NeueHealth Reports Second Quarter 2024 Results

  • 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

DORAL, Fla.--()--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).

 

Contacts

Investor Contact:
IR@neuehealth.com

Media Contact:
media@neuehealth.com

Contacts

Investor Contact:
IR@neuehealth.com

Media Contact:
media@neuehealth.com