“I’m pleased to be reporting another strong quarter of performance across all of our key metrics. We continued to focus our efforts on continuous improvement as we strive to deliver the highest quality care by leveraging the power of our AVA technology platform, care model and provider engagement efforts,” said
“During the quarter, we further enhanced our product offerings, reflecting our commitment to putting our seniors first. I’m confident that our differentiated approach and rich product offerings will be key to our ability to execute our focus on growing membership in a reliable, sustainable fashion,” Kao added.
Third Quarter 2021 Financial Highlights
All comparisons, unless otherwise noted, are to the three months ended
- Health plan membership at the end of the quarter was approximately 86,000, up 29% year over year
- Total revenue was
$293.5 million , up 18% year over year - Health plan premium revenue of
$278.8 million represented 24% growth year over year - Adjusted gross profit was
$42.0 million and loss from operations was($41.5) million - Adjusted gross profit excludes depreciation of
$0.05 million and equity-based compensation of$2.4 million recorded within medical expenses - Medical benefits ratio based on adjusted gross profit was 85.7%
- Adjusted gross profit excludes depreciation of
- Adjusted EBITDA was
($5.5) million and net loss was($45.8) million - As of
September 30, 2021 , total cash was$500.5 million and debt was$153.0 million (excluding unamortized debt issuance costs)
Adjusted Gross Profit is reconciled as follows:
Three Months Ended | Nine Months Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Income (loss) from operations | $ | (41,450 | ) | $ | 15,060 | $ | (134,606 | ) | $ | 22,532 | ||||||
Add back: | ||||||||||||||||
Equity-based compensation (medical expenses) | 2,435 | - | 11,458 | - | ||||||||||||
Depreciation (medical expenses) | 53 | 87 | 159 | 280 | ||||||||||||
Depreciation and amortization | 4,080 | 3,933 | 11,725 | 11,024 | ||||||||||||
Selling, general, and administrative expenses | 76,846 | 38,794 | 212,910 | 105,279 | ||||||||||||
Total add back | 83,414 | 42,814 | 236,252 | 116,583 | ||||||||||||
Adjusted gross profit | $ | 41,964 | $ | 57,874 | $ | 101,646 | $ | 139,115 | ||||||||
Adjusted gross profit % | 14.3 | % | 23.3 | % | 11.7 | % | 19.4 | % | ||||||||
Medical benefit ratio | 85.7 | % | 76.7 | % | 88.3 | % | 80.6 | % | ||||||||
Adjusted EBITDA is reconciled as follows:
Three Months Ended | Nine Months Ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
(dollars in thousands) | ||||||||||||||
Net income (loss) | $ | (45,816 | ) | $ | 10,846 | $ | (147,452 | ) | $ | 9,139 | ||||
Add back: | ||||||||||||||
Interest expense | 4,414 | 4,271 | 12,991 | 12,623 | ||||||||||
Depreciation and amortization | 4,133 | 4,020 | 11,884 | 11,304 | ||||||||||
EBITDA | (37,269 | ) | 19,137 | (122,577 | ) | 33,066 | ||||||||
Equity-based compensation(1) | 30,511 | 304 | 93,185 | 980 | ||||||||||
Reorganization and transaction-related expenses(2) | 457 | — | 4,058 | — | ||||||||||
Acquisition expenses(3) | 789 | — | 1,090 | — | ||||||||||
Adjusted EBITDA | $ | (5,512 | ) | $ | 19,441 | $ | (24,244 | ) | $ | 34,046 |
(1) | 2021 represents equity-based compensation related to the timing of the Company’s initial public offering (“IPO”), including the previously issued stock appreciation rights liability awards, modifications related to transaction vesting units, and new grants made in conjunction with the IPO. 2020 represents equity-based compensation related to certain Class B and Class C membership units issued by | |
(2) | Represents legal, professional, accounting and other advisory fees related to the Reorganization and the IPO that are considered non-recurring and non-capitalizable. | |
(3) | Represents acquisition-related fees, such as legal and advisory fees, that are non-recurring and non-capitalizable. | |
Outlook for Fourth Quarter and Fiscal Year 2021
Three Months Ending | Twelve Months Ending | |||
$ Millions | Low | High | Low | High |
Health Plan Membership | 86,100 | 86,300 | 86,100 | 86,300 |
Revenue | ||||
Adjusted Gross Profit1 | ||||
Adjusted EBITDA2 | ( | ( | ( | ( |
_______________________
- Adjusted gross profit is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as revenues less medical expenses before depreciation and amortization and equity-based compensation expense. We cannot reconcile our estimated ranges for adjusted gross profit to income (loss) from operations, the most directly comparable GAAP measure, and cannot provide estimated ranges for income (loss) from operations, without unreasonable efforts because of the uncertainty around certain items that may impact income (loss) from operations, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted.
- Adjusted EBITDA is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as net income (loss) before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses and equity-based compensation expense. We cannot reconcile our estimated ranges for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and cannot provide estimated ranges for net loss, without unreasonable efforts because of the uncertainty around certain items that may impact net loss, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted.
Conference Call Details
The company will host a conference call at
About
Forward Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and 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 and our financial outlook for the fourth quarter ended
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
(Unaudited)
Assets | ||||||||
Current Assets: | ||||||||
Cash | $ | 500,485 | $ | 207,311 | ||||
Accounts receivable (less allowance for credit losses of | 47,671 | 40,140 | ||||||
Prepaid expenses and other current assets | 29,236 | 17,225 | ||||||
Total current assets | 577,392 | 264,676 | ||||||
Property and equipment, net | 31,505 | 27,145 | ||||||
Right of use asset, net | 8,272 | 9,888 | ||||||
35,213 | 34,645 | |||||||
Other assets | 4,545 | 2,148 | ||||||
Total assets | $ | 656,927 | $ | 338,502 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities: | ||||||||
Medical expenses payable | $ | 128,775 | $ | 112,605 | ||||
Accounts payable and accrued expenses | 16,557 | 15,675 | ||||||
Accrued compensation | 29,810 | 25,172 | ||||||
Total current liabilities | 175,142 | 153,452 | ||||||
Long-term debt, net of debt issuance costs | 148,967 | 144,168 | ||||||
Long-term portion of lease liabilities | 7,743 | 10,271 | ||||||
Total liabilities | 331,852 | 307,891 | ||||||
Commitments and Contingencies (Note 12) | ||||||||
Stockholders' Equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 188 | 164 | ||||||
Additional paid-in capital | 851,895 | 410,018 | ||||||
Accumulated deficit | (527,023 | ) | (379,571 | ) | ||||
325,060 | 30,611 | |||||||
Noncontrolling interest | 15 | — | ||||||
Total stockholders' equity | 325,075 | 30,611 | ||||||
Total liabilities and stockholders' equity | $ | 656,927 | $ | 338,502 |
(1) | The condensed consolidated balance sheet as of | |
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues: | |||||||||||||||
Earned premiums | $ | 293,275 | $ | 245,491 | $ | 869,014 | $ | 713,713 | |||||||
Other | 191 | 2,376 | 485 | 3,100 | |||||||||||
Total revenues | 293,466 | 247,867 | 869,499 | 716,813 | |||||||||||
Expenses: | |||||||||||||||
Medical expenses | 253,990 | 190,080 | 779,470 | 577,978 | |||||||||||
Selling, general, and administrative expenses | 76,846 | 38,794 | 212,910 | 105,279 | |||||||||||
Depreciation and amortization | 4,080 | 3,933 | 11,725 | 11,024 | |||||||||||
Total expenses | 334,916 | 232,807 | 1,004,105 | 694,281 | |||||||||||
Income (loss) from operations | (41,450 | ) | 15,060 | (134,606 | ) | 22,532 | |||||||||
Other expenses: | |||||||||||||||
Interest expense | 4,414 | 4,271 | 12,991 | 12,623 | |||||||||||
Other (income) expenses | (48 | ) | (57 | ) | (145 | ) | 770 | ||||||||
Total other expenses | 4,366 | 4,214 | 12,846 | 13,393 | |||||||||||
Income (loss) before income taxes | (45,816 | ) | 10,846 | (147,452 | ) | 9,139 | |||||||||
Provision for income taxes | — | — | — | — | |||||||||||
Net income (loss) attributable to | $ | (45,816 | ) | $ | 10,846 | $ | (147,452 | ) | $ | 9,139 | |||||
Total weighted-average common shares outstanding - basic and diluted(1) | 177,828,872 | 152,255,955 | 169,786,542 | 148,747,914 | |||||||||||
Net income (loss) per share - basic and diluted | $ | (0.26 | ) | $ | 0.07 | $ | (0.87 | ) | $ | 0.06 |
(1) | The weighted-average shares used in computing net loss per share, basic and diluted were retroactively adjusted as a result of the Reorganization. See Form 10-Q for additional details. | |
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended | ||||||||
2021 | 2020 | |||||||
Operating Activities: | ||||||||
Net income (loss) | $ | (147,452 | ) | $ | 9,139 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Provision for credit loss | 74 | 54 | ||||||
Depreciation and amortization | 11,884 | 11,304 | ||||||
Amortization-debt issuance costs and investment discount | 1,681 | 1,634 | ||||||
Payment-in-kind interest | 3,118 | 2,989 | ||||||
Loss on disposal of property and equipment | — | 990 | ||||||
Equity-based compensation and common stock payments | 81,786 | 980 | ||||||
Non-cash lease expense | 2,001 | 1,756 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (6,731 | ) | (972 | ) | ||||
Prepaid expenses and other current assets | (11,829 | ) | (10,249 | ) | ||||
Other assets | 8 | 35 | ||||||
Medical expenses payable | 15,402 | (2,115 | ) | |||||
Accounts payable and accrued expenses | (443 | ) | (3,495 | ) | ||||
Accrued compensation | 4,638 | 7,236 | ||||||
Lease liabilities | (2,779 | ) | 2,362 | |||||
Noncurrent liabilities | — | (3,941 | ) | |||||
Net cash provided by (used in) operating activities | (48,642 | ) | 17,707 | |||||
Investing Activities: | ||||||||
Asset acquisition, net of cash received | (1,405 | ) | — | |||||
Purchase of investments | (2,475 | ) | (1,325 | ) | ||||
Sale of investments | 1,425 | 575 | ||||||
Acquisition of property and equipment | (15,409 | ) | (10,983 | ) | ||||
Proceeds from the sale of property and equipment | — | 100 | ||||||
Net cash used in investing activities | (17,864 | ) | (11,633 | ) | ||||
Financing Activities: | ||||||||
Purchase of noncontrolling interest | 15 | — | ||||||
Equity repurchase | (1,474 | ) | (1,361 | ) | ||||
Issuance of common stock | 390,600 | 135,000 | ||||||
Common stock issuance costs | (29,011 | ) | (3,371 | ) | ||||
Net cash provided by financing activities | 360,130 | 130,268 | ||||||
Net increase in cash | 293,624 | 136,342 | ||||||
Cash and restricted cash at beginning of period | 207,811 | 86,484 | ||||||
Cash and restricted cash at end of period | $ | 501,435 | $ | 222,826 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 8,193 | $ | 7,997 | ||||
Supplemental non-cash investing and financing activities: | ||||||||
Acquisition of property in accounts payable | $ | 438 | $ | 43 | ||||
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets to the total above: | ||||||
Cash | $ | 500,485 | $ | 222,326 | ||
Restricted cash in other assets | 950 | 500 | ||||
Total | $ | 501,435 | $ | 222,826 | ||
Non-GAAP Financial Measures
Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses and equity-based compensation expense.
Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA in lieu of net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP.
Our use of the term Adjusted EBITDA may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies.
Medical Benefits Ratio (MBR)
We calculate our MBR by dividing total medical expenses excluding depreciation and equity-based compensation by total revenues in a given period.
Adjusted Gross Profit
Adjusted Gross Profit is a non-GAAP financial measure that we define as revenues less medical expenses before depreciation and amortization and equity-based compensation expense.
Adjusted Gross Profit should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Gross Profit in lieu of income (loss) from operations, which is the most directly comparable financial measure calculated in accordance with GAAP.
Our use of the term Adjusted Gross Profit may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies.
Investor Contact
ICR Westwicke for
AlignmentIR@westwicke.com
Media Contact
mPR, Inc. for
alignment@mpublicrelations.com
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