- Drove solid Q2 ‘24 results with continued focus on advancing
value-driven model and delivering high-quality, consumer-centric
care to all populations across the ACA Marketplace, Medicare, and
Medicaid
- Delivered positive Adjusted EBITDA for the second
consecutive quarter in 2024; reaffirming Adjusted EBITDA guidance
for the full year
- Positioned for continued strong performance this year and
beyond, expecting to reach high end of guidance range for consumers
served by year-end
NeueHealth, Inc. (“NeueHealth” or the “Company”) (NYSE: NEUE),
the value-driven healthcare company, today reported financial
results for its second quarter ended June 30, 2024.
“We continued to build momentum in the second quarter, driving
solid results in both our NeueCare and NeueSolutions segments as we
deliver a seamless, more coordinated care experience to all
populations,” said Mike Mikan, President and CEO of NeueHealth. “We
have built strong, ongoing relationships with consumers, providers,
and payors across the healthcare industry, and this is a testament
to our ability to align interests and create a better care
experience for all. We believe we are well-positioned for the
future with a strong pipeline in place to drive capital-efficient,
sustainable growth in 2024 and beyond.”
Key Metrics
As of June 30,
2024
2023
Consumer and Patient Metrics
Value-Based Consumers served
364,000
373,000
Enablement Services Lives
113,000
31,000
($ in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Financial Metrics
Revenue
$
225,991
$
297,982
$
471,086
$
598,532
Net Income (Loss)
$
(57,698
)
$
(88,627
)
$
(61,875
)
$
(258,088
)
Net Income (Loss) from Continuing
Operations
$
(39,259
)
$
(31,692
)
$
(33,571
)
$
(85,610
)
Adjusted EBITDA (non-GAAP)
$
3,962
$
7,797
$
7,618
$
2,480
See the table at the end of this release for additional
information and a reconciliation of the non-GAAP measures used in
the table above.
Financial Outlook
For 2024, we are providing the following guidance, which has
been updated slightly to reflect revised Revenue forecasts:
- NeueHealth’s Revenue is expected to be approximately $950
million
- On a segment basis, NeueCare Revenue is expected to be
approximately $320 million, while NeueSolutions Revenue is expected
to be approximately $640 million
- Adjusted Operating Cost Ratio is expected to be between 15% and
16%, excluding corporate costs. Including corporate costs, this is
expected to be between 19% and 20%†
- Adjusted EBITDA is expected to be between $15 million and $25
million in 2024†
† Reconciliations of projected Adjusted EBITDA and projected
Adjusted Operating Cost Ratio to the most directly comparable GAAP
financial measures are not provided because the Company is unable
to provide such reconciliations without unreasonable effort. The
inability to provide a reconciliation is due to the uncertainty and
inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be
recognized. With respect to Adjusted EBITDA, these GAAP measures
may include the impact of such items as loss from discontinued
operations, interest expense, income tax expense, depreciation and
amortization, transaction costs, share-based and other long-term
incentive compensation expense, gain on troubled debt
restructuring, changes in the fair value of equity securities and
other derivatives, restructuring and contract termination costs,
held-for-sale operations, financial solvency of contractual
counterparties, and impairment of goodwill or long-lived assets,
and the tax effect of all such items. Historically, the Company has
often excluded these items from non-GAAP financial measures. With
respect to Adjusted Operating Cost Ratio, these GAAP measures may
include the impact of such items as share-based compensation and
held-for-sale operations. The Company currently expects to continue
to exclude these items in future disclosures of non-GAAP financial
measures and may also exclude other items that may arise
(collectively, “non-GAAP adjustments”). The decisions and events
that typically lead to the recognition of non-GAAP adjustments,
such as a decision to exit part of the business, are inherently
unpredictable as to if or when they may occur. For the same
reasons, the Company is unable to address the probable significance
of the unavailable information, which could be material to future
results.
Earnings Conference Call
As previously announced, NeueHealth will discuss the Company’s
results, strategy, and outlook on a conference call with investors
at 8:00 a.m. Eastern Time today. NeueHealth will host a live
webcast of this conference call which can be accessed from the
Investor Relations page of the company’s website
(investors.neuehealth.com). Following the call, a webcast replay
will be available on the same site. This earnings release and the
Form 8-K filed August 7, 2024 can be accessed on the Investor
Relations page of the Company’s website. We routinely post
important information on our website, including corporate and
investor presentations and financial information. We intend to use
our website as a means of disclosing material, non-public
information and for complying with our disclosure obligations under
Regulation FD. Such disclosures will be included in the Investor
Relations section of our website. Accordingly, investors should
monitor this portion of our website, in addition to following our
press releases, U.S. Securities and Exchange Commission (“SEC”)
filings and public conference calls and webcasts.
About NeueHealth
NeueHealth is a value-driven healthcare company grounded in the
belief that all health consumers are entitled to high-quality,
coordinated care. By uniquely aligning the interests of health
consumers, providers, and payors, NeueHealth helps to make
healthcare accessible and affordable to all populations across the
ACA Marketplace, Medicare, and Medicaid. NeueHealth delivers
high-quality clinical care to over 470,000 health consumers through
owned clinics and unique partnerships with over 3,000 affiliated
providers. We also enable independent providers and medical groups
to thrive in performance-based arrangements through a suite of
technology and services scaled centrally and deployed locally. We
believe our value-driven, consumer-centric care model can transform
the healthcare experience and maximize value across the healthcare
system. For more information, visit: www.neuehealth.com.
Forward-Looking Statements
Statements made in this release that are not statements of
historical fact, including statements about our beliefs and
expectations, are forward-looking statements and should be
evaluated as such. Forward-looking statements include information
concerning possible or assumed future results of operations,
including descriptions of our business plan and strategies. These
statements often include words such as “anticipate,” “expect,”
“plan,” “believe,” “intend,” “project,” “forecast,” “estimates,”
“projections,” “outlook,” “ensure,” and other similar expressions.
These forward-looking statements include any statements regarding
our plans, expectations and financial guidance. Such
forward-looking statements are subject to various risks,
uncertainties and assumptions. Accordingly, there are or will be
important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. Factors
that might materially affect such forward-looking statements
include: our ability to continue as a going concern; our ability to
comply with the terms of our credit facilities or any credit
facility into which we enter in the future; our ability to receive
the remaining proceeds from the sale of our Medicare Advantage
business in California in a timely manner; our ability to obtain
any short or long term debt or equity financing needed to operate
our business; our ability to quickly and efficiently complete the
wind down of our remaining IFP and MA businesses, including by
satisfying liabilities of those businesses when due and payable;
potential disruptions to our business due to corporate
restructuring and any resulting headcount reduction; our ability to
accurately estimate and effectively manage the costs relating to
changes in our business offerings and models; a delay or inability
to withdraw regulated capital from our subsidiaries; a lack of
acceptance or slow adoption of our business model; our ability to
retain existing consumers and expand consumer enrollment; our and
our Care Partner’s abilities to obtain and accurately assess, code,
and report risk adjustment factor scores; our ability to contract
with care providers and arrange for the provision of quality care;
our ability to accurately estimate our medical expenses and
effectively manage our costs; our ability to obtain claims
information timely and accurately; the impact of any pandemic or
epidemic on our business and results of operations; the risks
associated with our reliance on third-party providers to operate
our business; the impact of modifications or changes to the U.S.
health insurance markets; our ability to manage any growth of our
business; our ability to operate, update or implement our
technology platform and other information technology systems; our
ability to retain key executives; our ability to successfully
pursue acquisitions and integrate acquired businesses and divest
businesses as needed; the occurrence of severe weather events,
catastrophic health events, natural or man-made disasters, and
social and political conditions or civil unrest; our ability to
prevent and contain data security incidents and the impact of data
security incidents on our members, patients, employees and
financial results; our ability to comply with requirements to
maintain effective internal controls; our ability to adapt to
mitigate risks associated with our ACO Reach businesses, including
any unanticipated market or regulatory developments; and the other
factors set forth under the heading “Risk Factors” in the Company’s
reports on Form 10-K, Form 10-Q, and Form 8-K (including all
amendments to those reports) and our other filings with the SEC.
Except as required by law, we undertake no obligation to update
publicly any forward-looking statements for any reason after the
date of this release to conform these statements to actual results
or changes in our expectations.
NeueHealth, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(in thousands, except share and
per share data)
(Unaudited)
June 30, 2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
133,425
$
87,299
Short-term investments
8,735
6,265
Accounts receivable, net of allowance of
$21 and $14,023, respectively
35,926
39,084
ACO REACH performance year receivable
425,517
115,878
Current assets of discontinued
operations
142,375
822,570
Current assets of held-for-sale
operations
8,158
—
Prepaids and other current assets
31,455
17,831
Total current assets
785,591
1,088,927
Other assets:
Property, equipment and capitalized
software, net
12,028
14,499
Intangible assets, net
76,040
93,238
Other non-current assets
23,606
28,816
Total other assets
111,674
136,553
Total assets
$
897,265
$
1,225,480
Liabilities, Redeemable Noncontrolling
Interest, Redeemable Preferred Stock and Shareholders’ Equity
(Deficit)
Current liabilities:
Medical costs payable
$
137,044
$
157,903
Accounts payable
8,603
11,841
Short-term borrowings
—
303,947
ACO REACH performance year obligation
325,599
—
Current liabilities of discontinued
operations
343,985
699,758
Current liabilities of held-for-sale
operations
3,981
—
Risk share payable to deconsolidated
entity
123,981
123,981
Warrant liability
21,792
13,971
Other current liabilities
79,222
79,856
Total current liabilities
1,044,207
1,391,257
Long-term borrowings
117,670
66,400
Other liabilities
17,926
22,441
Total liabilities
1,179,803
1,480,098
Commitments and contingencies
Redeemable noncontrolling interests
103,867
88,908
Redeemable Series A preferred stock,
0.0001 par value; 750,000 shares authorized in 2024 and 2023;
750,000 shares issued and outstanding in 2024 and 2023
747,481
747,481
Redeemable Series B preferred stock,0.0001
par value; 175,000 shares authorized in 2024 and 2023; 175,000
shares issued and outstanding in 2024 and 2023
172,936
172,936
Shareholders’ equity (deficit):
Common stock, 0.0001 par value;
3,000,000,000 shares authorized in 2024 and 2023; 8,279,173 and
8,053,576 shares issued and outstanding in 2024 and 2023,
respectively
1
1
Additional paid-in capital
3,087,570
3,056,027
Accumulated deficit
(4,382,393
)
(4,307,849
)
Accumulated other comprehensive loss
—
(122
)
Treasury Stock, at cost, 31,526 shares at
June 30, 2024, and December 31, 2023, respectively
(12,000
)
(12,000
)
Total shareholders’ equity
(deficit)
(1,306,822
)
(1,263,943
)
Total liabilities, redeemable
noncontrolling interests, redeemable preferred stock and
shareholders’ equity (deficit)
$
897,265
$
1,225,480
NeueHealth, Inc. and
Subsidiaries
Consolidated Statements of
Income (Loss)
(in thousands, except share and
per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue:
Capitated revenue
$
64,005
$
49,764
$
125,471
$
99,312
ACO REACH revenue
149,802
236,994
321,613
476,801
Service revenue
12,076
11,222
23,691
22,409
Investment income
108
2
311
10
Total revenue
225,991
297,982
471,086
598,532
Operating expenses:
Medical costs
177,681
245,160
374,555
505,280
Operating costs
70,217
70,280
137,039
149,798
Bad debt expense
14
—
11
—
Restructuring charges
239
1,285
181
1,586
Intangible assets impairment
11,411
—
11,411
—
Depreciation and amortization
3,978
4,671
8,540
10,154
Total operating expenses
263,540
321,396
531,737
666,818
Operating loss
(37,549
)
(23,414
)
(60,651
)
(68,286
)
Interest expense
4,110
9,170
7,040
16,957
Warrant income
(2,213
)
—
(4,285
)
—
Gain on troubled debt restructuring
—
—
(30,311
)
—
Loss from continuing operations before
income taxes
(39,446
)
(32,584
)
(33,095
)
(85,243
)
Income tax (benefit) expense
(187
)
(892
)
476
367
Net income (loss) from continuing
operations
(39,259
)
(31,692
)
(33,571
)
(85,610
)
Loss from discontinued operations, net of
tax (including loss on disposal of $991)
(18,439
)
(56,935
)
(28,304
)
(172,478
)
Net Loss
(57,698
)
(88,627
)
(61,875
)
(258,088
)
Net (income) loss from continuing
operations attributable to noncontrolling interests
(932
)
(24,205
)
(12,669
)
(29,755
)
Series A preferred stock dividend
accrued
(10,422
)
(9,942
)
(20,716
)
(19,656
)
Series B preferred stock dividend
accrued
(2,338
)
(2,231
)
(4,648
)
(4,411
)
Net loss attributable to NeueHealth,
Inc. common shareholders
$
(71,390
)
$
(125,005
)
$
(99,908
)
$
(311,910
)
Basic and diluted loss per share
attributable to NeueHealth, Inc. common shareholders
Continuing operations
$
(6.42
)
$
(8.55
)
$
(8.77
)
$
(17.59
)
Discontinued operations
(2.23
)
(7.15
)
(3.46
)
(21.76
)
Basic and diluted loss per share
(8.65
)
(15.70
)
(12.23
)
(39.35
)
Basic and diluted weighted-average common
shares outstanding
8,253
7,962
8,166
7,928
NeueHealth, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June
30,
2024
2023
Cash flows from operating activities:
Net loss
$
(61,875
)
$
(258,088
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
8,540
16,026
Impairment of intangible assets
11,411
—
Share-based and other long-term incentive
compensation
37,407
49,095
Deferred income taxes
—
873
Gain on troubled debt restructuring
(30,311
)
—
Net accretion of investments
(72
)
(14,173
)
Loss on disposal of property, equipment,
and capitalized software
595
—
Other, net
(469
)
3,891
Changes in assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable
(4,872
)
6,284
ACO REACH performance year receivable
(309,639
)
(524,428
)
Other assets
(7,889
)
57,846
Medical cost payable
(35,998
)
(567,932
)
Risk adjustment payable
(4,155
)
10,925
Accounts payable and other liabilities
(14,387
)
(111,174
)
Unearned revenue
(11
)
132,129
Warrant liability
8,978
—
ACO Reach performance year obligation
325,599
474,700
Net cash used in operating
activities
(77,148
)
(724,026
)
Cash flows from investing activities:
Purchases of investments
(9,544
)
(828,546
)
Proceeds from sales, paydowns, and
maturities of investments
2,581
988,749
Purchases of property and equipment
(877
)
(2,394
)
Proceeds from sale of business, net
197,121
(682
)
Net cash provided by investing
activities
189,281
157,127
Cash flows from financing activities:
Proceeds from issuance of common stock
—
2
Proceeds from long-term borrowings
52,411
—
Repayments of short-term borrowings
(273,636
)
—
Distributions to noncontrolling interest
holders
(4,730
)
(4,952
)
Net cash used in financing
activities
(225,955
)
(4,950
)
Net (decrease) increase in cash and
cash equivalents
(113,822
)
(571,849
)
Cash and cash equivalents of continuing
and discontinued operations – beginning of year
375,280
1,932,290
Cash and cash equivalents of continuing
and discontinued operations – end of period
$
261,458
$
1,360,441
NeueHealth, Inc. and
Subsidiaries
Segment Information
(in thousands)
(Unaudited)
NeueCare
($ in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
Statement of income (loss) and
operating data:
2024
2023
2024
2023
Revenue:
Capitated revenue
$
64,005
$
49,764
$
125,471
$
99,312
Service revenue
9,803
10,530
19,333
21,466
Investment income
21
—
21
—
Total unaffiliated revenue
73,829
60,294
144,825
120,778
Affiliated revenue
3,156
5,774
5,783
7,969
Total segment revenue
76,985
66,068
150,608
128,747
Operating expenses
Medical Costs
33,579
19,720
61,015
43,442
Operating Costs
34,676
32,139
67,265
61,328
Depreciation and amortization
3,221
3,178
7,007
6,310
Intangible asset impairment
11,411
—
11,411
—
Total operating expenses
82,887
55,037
146,698
111,080
Operating income (loss)
$
(5,902
)
$
11,031
$
3,910
$
17,667
NeueSolutions
($ in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
Statement of income (loss) and
operating data:
2024
2023
2024
2023
Revenue:
ACO REACH revenue
$
149,802
$
236,994
$
321,613
$
476,801
Service revenue
2,273
692
4,358
943
Total segment revenue
152,075
237,686
325,971
477,744
Operating expenses
Medical Costs
147,258
231,279
319,323
469,874
Operating Costs
4,406
3,411
9,172
6,383
Bad debt expense
14
—
11
—
Total operating expenses
151,678
234,690
328,506
476,257
Operating income (loss)
$
397
$
2,996
$
(2,535
)
$
1,487
Non-GAAP Financial Measures
We use the non-GAAP financial measures Adjusted EBITDA, Adjusted
Operating Cost Ratio, NeueCare Adjusted EBITDA, and NeueSolutions
Adjusted EBITDA. We define Adjusted EBITDA as Net Loss excluding
loss from discontinued operations, interest expense, income taxes,
depreciation and amortization, transaction costs, share-based and
other long-term compensation expense, gains on troubled debt
restructuring, changes in the fair value of equity securities and
derivatives, restructuring and contract termination costs,
held-for-sale operations, losses related to the bankruptcy of
contractual counterparties, impairment of goodwill and long-lived
assets, and the tax effect of all such items. We define Adjusted
Operating Cost Ratio as Operating Cost Ratio excluding share-based
compensation expense and held-for-sale operations. We define
NeueCare Adjusted EBITDA as NeueCare Net Income excluding interest
expense, income taxes, depreciation and amortization, transaction
costs, share-based and other long-term compensation expense, gains
on troubled debt restructuring, changes in the fair value of equity
securities and derivatives, restructuring and contract termination
costs, held-for-sale operations, losses related to the bankruptcy
of contractual counterparties, impairment of goodwill and
long-lived assets, and the tax effect of all such items. We define
NeueSolutions Adjusted EBITDA as NeueSolutions Net Loss excluding
interest expense, income taxes, depreciation and amortization,
transaction costs, share-based and other long-term compensation
expense, gains on troubled debt restructuring, changes in the fair
value of equity securities and derivatives, restructuring and
contract termination costs, held-for-sale operations, losses
related to the bankruptcy of contractual counterparties, impairment
of goodwill and long-lived assets, and the tax effect of all such
items. These non-GAAP measures have been presented in this
quarterly Earnings Release or in the earnings conference call as
supplemental measures of financial performance that are not
required by or presented in accordance with GAAP because we believe
they assist management and investors in comparing our operating
performance across reporting periods on a consistent basis by
excluding and including items that we do not believe are indicative
of our core operating performance. Management believes these
measures are useful to investors in highlighting trends in our
operating performance, while other measures can differ
significantly depending on long-term strategic decisions regarding
capital structure, the tax jurisdictions in which we operate and
capital investments. Management uses Adjusted EBITDA, Adjusted
Operating Cost Ratio, NeueCare Adjusted EBITDA, and NeueSolutions
Adjusted EBITDA to supplement GAAP measures of performance in the
evaluation of the effectiveness of our business strategies, to make
budgeting decisions, to establish discretionary annual incentive
compensation and to compare our performance against that of other
peer companies using similar measures. Management supplements GAAP
results with non-GAAP financial measures to provide a more complete
understanding of the factors and trends affecting the business than
GAAP results alone.
Adjusted EBITDA is not a recognized term under GAAP and should
not be considered as an alternative to Net income (loss) as a
measure of financial performance or any other performance measure
derived in accordance with GAAP. Additionally, Adjusted EBITDA is
not intended to be a measure of free cash flow available for
management’s discretionary use as it does not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. The presentation of Adjusted EBITDA has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentation of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
Adjusted Operating Cost Ratio is not a recognized term under
GAAP and should not be considered as an alternative to Operating
Cost Ratio as a measure of financial performance or any other
performance measure derived in accordance with GAAP. The
presentation of Adjusted Operating Cost Ratio has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for analysis of our results as reported under GAAP.
Because not all companies use identical calculations, the
presentation of these measures may not be comparable to other
similarly titled measures of other companies and can differ
significantly from company to company.
Neither NeueCare Adjusted EBITDA nor NeueSolutions Adjusted
EBITDA are recognized terms under GAAP and should not be considered
as alternatives to NeueCare Net Loss or NeueSolutions Net Loss,
respectively, as a measure of financial performance or any other
performance measure derived in accordance with GAAP. The
presentation of NeueCare Adjusted EBITDA and NeueSolutions Adjusted
EBITDA have limitations as analytical tools and should not be
considered in isolation or as a substitute for analysis of our
results as reported under GAAP. Because not all companies use
identical calculations, the presentation of these measures may not
be comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
The following table provides a reconciliation of net loss to
Adjusted EBITDA for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2024
2023
2024
2023
Net loss
$
(57,698
)
$
(88,627
)
$
(61,875
)
$
(258,088
)
Loss from Discontinued Operations
18,439
56,935
28,304
172,478
EBITDA adjustments from continuing
operations
Interest expense
4,110
9,170
7,040
16,957
Income tax (benefit) expense
(187
)
(892
)
476
367
Depreciation and amortization (h)
3,484
4,176
7,551
9,163
Transaction costs (a)
844
8,096
1,965
9,948
Share-based and other long-term incentive
compensation expense (b)
21,236
15,775
39,862
49,095
Gain on troubled debt restructuring
(c)
—
—
(30,311
)
—
Change in fair value of warrant liability
(d)
(2,213
)
—
(4,285
)
—
Restructuring and contract termination
costs (e)
239
1,285
181
1,586
Held-for-sale operations (f)
16,671
1,879
18,294
974
ACO REACH care partner bankruptcy (g)
(963
)
—
285
—
Impairment of goodwill and long-lived
assets (h)
—
—
131
—
EBITDA adjustments from continuing
operations
$
43,221
$
39,489
$
41,189
$
88,090
Adjusted EBITDA
$
3,962
$
7,797
$
7,618
$
2,480
(a)
Transaction costs include accounting, tax,
valuation, consulting, legal and investment banking fees directly
relating to financing initiatives and acquisitions or dispositions.
These costs can vary from period to period and impact
comparability, and we do not believe such transaction costs reflect
the ongoing performance of our business.
(b)
Represents non-cash compensation expense
related to stock option and restricted stock unit award grants,
which can vary from period to period based on a number of factors,
including the timing, quantity and grant date fair value of the
awards. Also includes estimated compensation expense that the
Company has the option to pay in cash or shares of $2.5 million for
the three and six months ended June 30, 2024, which is a 2024-only
deviation from the long-term incentive award plan.
(c)
Beginning in the first quarter of 2024,
Adjusted EBITDA excludes the impact of gains on troubled debt
restructuring. The comparable periods in 2023 have been recast to
exclude these impacts.
(d)
Represents the non-cash change in the fair
value of the warrant liability established for warrants included in
our financing arrangements, which are remeasured at fair value each
reporting period.
(e)
Restructuring and contract termination
costs represent severance costs as part of a workforce reduction,
amounts paid for early termination of leases, and impairment of
certain long-lived assets primarily relating to our decision to
exit the Commercial business for the 2023 plan year.
(f)
Beginning in the second quarter of 2024,
Adjusted EBITDA excludes the impact of our operations classified as
held-for-sale. For the three and six months ended June 30, 2024,
$11.4 million of intangible asset impairment expense was incurred
as a result of classifying operations as held-for-sale. The
comparable periods in 2023 have been recast to exclude these
impacts.
(g)
Represents the costs expected to be
incurred as a result of one of our ACO REACH care partners filing
for bankruptcy; includes the full allowance established for the
outstanding receivable and ongoing costs incurred to manage and
provide service to members attributed to the care partner that
would have otherwise been reimbursed prior to the care partner’s
bankruptcy.
(h)
Adjustment has been updated to remove the
impact of our held-for-sale operations that are adjusted for in
their entirety as described in (g).
The following table provides a reconciliation of Adjusted
Operating Cost Ratio for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Operating Cost Ratio
31.1
%
23.6
%
29.1
%
25.0
%
Impact of share-based compensation expense
(a)
(9.4
)%
(5.3
)%
(8.5
)%
(8.2
)%
Impact of held-for-sale operations (b)
(3.7
)%
(2.2
)%
(3.1
)%
(1.9
)%
Adjusted Operating Cost Ratio
(c)
18.0
%
16.1
%
17.5
%
14.9
%
(a)
Represents non-cash compensation expense related to stock option
and restricted stock unit award grants, which can vary from period
to period based on a number of factors, including the timing,
quantity and grant date fair value of the awards. Also includes
estimated compensation expense that the company has the option to
pay in cash or shares of $2.5 million for the three and six months
ended June 30, 2024, which is a 2024-only deviation from the
long-term incentive award plan.
(b)
Represents the impact of revenue and operating costs related to
our operations classified as held-for-sale during the quarter ended
June 30, 2024. The comparable periods in 2023 have been recast to
exclude these impacts.
(c)
The three and six months ended June 30, 2024 are higher than the
equivalent periods ended June 30, 2023 by 1.9% and 2.6%,
respectively, driven by the decrease in revenue due to a decline in
our ACO REACH aligned beneficiaries outweighing the decreases in
our operating costs as part of our restructuring efforts.
The following table provides a reconciliation of NeueCare net
income to NeueCare Adjusted EBITDA for the periods presented:
NeueCare
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2024
2023
2024
2023
NeueCare Net Income (Loss)
$
(5,902
)
$
11,031
$
3,910
$
17,667
Interest expense
—
—
—
—
Income tax (benefit) expense
—
—
—
—
Depreciation and amortization (h)
2,727
2,683
6,018
5,319
Transaction costs (a)
—
—
—
—
Share-based and other long-term incentive
compensation expense (b)
—
—
—
—
Gain on troubled debt restructuring
(c)
—
—
—
—
Change in fair value of warrant liability
(d)
—
—
—
—
Restructuring and contract termination
costs (e)
—
—
—
—
Held-for-sale operations (f)
16,671
1,879
18,294
974
ACO REACH care partner bankruptcy (g)
—
—
—
—
Impairment of goodwill and long-lived
assets (h)
$
—
$
—
$
—
$
—
NeueCare Adjusted EBITDA
$
13,496
$
15,593
$
28,222
$
23,960
The following table provides a reconciliation of NeueSolutions
net loss to NeueSolutions Adjusted EBITDA for the periods
presented:
NeueSolutions
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2024
2023
2024
2023
NeueSolutions Net income (loss)
$
397
$
2,996
$
(2,535
)
$
1,487
Interest expense
—
—
—
—
Income tax (benefit) expense
—
—
—
—
Depreciation and amortization (h)
—
—
—
—
Transaction costs (a)
—
—
—
—
Share-based and other long-term incentive
compensation expense (b)
—
—
—
—
Gain on troubled debt restructuring
(c)
—
—
—
—
Change in fair value of warrant liability
(d)
—
—
—
—
Restructuring and contract termination
costs (e)
—
—
—
—
Held-for-sale operations (f)
—
—
—
—
ACO REACH care partner bankruptcy (g)
(963
)
—
285
—
Impairment of goodwill and long-lived
assets (h)
$
—
$
—
$
—
$
—
NeueSolutions Adjusted EBITDA
$
(566
)
$
2,996
$
(2,250
)
$
1,487
(a)
Transaction costs include
accounting, tax, valuation, consulting, legal and investment
banking fees directly relating to financing initiatives. These
costs can vary from period to period and impact comparability, and
we do not believe such transaction costs reflect the ongoing
performance of our business.
(b)
Represents non-cash compensation
expense related to stock option and restricted stock unit award
grants, which can vary from period to period based on a number of
factors, including the timing, quantity and grant date fair value
of the awards. Also includes estimated compensation expense that
the company has the option to pay in cash or shares of $2.5 million
for the three and six months ended June 30, 2024, which is a
2024-only deviation from the long-term incentive award plan.
(c)
Beginning in the first quarter of
2024, Adjusted EBITDA excludes the impact of gains on troubled debt
restructuring. The comparable periods in 2023 have been recast to
exclude these impacts.
(d)
Represents the non-cash change in
the fair value of the warrant liability established for warrants
included in our financing arrangements, which are remeasured at
fair value each reporting period.
(e)
Restructuring and contract
termination costs represent severance costs as part of a workforce
reduction, amounts paid for early termination of leases, and
impairment of certain long-lived assets primarily relating to our
decision to exit the Commercial business for the 2023 plan
year.
(f)
Beginning in the second quarter
of 2024, Adjusted EBITDA excludes the impact of our operations
classified as held-for-sale. For the 3 and 6 months ended June 30,
2024, $11.4 million of intangible asset impairment expense was
incurred as a result of classifying operations as held-for-sale.
The comparable periods in 2023 have been recast to exclude these
impacts.
(g)
Represents the costs expected to
be incurred as a result of one of our ACO REACH care partners
filing for bankruptcy; includes the full allowance established for
the outstanding receivable and ongoing costs incurred to manage and
provide service to members attributed to the care partner that
would have otherwise been reimbursed prior to the care partner’s
bankruptcy.
(h)
Adjustment has been updated to
remove the impact of our held-for-sale operations that are adjusted
for in there entirety as described at (f).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807512796/en/
Investor Contact: IR@neuehealth.com
Media Contact: media@neuehealth.com
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