medicare risk-based revenue	$	168,502			$	121,593
Medicaid risk-based revenue		37,653				25,626
Government value-based care revenue		18,815				10,010
Other revenue		7,276				15,754
Total revenue		232,246				172,983
Operating expenses
External provider costs		180,941				110,673
Cost of care		43,133				38,627
Sales and marketing		3,064				3,765
Corporate, general and administrative		20,108				23,965
Depreciation and amortization		6,705				6,576
Goodwill impairment		—				98,000
Total operating expenses		253,951				281,606
Operating loss		(21,705	)			(108,623	)
Nonoperating (expenses) income
Interest expense		(19,756	)			(10,711	)
Change in fair value of derivative liabilities		(2,381	)			1,107
Gain on remeasurement of contingent earnout liabilities		—				36,136
Other income, net		610				187
Total nonoperating (expenses) income		(21,526	)			26,718
Loss before income tax		(43,231	)			(81,904	)
Income tax expense		(177	)			(177	)
Net loss	$	(43,408	)		$	(82,082	)
Weighted-average basic shares outstanding 1		3,778,600				3,712,027
Weighted-average diluted shares outstanding 1		3,778,600				3,712,027
Net loss per share
Basic	$	(11.49	)		$	(22.11	)
Diluted	$	(11.49	)		$	(22.11	)
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. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
		Three Months Ended March 31,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(43,408	)		$	(82,082	)
Adjustments to reconcile net loss to cash and cash equivalents:
Depreciation and amortization expense			6,705				6,576
Amortization of debt issuance costs and discounts			931				1,839
Stock-based compensation expense			2,365				2,298
Income tax expense			177				177
Change in fair value of derivative liabilities			2,381				(1,107	)
Gain on remeasurement of contingent earnout liabilities			—				(36,136	)
Payment-in-kind interest expense			5,915				2,453
Non-cash finance lease expense			156				—
Provision for credit losses			(302	)			(104	)
Goodwill impairment			—				98,000
Amortization of right-of-use assets			2,675				2,725
Other non-cash, net			134				1,080
Changes in operating assets and liabilities:
Accounts receivable			7,072				(7,850	)
Other current assets			(3,583	)			(1,961	)
Risk settlement liabilities			10,997				(454	)
Other assets			(23,332	)			(9,735	)
Operating lease liabilities			962				(1,280	)
Accounts payable			(188	)			(500	)
Accrued expenses			3,948				(29	)
Related party liabilities			1,039				—
Other liabilities			1,555				4,343
Net cash used in operating activities			(23,802	)			(21,746	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(126	)			(2,286	)
Net cash used in investing activities			(126	)			(2,286	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings, net			—				27,000
Principal payments of debt			(119	)			(25	)
Payments of debt issuance costs			—				(348	)
Net cash (used in) provided by financing activities			(119	)			26,627
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(24,047	)			2,596
Cash and cash equivalents - beginning of period			65,528				41,626
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	41,479			$	44,222

The following table represents Non-GAAP Financial Summary:
Non-GAAP Financial Summary
(Unaudited)		Three Months Ended
(in thousands)		Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Medicare risk-based revenue		$	107,747			$	143,664			$	122,267			$	113,041			$	121,593			$	155,486			$	134,105			$	108,650			$	168,502
Medicaid risk-based revenue			20,165				19,896				19,852				36,620				25,626				30,054				23,950				26,263				37,653
Government value-based care revenue			—				—				—				6,389				10,010				22,206				28,067				7,425				18,815
Other revenue			9,008				8,719				15,551				8,213				15,754				16,694				15,721				9,497				7,276
Total revenue			136,920				172,279				157,670				164,263				172,983				224,440				201,843				151,835				232,246
External provider costs			92,856				120,348				106,900				104,078				110,673				156,995				139,139				165,522				180,941
Cost of care			26,854				30,293				30,150				34,581				37,627				38,865				41,599				41,915				42,229
Platform contribution			17,210				21,638				20,620				25,604				24,683				28,580				21,106				(55,602	)			9,075
Platform contribution margin (%)			12.6	%			12.6	%			13.1	%			15.6	%			14.3	%			12.7	%			10.5	%			(36.6	%)			3.9	%
Sales and marketing			3,301				2,299				2,355				3,806				3,765				3,381				3,501				3,627				3,064
Corporate, general and administrative			10,873				12,165				13,877				17,263				21,329				18,158				15,527				12,531				16,495
Adjusted operating expenses			14,174				14,464				16,232				21,069				25,094				21,539				19,028				16,158				19,559
Adjusted EBITDA		$	3,035			$	7,175			$	4,388			$	4,535			$	(411	)		$	7,042			$	2,077			$	(71,759	)		$	(10,482	)

The following table provides a reconciliation of GAAP net loss to Adjusted EBITDA:
Reconciliation to Adjusted EBITDA		Three Months Ended
(in thousands)		Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Net loss		$	(16,797	)		$	(9,381	)		$	(22,053	)		$	10,434			$	(82,082	)		$	(32,376	)		$	(103,123	)		$	(465,766	)		$	(43,408	)
Interest expense			1,728				3,896				6,088				8,743				10,711				13,197				14,000				16,526				19,756
Depreciation and amortization			5,062				4,903				4,573				7,180				6,576				6,828				6,833				7,550				6,705
Remeasurement of derivative and contingent earnout liabilities			3,536				(7,391	)			7,331				(84,171	)			(37,242	)			15,786				(1,450	)			(961	)			2,381
Goodwill impairment			—				—				—				70,000				98,000				—				80,000				369,200				—
Stock-based compensation			1,087				2,788				3,611				2,786				2,298				2,464				3,243				2,595				2,365
Loss on extinguishment of debt			—				6,172				—				—				—				—				—				—				—
Business Combination integration costs (1)			4,379				1,887				2,586				163				716				686				483				833				381
Acquisition and disposition related costs (2)			3,429				4,074				2,118				10,632				622				815				652				1,069				1,052
Other (3)			430				56				(47	)			(1,158	)			(187	)			(535	)			1,263				(1,409	)			109
Income tax expense (benefit)			181				171				181				(20,074	)			177				177				177				(1,395	)			177
Adjusted EBITDA		$	3,035			$	7,175			$	4,388			$	4,535			$	(411	)		$	7,042			$	2,077			$	(71,759	)		$	(10,482	)
Memo:
De novo pre-opening costs		$	973			$	506			$	2,426			$	3,205			$	1,975			$	1,560			$	1,880			$	1,323			$	1,366
De novo post-opening losses			1,119				993				1,533				2,274				3,885				4,228				3,906				4,558				3,451

(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)	Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Consulting and legal fees (a)	$	3,190			$	887			$	725			$	257			$	282			$	237			$	69			$	451			$	371
Severance costs		25				252				1,080				167				11				13				—				—				—
Other (b)		1,164				748				782				(261	)			423				436				414				382				10
	$	4,379			$	1,887			$	2,586			$	163			$	716			$	686			$	483			$	833			$	381

		(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)		Represents legal and incremental compensation payroll costs directly associated with efforts to achieve synergies related to closed transactions and legal and advisory costs related to exploration of potential dispositions. Significant components of the acquisition and disposition related costs were as follows:

		Three Months Ended
(in thousands)		Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Advisor and other professional fees (a)		$	1,622			$	2,359			$	1,219			$	9,877			$	(258	)		$	(34	)		$	94			$	352			$	524
Compensation costs (b)			1,808				1,715				899				755				880				849				558				717				528
		$	3,429			$	4,074			$	2,118			$	10,632			$	622			$	815			$	652			$	1,069			$	1,052

		(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 or potential dispositions.
		(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)		Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Other income		$	—			$	—			$	—			$	(1,000	)		$	—			$	—			$	—			$	(874	)		$	—
Tax-related costs			265				69				(178	)			46				—				—				—				—				—
Legal settlement			—				(43	)			—				—				—				—				—				—				—
Interest income			—				—				(12	)			(201	)			(253	)			(602	)			(433	)			(560	)			(668	)
Severance costs			—				—				—				—				—				—				1,639				—				694
Other			165				29				144				(3	)			66				67				58				25				83
		$	430			$	56			$	(47	)		$	(1,158	)		$	(187	)		$	(535	)		$	1,263			$	(1,409	)		$	109

The following metrics are as of the end of the indicated date, except for Platform Contribution, which is for the three month period ended as of the indicated date:

		Three Months Ended
Non-GAAP Operating Metrics		Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Centers			48				48				51				62				62				62				62				56				55
Markets			6				6				7				7				7				7				7				7				6
Patients (MCREM)*			50,600				54,000				57,400				221,500				225,100				226,500				228,700				229,300				218,000
Patients in value-based care arrangements (MCREM)			79.8	%			81.0	%			78.2	%			97.6	%			99.0	%			99.4	%			98.8	%			98.8	%			99.1	%
Platform Contribution ($, millions)		$	17.2			$	21.6			$	20.6			$	25.6			$	24.7			$	28.6			$	21.1			$	(55.6	)		$	9.1
* 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.

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to Platform Contribution:

Reconciliation to Platform Contribution	Three Months Ended
(in millions)	Mar 31, 2022				Jun 30, 2022				Sep 30, 2022				Dec 31, 2022				Mar 31, 2023				Jun 30, 2023				Sep 30, 2023				Dec 31, 2023				Mar 31, 2024
Gross profit (a)	$	11.2			$	15.4			$	14.8			$	17.2			$	17.1			$	20.4			$	12.0			$	(63.5	)		$	1.5
Depreciation and amortization		5.1				4.9				4.6				7.2				6.6				6.8				6.8				7.6				6.7
Stock-based compensation		0.4				1.3				1.2				1.2				1.0				1.3				1.2				0.1				0.7
Other adjustments (b)		0.5				0.1				0.1				—				—				—				1.0				0.2				0.2
Platform Contribution	$	17.2			$	21.6			$	20.6			$	25.6			$	24.7			$	28.6			$	21.1			$	(55.6	)		$	9.1
(a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.4 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, December 31, 2023, and March 31, 2024, other adjustments include $1.0 million, $0.2 million and $0.2 million, respectively, of severance costs related to center staff.

The following table calculates the medical expense ratio:

	Three Months Ended March 31,
(in thousands, except ratio)	2024				2023
External provider costs	$	180,941			$	110,673
Medicare and Medicaid risk-based revenue		206,155				147,219
Medical Expense Ratio		87.8	%			75.2	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240509152415/en/

The CareMax Stock at the time of publication of the news with a fall of -9,34 % to 3,01USD on Nasdaq stock exchange (09. Mai 2024, 22:30 Uhr).