UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37888

Tabula Rasa HealthCare, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)	46-5726437 (I.R.S. Employer Identification No.)
228 Strawbridge Drive, Suite 100 Moorestown, NJ 08057 (Address of Principal Executive Offices, including Zip Code)	(866) 648 - 2767 (Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $0.0001 per share	TRHC	The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒☐	Accelerated filer ☐	Non-accelerated filer ☐☒	Smaller reporting company ☐☒

			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July ~~29, 2022,~~28, 2023, the Registrant had ~~26,251,035~~27,054,536 shares of Common Stock outstanding.

Table of Contents

TABULA RASA HEALTHCARE, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended June 30, ~~2022~~2023

TABLE OF CONTENTS

		Page
		Number

PART I	Financial Information	3
Item 1.	Financial Statements	3
	Unaudited Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022	3
	Unaudited Consolidated Statements of Operations for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022	4
	Unaudited Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022	5
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3233
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47

PART II	Other Information	48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

Signatures		51

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	June 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Assets
Current assets:
Cash	$	26,522	$	9,395
Cash and cash equivalents					$	62,811	$	70,017
Restricted cash		7,062		6,038		10,400		12,372
Accounts receivable, net of allowance of $103 and $110, respectively		20,324		21,405
Accounts receivable, net of allowance of $935 and $368, respectively						18,610		19,252
Inventories		5,798		5,444		8,659		6,566
Prepaid expenses		3,534		3,812		3,581		4,664
Client claims receivable		14,419		11,257		16,415		16,377
Divestiture-related note receivable						3,527		—
Other current assets		25,021		18,033		22,678		18,187
Current assets of discontinued operations		163,624		14,511		—		22,825
Total current assets		266,304		89,895		146,681		170,260
Property and equipment, net		10,126		11,778		9,369		9,158
Operating lease right-of-use assets		14,656		16,323		10,149		10,483
Software development costs, net		31,275		29,254		33,077		32,592
Goodwill		115,323		115,323		115,323		115,323
Intangible assets, net		41,970		45,358		35,129		38,326
Contingent consideration receivable						—		3,350
Other assets		4,814		3,929		6,209		4,657
Noncurrent assets of discontinued operations		—		187,558
Total assets	$	484,468	$	499,418	$	355,937	$	384,149

Liabilities and stockholders’ equity (deficit)
Liabilities and stockholders’ deficit
Current liabilities:
Line of credit	$	57,200	$	—
Current operating lease liabilities		3,038		3,275	$	2,982	$	2,708
Accounts payable		15,802		8,870		20,623		19,459
Client claims payable		8,751		8,398		10,981		10,781
Accrued expenses and other liabilities		50,179		40,997		59,105		55,745
Current liabilities of discontinued operations		19,158		12,380		—		13,389
Total current liabilities		154,128		73,920		93,691		102,082
Line of credit		—		29,500
Long-term debt, net of discount of $3,646 and $5,701, respectively		231,626		319,299
Long-term debt - related party, net of discount of $1,391 and $0, respectively		88,337		—
Long-term debt, net of discount of $2,669 and $3,160, respectively						232,603		232,112
Long-term debt – related party, net of discount of $1,019 and $1,206, respectively						88,709		88,522
Noncurrent operating lease liabilities		14,034		15,792		12,102		12,786
Deferred income tax liability, net		1,034		1,402		1,507		1,380
Other long-term liabilities		1,992		176		5,404		4,298
Noncurrent liabilities of discontinued operations		—		3,573
Total liabilities		491,151		443,662		434,016		441,180

Commitments and contingencies (Note 15)
Commitments and contingencies (Note 16)

Stockholders' equity (deficit):
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Common stock, $0.0001 par value; 100,000,000 shares authorized, 26,799,516 and 26,036,236 shares issued and 26,260,181 and 25,666,434 shares outstanding at June 30, 2022 and December 31, 2021, respectively		3		3
Treasury stock, at cost; 539,335 and 369,802 shares at June 30, 2022 and December 31, 2021, respectively		(4,292)		(4,292)
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 and December 31, 2022						—		—
Common stock, $0.0001 par value; 100,000,000 shares authorized, 28,360,785 and 28,031,616 shares issued and 27,058,420 and 27,129,096 shares outstanding at June 30, 2023 and December 31, 2022, respectively						3		3
Treasury stock, at cost; 1,302,365 and 902,520 shares at June 30, 2023 and December 31, 2022, respectively						(4,049)		(3,391)
Additional paid-in capital		335,756		320,392		359,573		354,214
Accumulated deficit		(338,150)		(260,347)		(433,606)		(407,857)
Total stockholders’ equity (deficit)		(6,683)		55,756
Total liabilities and stockholders’ equity (deficit)	$	484,468	$	499,418
Total stockholders’ deficit						(78,079)		(57,031)
Total liabilities and stockholders’ deficit					$	355,937	$	384,149

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,


2022

2021

2022

2021
Revenue:

Product revenue

$
55,892

$
46,858

$
106,865

$
88,700
Service revenue

16,705

17,439

32,842

34,375
Total revenue

72,597

64,297

139,707

123,075
Cost of revenue, exclusive of depreciation and amortization shown below:

Product cost

43,384

35,064

82,936

66,421
Service cost

13,247

12,556

26,416

25,178
Total cost of revenue, exclusive of depreciation and amortization

56,631

47,620

109,352

91,599
Operating expenses:

Research and development

3,243

4,311

7,208

7,370
Sales and marketing

2,172

2,539

4,821

5,506
General and administrative

15,150

16,652

31,028

31,332
Long-lived asset impairment charge

—

—

4,062

—
Depreciation and amortization

5,489

4,980

11,231

9,781
Total operating expenses

26,054

28,482

58,350

53,989
Loss from operations

(10,088)

(11,805)

(27,995)

(22,513)
Interest expense, net

2,444

2,182

4,713

4,729
Loss from continuing operations before income taxes

(12,532)

(13,987)

(32,708)

(27,242)
Income tax expense

159

81

375

202
Net loss from continuing operations

(12,691)

(14,068)

(33,083)

(27,444)
Net loss from discontinued operations, net of tax

(36,919)

(7,013)

(44,720)

(13,129)
Net loss

$
(49,610)

$
(21,081)

$
(77,803)

$
(40,573)

Net loss per share:

Net loss per share from continuing operations, basic and diluted

$
(0.53)

$
(0.60)

$
(1.38)

$
(1.19)
Net loss per share from discontinued operations, basic and diluted

(1.54)

(0.31)

(1.87)

(0.56)
Total net loss per share, basic and diluted

$
(2.07)

$
(0.91)

$
(3.25)

$
(1.75)

Weighted average common shares outstanding, basic and diluted

23,959,726

23,268,131

23,913,050

23,140,043


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue:
Medication revenue	$	69,626	$	55,892	$	138,376	$	106,865
Technology-enabled solutions revenue		20,410		16,705		39,937		32,842
Total revenue		90,036		72,597		178,313		139,707
Cost of revenue, exclusive of depreciation and amortization shown below:
Cost of medication revenue		53,554		43,384		106,636		82,936
Cost of technology-enabled solutions revenue		13,953		13,247		28,395		26,416
Total cost of revenue, exclusive of depreciation and amortization		67,507		56,631		135,031		109,352
Operating expenses:
Research and development		1,777		3,243		3,056		7,208
Sales and marketing		2,732		2,172		5,185		4,821
General and administrative		17,599		15,150		34,176		31,028
Change in fair value of contingent consideration receivable		3,350		—		3,750		—
Long-lived asset impairment charge		—		—		—		4,062
Depreciation and amortization		6,103		5,489		12,303		11,231
Total operating expenses		31,561		26,054		58,470		58,350
Loss from operations		(9,032)		(10,088)		(15,188)		(27,995)
Other income (expense):
Interest expense, net		(1,144)		(2,444)		(2,409)		(4,713)
Other income		566		—		1,018		—
Total other expense, net		(578)		(2,444)		(1,391)		(4,713)
Loss from continuing operations before income taxes		(9,610)		(12,532)		(16,579)		(32,708)
Income tax expense		133		159		238		375
Net loss from continuing operations		(9,743)		(12,691)		(16,817)		(33,083)
Net loss from discontinued operations, net of tax		(108)		(36,919)		(8,932)		(44,720)
Net loss	$	(9,851)	$	(49,610)	$	(25,749)	$	(77,803)

Net loss per share:
Net loss per share from continuing operations, basic and diluted	$	(0.38)	$	(0.53)	$	(0.66)	$	(1.38)
Net loss per share from discontinued operations, basic and diluted		—		(1.54)		(0.35)		(1.87)
Total net loss per share, basic and diluted	$	(0.38)	$	(2.07)	$	(1.01)	$	(3.25)

Weighted average common shares outstanding, basic and diluted		25,422,032		23,959,726		25,333,137		23,913,050

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)


	Stockholders' Equity (Deficit)												Stockholders' Equity (Deficit)
	Six Months Ended June 30, 2022												Six Months Ended June 30, 2023
	Common Stock			Treasury Stock			Additional		Accumulated		Stockholders'		Common Stock			Treasury Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity (Deficit)		Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity (Deficit)
Balance, January 1, 2022	26,036,236	$	3	(369,802)	$	(4,292)	$	320,392	$	(260,347)	$	55,756
Issuance of common stock awards	16,471		—	—		—		—		—		—
Balance, January 1, 2023													28,031,616	$	3	(902,520)	$	(3,391)	$	354,214	$	(407,857)	$	(57,031)
Issuance of restricted stock	297,434		—	—		—		—		—		—	25,167		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(138,882)		—		—		—		—	—		—	(232,208)		—		—		—		—
Exercise of stock options, net of shares withheld	11,646		—	—		—		60		—		60	71,562		—	—		—		219		—		219
Shares withheld for payment of employee taxes													—		—	(125,088)		(622)		—		—		(622)
Stock-based compensation expense	—		—	—		—		8,609		—		8,609	—		—	—		—		2,468		—		2,468
Net loss	—		—	—		—		—		(28,193)		(28,193)	—		—	—		—		—		(15,898)		(15,898)
Balance, March 31, 2022	26,361,787		3	(508,684)		(4,292)		329,061		(288,540)		36,232
Issuance of common stock awards	12,262		—	—		—		—		—		—
Balance, March 31, 2023													28,128,345		3	(1,259,816)		(4,013)		356,901		(423,755)		(70,864)
Issuance of restricted stock	424,540		—	—		—		—		—		—	205,128		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(30,542)		—		—		—		—	—		—	(36,307)		—		—		—		—
Exercise of stock options, net of shares withheld	927		—	(109)		—		3		—		3	27,312		—	—		—		(98)		—		(98)
Shares withheld for payment of employee taxes													—		—	(6,242)		(36)		—		—		(36)
Stock-based compensation expense	—		—	—		—		6,692		—		6,692	—		—	—		—		2,770		—		2,770
Net loss	—		—	—		—		—		(49,610)		(49,610)	—		—	—		—		—		(9,851)		(9,851)
Balance, June 30, 2022	26,799,516	$	3	(539,335)	$	(4,292)	$	335,756	$	(338,150)	$	(6,683)
Balance, June 30, 2023													28,360,785	$	3	(1,302,365)	$	(4,049)	$	359,573	$	(433,606)	$	(78,079)

See accompanying notes to unaudited consolidated financial statements.

Stockholders' Equity

Six Months Ended June 30, 2021

Common Stock

Treasury Stock

Additional

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Paid-in Capital

Deficit

Equity
Balance, January 1, 2021

24,222,674

$
2

(217,778)

$
(4,018)

$
352,445

$
(179,900)

$
168,529
Cumulative effect of change in accounting policy

—

—

—

—

(74,850)

(1,392)

(76,242)
Issuance of common stock awards

1,416

—

—

—

—

—

—
Issuance of restricted stock

629,088

—

—

—

—

—

—
Forfeitures of restricted shares

—

—

(12,880)

—

—

—

—
Exercise of stock options, net of shares withheld

224,503

—

(6,218)

(274)

2,501

—

2,227
Stock-based compensation expense

—

—

—

—

8,602

—

8,602
Net loss

—

—

—

—

—

(19,492)

(19,492)
Balance, March 31, 2021

25,077,681

2

(236,876)

(4,292)

288,698

(200,784)

83,624
Issuance of restricted stock

120,598

—

—

—

—

—

—
Forfeitures of restricted shares

—

—

(22,913)

—

—

—

—
Exercise of stock options, net of shares withheld

84,396

—

—

—

885

—

885
Stock-based compensation expense

—

—

—

—

12,349

—

12,349
Net loss

—

—

—

—

—

(21,081)

(21,081)
Balance, June 30, 2021

25,282,675

$
2

(259,789)

$
(4,292)

$
301,932

$
(221,865)

$
75,777


	Stockholders' Equity (Deficit)
	Six Months Ended June 30, 2022
	Common Stock			Treasury Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity (Deficit)
Balance, January 1, 2022	26,036,236	$	3	(369,802)	$	(4,292)	$	320,392	$	(260,347)	$	55,756
Issuance of common stock awards	16,471		—	—		—		—		—		—
Issuance of restricted stock	297,434		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(138,882)		—		—		—		—
Exercise of stock options, net of shares withheld	11,646		—	—		—		60		—		60
Stock-based compensation expense	—		—	—		—		8,609		—		8,609
Net loss	—		—	—		—		—		(28,193)		(28,193)
Balance, March 31, 2022	26,361,787		3	(508,684)		(4,292)		329,061		(288,540)		36,232
Issuance of common stock awards	12,262		—	—		—		—		—		—
Issuance of restricted stock	424,540		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(30,542)		—		—		—		—
Exercise of stock options, net of shares withheld	927		—	(109)		—		3		—		3
Stock-based compensation expense	—		—	—		—		6,692		—		6,692
Net loss	—		—	—		—		—		(49,610)		(49,610)
Balance, June 30, 2022	26,799,516	$	3	(539,335)	$	(4,292)	$	335,756	$	(338,150)	$	(6,683)

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Six Months Ended

June 30,

2022

2021
Cash flows from operating activities:

Net loss

$
(77,803)

$
(40,573)
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

18,562

23,244
Amortization of deferred financing costs and debt discount

939

1,172
Deferred taxes

(368)

263
Stock-based compensation

15,301

20,951
Acquisition-related contingent consideration paid

—

(67)
Impairment charges

40,510

—
Other noncash items

(54)

7

Changes in operating assets and liabilities:

Accounts receivable, net

2,979

(2,737)
Inventories

(354)

(605)
Prepaid expenses and other current assets

(7,916)

(3,811)
Client claims receivables

(3,162)

207
Other assets

(769)

(2,546)
Accounts payable

9,295

(926)
Accrued expenses and other liabilities

9,188

7,646
Client claims payables

353

(1,332)
Other long-term liabilities

2,139

7
Net cash provided by operating activities

8,840

900

Cash flows from investing activities:

Purchases of property and equipment

(471)

(970)
Software development costs

(17,870)

(14,011)
Net cash used in investing activities

(18,341)

(14,981)

Cash flows from financing activities:

Proceeds from exercise of stock options

60

3,082
Payments for debt financing costs

(350)

(8)
Borrowings on line of credit

27,700

12,500
Payment of acquisition-related notes payable

—

(13,000)
Payments of acquisition-related contingent consideration

—

(99)
Repayments of long-term debt and finance leases

—

(4)
Net cash provided by financing activities

27,410

2,471

Net increase (decrease) in cash and restricted cash

17,909

(11,610)
Cash and restricted cash, beginning of period

15,706

28,532
Cash and restricted cash, end of period ⁽¹⁾

$
33,615

$
16,922

Supplemental disclosure of cash flow information:

Purchases of property and equipment and software development included in accounts payable and accrued expenses

$
2,693

$
131
Cash paid for interest

$
3,882

$
3,398
Cash paid for taxes

$
137

$
47
Interest costs capitalized to software development costs

$
202

$
134

Reconciliation of cash and restricted cash:

Cash

$
26,522

$
11,421
Restricted cash

7,062

4,657
Cash from discontinued operations

31

844
Total cash and restricted cash

$
33,615

$
16,922


	Six Months Ended
	June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(25,749)	$	(77,803)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		12,303		18,562
Amortization of deferred financing costs and debt discount		678		939
Deferred taxes		127		(368)
Stock-based compensation		5,238		15,301
Change in fair value of contingent consideration receivable		3,750		—
Impairment charges		363		40,510
Net loss on divestiture of businesses		4,888		—
Other noncash items		292		(54)
Changes in operating assets and liabilities, net of effect of divestitures:
Accounts receivable, net		514		2,979
Inventories		(2,093)		(354)
Prepaid expenses and other current assets		(3,829)		(7,916)
Client claims receivables		(38)		(3,162)
Other assets		3		(769)
Accounts payable		(1,222)		9,295
Accrued expenses and other liabilities		374		9,188
Client claims payables		200		353
Other long-term liabilities		554		2,139
Net cash (used in) provided by operating activities		(3,647)		8,840

Cash flows from investing activities:
Purchases of property and equipment		(1,310)		(471)
Software development costs		(7,187)		(17,870)
Proceeds from divestiture of businesses		3,384		—
Net cash used in investing activities		(5,113)		(18,341)

Cash flows from financing activities:
Proceeds from exercise of stock options		219		60
Payments for employee taxes for shares withheld		(655)		—
Payments for debt financing costs		—		(350)
Borrowings on line of credit		—		27,700
Net cash (used in) provided by financing activities		(436)		27,410

Net (decrease) increase in cash, cash equivalents and restricted cash		(9,196)		17,909
Cash, cash equivalents and restricted cash, beginning of period		82,407		15,706
Cash, cash equivalents and restricted cash, end of period ⁽¹⁾	$	73,211	$	33,615

Supplemental disclosure of cash flow information:
Purchases of property and equipment and software development included in accounts payable and accrued expenses	$	2,762	$	2,693
Purchases of property and equipment and software development through vendor financing arrangements	$	881	$	—
Cash paid for interest	$	2,844	$	3,882
Cash paid for taxes, net	$	30	$	137
Interest costs capitalized to software development costs	$	24	$	202
Employee taxes for shares withheld included in accrued expenses	$	3	$	—

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	62,811	$	26,522
Restricted cash		10,400		7,062
Cash from discontinued operations		—		31
Total cash, cash equivalents and restricted cash	$	73,211	$	33,615

(1)

The cash flows related to discontinued operations have not been segregated. Accordingly, the unaudited consolidated statements of cash flows include the results of continuing and discontinued operations. See Note 3 for discussion of discontinued operations.

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

1. Nature of Business

Tabula Rasa HealthCare, Inc. (the “Company”) is a healthcare technology company ~~advancing~~enabling simplified and individualized care that improves the ~~safe use~~health of medications by creating solutions designed to empower pharmacists, providers, and patients to optimize medication regimens. The Company’s advanced proprietary technology, MedWise®, identifies causes of and risks for medication-related problems, including adverse drug events, so healthcare professionals can minimize harm and reduce medication-related risks. The Company’s software and services help improve patient outcomes and lower healthcare costs through reduced hospitalizations, emergency department visits, and healthcare utilization.those the Company serves. The Company ~~serves~~offers comprehensive pharmacy services that include personalized, precision medication management and delivery, as well as a ~~number~~suite of ~~different organizations within the healthcare industry, including~~clinical and business management tools that help health plans ~~pharmacies, hospital sites,~~ and at-risk provider groups ~~the majority of which are organizations with Programs of All-Inclusive Care for the Elderly (“PACE”).~~optimize utilization and improve patient health.

2. Basis of Presentation, Summary of Significant Accounting Policies, and Recent Accounting Pronouncements

(a)Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the Company’s interim consolidated financial position for the periods indicated. The interim results for the three and six months ended June 30, ~~2022~~2023 are not necessarily indicative of results to be expected for the year ending December 31, ~~2022,~~2023, any other interim periods, or any future year or period. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s ~~Annual Report~~annual report on Form 10-K filed with the SEC on ~~February 25, 2022~~March 10, 2023 (the ~~“2021~~“2022 Form 10-K”).

Except as described below, there have been no material changes to the Company’s significant accounting policies described in the ~~2021~~2022 Form 10-K that have a material impact on the Company’s accompanying unaudited consolidated financial statements and related notes.

(b)Segment Reporting

The Company previously operated its business through two segments, CareVention HealthCare and MedWise HealthCare. During the first quarter of 2022, the Company announced plans to evaluate non-core assets, refocus its corporate strategy, and increase stockholder value. As a result, the Company commenced plans to sell the SinfoníaRx, DoseMe, and PrescribeWellness Businesses (as defined below), which the Company acquired in September 2017, January 2019, and March 2019, respectively. The Company completed the sales of its unincorporated PrescribeWellness business (the “PrescribeWellness Business”), DoseMe business (the “DoseMe Business”), and SinfoníaRx business (the “SinfoníaRx Business”) in August 2022, January 2023, and March 2023, respectively. The completed sales of these businesses represented a strategic business shift, having a significant effect on the Company’s operations and financial results. As a result, the Company determined that these businesses met such requirements to be classified as held for sale and discontinued operations as of March 31, 2022, and subsequently continued to meet the requirements through their respective sale dates. Accordingly, unless otherwise indicated, the accompanying consolidated financial statements reflect the assets, liabilities, revenue, and expenses related to these businesses as discontinued operations for all periods presented. Unless otherwise noted, amounts and disclosures throughout the notes to the consolidated financial statements relate to the Company’s continuing operations.

The PrescribeWellness, DoseMe, and SinfoníaRx Businesses collectively comprised the majority of the Company’s MedWise HealthCare segment. As a result of the sales of these businesses, the Company reevaluated its operating segments with respect to the CareVention HealthCare segment and the remaining MedWise HealthCare segment. Subsequent to the sales of these businesses, the Company’s chief operating decision maker (“CODM”), who is the Chief Executive Officer, evaluates performance and allocates resources based on the consolidated results of the Company. Therefore, the Company consolidated its two operating segments to one segment by merging the CareVention HealthCare segment and the remaining MedWise HealthCare segment. The Company now operates its business as one

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

segment effective as of March 31, 2023. Prior comparative periods have been revised to conform with the current period segment presentation.

See Note 3 for further information on the Company’s discontinued operations and the Company’s sales of the PrescribeWellness, DoseMe, and SinfoníaRx Businesses.

(c)Assets and Liabilities Held for Sale and Discontinued Operations

A long-lived asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable within a year. A long-lived asset (or disposal group) classified as held for sale is initially measured at the lower of its carrying amount or fair value less costs to sell. An impairment loss is recognized for any initial or subsequent write-down of the long-lived asset (or disposal group) to fair value less costs to sell. A gain or loss not previously recognized by the date of the sale of the long-lived asset (or disposal group) is recognized at the date of derecognition.

Long-lived assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Long-lived assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

~~Unless otherwise noted, amounts and disclosures throughout the notes to the unaudited consolidated financial statements relate to the Company’s continuing operations.~~

Additional details surrounding the Company’s assets and liabilities held for sale and discontinued operations are included in Note 3.

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

~~(c)~~(d)Cloud Computing Arrangements

Costs to implement cloud computing arrangements that are hosted by third-party vendors are capitalized when incurred during the application development phase. Capitalized implementation costs are included in prepaid expenses and other assets on the Company’s consolidated balance sheets, and are amortized on a straight-line basis over the reasonably certain term of the hosting arrangement, beginning when the service is ready for its intended use. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, capitalized implementation costs ~~of $1,045~~were $2,178 and ~~$747, respectively, were included in prepaid expenses, and $842 and $0, respectively, were included in other assets on the Company’s consolidated balance sheets.~~$2,158, respectively. Accumulated amortization for these arrangements was ~~$503~~$775 and ~~$398~~$590 as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Amortization expense for the three months ended June 30, 2023 and 2022, was $63 and ~~2021, was~~ $52, ~~and $53,~~ respectively. Amortization expense for the six months ended June 30, 2023 and 2022, was $185 and ~~2021, was~~ $105, ~~and $103,~~ respectively.

~~(d)~~(e)Vendor Financing Arrangements

On February 24, 2022, the Company expanded its existing relationship with a third-party service provider for business process outsourcing and technology services for its third-party administration services and electronic health records solutions. As a result, the third-party provider hired approximately 180 employees from the Company, hired to fill existing open positions, and ~~will augment~~augmented with additional resources to meet client demand. The agreement term is seven years and includes total estimated fees of $115,300.

The arrangement includes extended payment terms for cloud computing implementation costs, internally developed software support, and business process support. In order to determine the present value of the commitment, the Company used an imputed interest rate of 9.5%, which iswas reflective of its estimated uncollateralized borrowing ~~rate.~~rate at signing. As of June 30, 2023 and December 31, 2022, the outstanding principal balance of the financing arrangement was ~~$2,537~~$6,500 and $5,169, respectively, with an unamortized discount of ~~$600,~~$1,546 and $1,239, respectively, which was included in accrued expenses and other liabilities and other long-term liabilities on the Company’s consolidated balance ~~sheet.~~ sheets.

On October 1, 2022, the Company entered into a purchase arrangement with a third-party software support and service provider to purchase software licenses for total fees of $1,065. The purchased software licenses were delivered to the Company on the purchase date. The arrangement allows the Company to pay the fees over 36 monthly installment

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

payments. The Company used an imputed interest rate of 10.0%, which was reflective of its estimated collateralized borrowing rate on the purchase date. As of June 30, 2023 and December 31, 2022, the outstanding principal balance of the financing arrangement was $749 and $916, respectively, with an unamortized discount of $129 and $138, respectively, which was included in accrued expenses and other liabilities and other long-term liabilities on the Company’s consolidated balance sheets.

Imputed interest expense from vendor financing arrangements was $118 and $30 for the ~~arrangement was $30~~three months ended June 30, 2023 and 2022, respectively, and $222 and $36 for the ~~three and~~ six months ended June 30, 2023 and 2022, respectively.

~~(e)~~(f)Allowance for Credit Losses

The Company maintains an allowance for credit losses to provide for expected credit losses on its divestiture-related notes receivable. The allowance for credit losses is based on the Company’s analysis of the expected future cash flows, as well as an assessment of the debtor’s credit quality. All losses are charged to the allowance when the loss occurs or when a determination is made that such a loss is likely and can be reasonably estimated. Recoveries are credited to the allowance at the time of recovery. The Company evaluates its allowance for credit losses quarterly. As of June 30, 2023, the allowance for credit losses on the divestiture-related notes receivable was $149. See Note 7 for additional information on the Company’s divestiture-related notes receivable.

(g)Concentrations of Credit Risk

The Company is subject to concentrations of credit risk related to cash, cash equivalents, restricted cash, accounts receivable, and client claims receivable. While the Company maintains its cash, cash equivalents and restricted cash with financial institutions with high credit ratings, it often maintains these deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any realized losses on cash, cash equivalents or restricted cash to date.

The Company’s medication fulfillment services clients are sponsors of the federal Medicare Part D plan (prescription drug coverage plan) and, therefore, subject to the payment regulations established by the Centers for Medicare & Medicaid Services (“CMS”). Under CMS guidelines, Medicare Part D sponsors are required to remit payment for claims within 14 calendar days of the date on which an electronically submitted claim is received and within 30 days of the date on which non-electronically-submitted claims are received. The Company extends credit to clients based upon such terms, as well as management’s evaluation of creditworthiness, and generally collateral is not required.

The Company’s clients also include health plans ~~pharmacies,~~ and other healthcare providers. Credit associated with these accounts is extended based upon management’s evaluation of creditworthiness and is monitored on an on-going basis.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, no ~~clients~~client represented more than 10% of net accounts receivable.

~~NaN~~As of June 30, 2023, one client represented 18% of client claims receivable. As of December 31, 2022, one client represented 14% of client claims receivable.

One client accounted for ~~16%~~13% and ~~13%~~16% of total revenue for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~17%~~13% and ~~14%~~17% of total revenue for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~(f)~~(h)Recent Accounting ~~Pronouncements~~Pronouncement

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ~~(“ASU”)~~ 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under ~~ASC~~FASB Accounting Standards Codification Topic 606 (Revenue from Contracts with Customers) in order to align the recognition of a contract liability with the definition of performance obligation. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. ASU 2021-08 is effective for financial statements issued for fiscal years beginning after December 15, 2022; early adoption is permitted. The Company ~~is currently evaluating the potential~~adopted ASU 2021-08 on January 1, 2023 and determined that it did not have a significant impact ~~of the adoption of this standard~~ on the ~~Company’s~~ consolidated financial statements.

3. Discontinued Operations

~~In February 2022,~~Divestiture of the Company announced plans to evaluate non-core assets, refocus its corporate strategy, and increase stockholder value, and the Company commenced a plan to sell the DoseMe business, which the Company acquired in January 2019. In March 2022, the Company completed its evaluation of additional divestiture opportunities and commenced plans to sell the SinfoníaRx and PrescribeWellness ~~businesses, which were acquired in September 2017 and March 2019, respectively.~~Business

On ~~June 18,~~August 1, 2022 (the ~~“Signing~~“PW Sale Date”), the Company ~~and Tabula Rasa HealthCare Group, Inc., a wholly-owned subsidiary~~completed the sale of the Company (the “Seller”), entered into an Asset Purchase Agreement (the “PW Purchase Agreement”), by and among the Company, Seller, and Transaction Data Systems, Inc. (“TDS”), pursuant to which Seller agreed to sell to TDS its ~~unincorporated~~ PrescribeWellness ~~business division (the “PrescribeWellness Business”),~~Business, including the assets, properties, and rights that ~~are~~were primarily used or held for use in connection with the PrescribeWellness Business, ~~and~~as well as the KD Assets (as defined below) to Transaction Data Systems, Inc. (“TDS”). AsOn the PW Sale Date, the Company also completed the acquisition of certain intellectual property from karmadata, Inc. (“KD”) that had historically been licensed to the Company, (the “KD Assets”). The KD Assets acquired were simultaneously transferred to TDS on the PW Sale Date. The purchase consideration ~~TDS agreed to pay to Seller up to $140,000~~included $125,000 in cash, ~~of which $125,000 was to be paid upon consummation of the sale, subject to certain adjustments related to the net working capital of the PrescribeWellness Business,~~ subject to certain customary post-closing ~~adjustments. The additional $15,000~~adjustments, of which $118,561 was ~~contingent consideration that may be~~paid directly to the Company and $5,900 was paid to ~~Seller~~KD on the PW Sale Date. In October 2022, TDS also paid the Company $1,477 for certain customary post-closing adjustments after the PW Sale Date. The Company is also entitled to receive up to $15,000 of contingent consideration based upon the PrescribeWellness Business’s achievement of certain performance-based metrics during the fiscal years ending December 31, 2023 and 2024. The contingent consideration had an estimated fair value of $7,000 on the PW Sale Date. See Note 15 for additional discussion on the fair value assessment of the contingent consideration receivable.

~~On the Signing Date and as a condition to TDS’s entry into the PW Purchase Agreement, Seller also entered into an asset purchase agreement (the “KD Purchase Agreement”)~~In connection with karmadata, Inc., a Delaware corporation (“KD”), pursuant to which Seller agreed to purchase all of KD’s rights, title, and interests in and to certain intellectual property of KD that has historically been licensed to Seller, all intellectual property owned by KD that was developed or improved pursuant to that certain IP Development Agreement, by and between Seller and KD, dated as of December 1, 2016, as amended, and all authorization rights and claims or causes of action with respect to the foregoing (collectively, the “KD Assets”).

The foregoing descriptions of the PW Purchase Agreement and the KD Purchase Agreements are qualified in their entirety by reference to the terms of such agreements, which are included as Exhibits 10.3 and 10.4 to this Quarterly Report on Form 10-Q.

~~As discussed in Note 18, on August 1, 2022, the Company completed~~ the sale of the PrescribeWellness Business, ~~and~~ the ~~acquisition~~Company entered into a transition services agreement (the “PW TSA”) with TDS, pursuant to which the Company provided services, including, but not limited to, business support services for the PrescribeWellness Business after the sale through January 2023. The Company recognized $4 of income related to the ~~KD Assets.~~PW TSA for the six months ended June 30, 2023, which is reported in other income in the Company’s consolidated statement of operations.

~~The Company considers~~During the ~~sale~~three and six months ended June 30, 2022, as a result of the ~~DoseMe~~Company’s intention to sell the PrescribeWellness Business, the Company prepared impairment tests on the related net assets held for sale. Using a market approach to determine fair value, the Company concluded that the fair value less costs to sell did not exceed the carrying value of the net assets held for sale for the PrescribeWellness Business. As a result, the Company recorded goodwill impairment charges of $12,145 and ~~SinfoníaRx businesses to be highly probable within one year.~~impairment charges of $8,500 on net assets held for sale for the three and six months ended June 30, 2022.

910

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

AtThe following table summarizes the results of operations of the PrescribeWellness Business, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations:


	Three Months Ended		Six Months Ended
	June 30, 2022		June 30, 2022
Revenue	$	7,885	$	16,769
Cost of revenue, exclusive of depreciation and amortization		3,348		6,518
Operating expenses		5,104		12,594
Impairment charges		20,645		20,645
Loss from discontinued operations before income taxes		(21,212)		(22,988)
Income tax benefit		(315)		(288)
Net loss from discontinued operations, net of tax	$	(20,897)	$	(22,700)

The following table summarizes the significant operating noncash items and investing activities of the PrescribeWellness Business:


	Six Months Ended
	June 30, 2022
Depreciation and amortization	$	4,551
Impairment charges		20,645
Stock-based compensation		969
Purchases of property and equipment		(21)
Software development costs		(3,790)

Divestiture of the DoseMe Business

On January 20, 2023 (the “DoseMe Sale Date”), the Company completed the sale of its DoseMe Business, including the assets, properties, and rights that were primarily used or held for use in connection with the DoseMe Business, to DoseMe Operations Inc. (“DoseMe Operations”). The purchase consideration included $2,000 in cash, subject to certain customary post-closing adjustments, of which $1,984 was paid directly to the Company on the DoseMe Sale Date. The purchase consideration also includes a note receivable of $3,000 with an annual interest rate of 7%, which matures on January 20, 2027. See Note 7 for additional information on the divestiture-related note receivable.

In connection with the sale of the DoseMe Business, the Company entered into a transition services agreement (“DoseMe TSA”) with DoseMe Operations, pursuant to which the Company is providing services, including, but not limited to, business support services for the DoseMe Business after the sale through October 2023. For the three and six months ended June 30, ~~2022,~~2023, the Company recognized $51 and $101 of income related to the DoseMe ~~SinfoníaRx, and PrescribeWellness businesses comprised the majority of~~TSA, respectively, which is reported in other income in the Company’s ~~MedWise HealthCare segment. The Company’s sale~~consolidated statement of PrescribeWellness, and plan of sale with respect to DoseMe and SinfoníaRx, represents a strategic business shift having a significant effect on the Company’s operations and financial results. As a result, the Company determined that these businesses met such requirements to be classified as held for sale and discontinued operations as of March 31, 2022 and continue to meet the requirements as of June 30, 2022. Accordingly, unless otherwise indicated, the accompanying consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue, and expenses related to these businesses as discontinued operations.

During the three and six months ended June 30, 2022, as a result of the Company’s intention to sell the ~~aforementioned businesses,~~DoseMe Business, the Company prepared an impairment ~~test~~tests on the related net assets held for sale. Using a market approach to determine fair value, the Company concluded that the fair value less costs to sell did not exceed the carrying ~~values~~value of the net assets held for sale for the ~~PrescribeWellness, SinfoníaRx, and~~ DoseMe ~~businesses did not exceed their fair values, less costs to sell.~~Business. As a result, the Company recorded goodwill impairment charges of ~~$17,532 related to~~$740 and impairment charges of $3,835 on net assets held for sale for the ~~PrescribeWellness and SinfoníaRx businesses and $18,076~~six months ended June 30, 2022. For the three months ended June 30, 2022, the Company recorded $3,735 of impairment charges on the net assets held for ~~sale related to the PrescribeWellness, SinfoníaRx, and DoseMe businesses for the three months ended June 30, 2022. For~~sale. During the six months ended June 30, ~~2022,~~2023, the Company recorded ~~goodwill impairment charges~~a final gain of ~~$18,272 and impairment charges~~$211 on the ~~net assets held for~~ sale of ~~$18,176 related to~~ the ~~PrescribeWellness, SinfoníaRx, and~~ DoseMe ~~businesses.~~Business.

~~The following table summarizes the results of operations of the~~ ~~DoseMe, SinfoníaRx, and PrescribeWellness~~ ~~businesses, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations for the three and six months ended June 30, 2022 and 2021~~:

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021
Revenue
$
16,961

$
18,012

$
33,456

$
35,914
Cost of revenue, exclusive of depreciation and amortization

10,197

9,643

19,942

19,691
Operating expenses

8,761

15,330

22,354

29,222
Impairment charges

35,608

—

36,448

—
Loss from discontinued operations before income taxes

(37,605)

(6,961)

(45,288)

(12,999)
Income tax (benefit) expense

(686)

52

(568)

130
Net loss from discontinued operations, net of tax
$
(36,919)

$
(7,013)

$
(44,720)

$
(13,129)

1011

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The following table summarizes the ~~current and noncurrent~~ assets and liabilities classified as discontinued operations on the consolidated balance sheets as of ~~June 30, 2022 and~~ December 31, ~~2021:~~2022:


	June 30,		December 31,		December 31,
	2022		2021		2022
Cash	$	31	$	273	$	18
Accounts receivable, net		10,748		12,646		530
Prepaid expenses and other assets		2,940		1,592		43
Property and equipment, net		1,707		—		30
Operating lease right-of-use assets		4,984		—
Software development costs, net		20,012		—		421
Goodwill		37,240		—		1,927
Intangible assets, net		104,138		—		9,372
Impairment of carrying value		(18,176)		—		(7,730)
Total current assets of discontinued operations	$	163,624	$	14,511	$	4,611

Property and equipment, net	$	—	$	1,897
Operating lease right-of-use assets		—		4,730
Software development costs, net		—		15,940
Goodwill		—		55,512
Intangible assets, net		—		109,292
Other assets		—		187
Total noncurrent assets of discontinued operations	$	—	$	187,558

Operating lease liabilities	$	4,785	$	1,413
Accounts payable		6,671		4,308	$	42
Accrued expenses and other liabilities		7,702		6,659		1,231
Total current liabilities of discontinued operations	$	19,158	$	12,380	$	1,273

Noncurrent operating lease liabilities		—	$	3,438
Other long-term liabilities		—		135
Total noncurrent liabilities of discontinued operations	$	—	$	3,573

The following table summarizes the results of operations of the DoseMe Business, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue	$	—	$	407	$	64	$	778
Cost of revenue, exclusive of depreciation and amortization		—		47		3		88
Operating expenses		—		782		432		2,165
Impairment charges		—		3,735		—		4,575
Loss (gain) on divestiture of business		11		—		(211)		—
Loss from discontinued operations before income taxes		(11)		(4,157)		(160)		(6,050)
Income tax (benefit) expense		(44)		(105)		10		(76)
Net income (loss) from discontinued operations, net of tax	$	33	$	(4,052)	$	(170)	$	(5,974)

The following table summarizes the significant operating ~~non-cash~~noncash items and investing activities of ~~discontinued operations:~~the DoseMe Business:

Six Months Ended

June 30,

2022

2021
Depreciation and amortization

$
7,331

$
13,463
Impairment charges

36,448

—
Stock-based compensation

2,506

3,752
Purchases of property and equipment

(59)

(230)
Software development costs

(6,006)

(4,445)


	Six Months Ended
	June 30,
	2023		2022
Depreciation and amortization	$	—	$	655
Impairment charges		—		4,575
Stock-based compensation		1		345
Gain on divestiture of business		211		—
Purchases of property and equipment		—		(6)
Software development costs		—		(145)

1112

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Divestiture of the SinfoníaRx Business

On March 2, 2023 (the “SinfoníaRx Sale Date”), the Company completed the sale of its SinfoníaRx Business, including the assets, properties, and rights that were primarily used or held for use in connection with the SinfoníaRx Business to Symphony Clinic, LLC (“Symphony”). The purchase consideration included $1,400 in cash, subject to certain customary post-closing adjustments, which was paid directly to the Company on the SinfoníaRx Sale Date. The purchase consideration also includes a note receivable of $3,600 with an annual interest rate of 3%, which matures on December 31, 2023. The Company may also be entitled to receive up to $1,000 in contingent consideration based upon potential regulatory changes affecting the SinfoníaRx Business. The contingent consideration had an estimated fair value of $500 on the SinfoníaRx Sale Date. See Note 7 for additional discussion on the divestiture-related note receivable and Note 15 for additional discussion on the fair value assessment of the contingent consideration receivable.

In connection with the sale of the SinfoníaRx Business, the Company entered into a transition services agreement (“SinfoníaRx TSA”) with Symphony, pursuant to which the Company is providing services, including, but not limited to, business support services for the SinfoníaRx Business after the sale through December 2023. For the three and six months ended June 30, 2023, the Company recognized $515 and $913 of income related to the SinfoníaRx TSA, respectively, which is reported in other income in the Company’s consolidated statement of operations.

During the three and six months ended June 30, 2022, as a result of the Company’s intention to sell the SinfoníaRx Business, the Company prepared impairment tests on the related net assets held for sale. Using a market approach to determine fair value, the Company concluded that the fair value less costs to sell did not exceed the carrying value of the net assets held for sale for the SinfoníaRx Business. As a result, the Company recorded goodwill impairment charges of $5,387 and impairment charges of $5,841 on net assets held for sale for the three and six months ended June 30, 2022. During the six months ended June 30, 2023, the Company recorded an additional $5,099 for the final loss on the sale of the SinfoníaRx Business.

The following table summarizes the assets and liabilities classified as discontinued operations on the consolidated balance sheets as of December 31, 2022:


	December 31,
	2022
Accounts receivable, net	$	3,707
Prepaid expenses and other assets		2,174
Property and equipment, net		1,320
Operating lease right-of-use assets		3,991
Software development costs, net		7,142
Intangible assets, net		13,263
Impairment of carrying value		(13,383)
Total current assets of discontinued operations	$	18,214

Operating lease liabilities	$	3,525
Accounts payable		3,188
Accrued expenses and other liabilities		5,403
Total current liabilities of discontinued operations	$	12,116

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The following table summarizes the results of operations of the SinfoníaRx Business, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue	$	—	$	8,669	$	3,536	$	15,909
Cost of revenue, exclusive of depreciation and amortization		—		6,802		4,919		13,336
Operating expenses		—		2,875		1,917		7,595
Impairment charges		—		11,228		363		11,228
Loss on divestiture of business		141		—		5,099		—
Loss from discontinued operations before income taxes		(141)		(12,236)		(8,762)		(16,250)
Income tax benefit		—		(266)		—		(204)
Net loss from discontinued operations, net of tax	$	(141)	$	(11,970)	$	(8,762)	$	(16,046)

The following table summarizes the significant operating noncash items and investing activities of the SinfoníaRx Business:


	Six Months Ended
	June 30,
	2023		2022
Depreciation and amortization	$	—	$	2,125
Impairment charges		363		11,228
Stock-based compensation		37		1,192
Loss on divestiture of business		5,099		—
Purchases of property and equipment		—		(32)
Software development costs		(358)		(2,071)

4. Revenue

The Company generates ~~the majority of its~~ revenue from ~~its CareVention HealthCare segment.~~medication fulfillment pharmacy services provided to PACE organizations and technology-enabled solutions tailored to the specific needs of the healthcare organizations that it serves.

Client contracts generally have a term of one to five years and generally renew at the end of the initial term. In most cases, clients may terminate their contracts with a notice period ranging from 0zero to 180 days without cause, thereby limiting the term in which the Company has enforceable rights and obligations. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the goods or ~~services.~~services provided. Generally, there are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that client contracts do not include a financing component.

The Company does not disclose the amount of variable consideration that the Company expects to recognize in future periods, as the variable consideration in the Company’s contracts is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to the Company’s efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. The Company’s contracts primarily include monthly fees associated with unspecified quantities of medications, members, claims, medication safety reviews, or user subscriptions that fluctuate throughout the contract. See below for a description of the Company’s revenues.

~~CareVention HealthCare~~14

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~PACE Product~~Medication Revenue

The Company provides medication fulfillment pharmacy services to PACE organizations. While the majority of medications are routinely filled in order to treat chronic conditions, the mix and quantity of medications can vary. Revenue from medication fulfillment services is generally billed monthly or weekly, depending on whether the PACE organization is contracted with a pharmacy benefit manager, and is recognized when medications are delivered and control has passed to the client. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts. The Company does not experience a significant level of returns or reshipments.

Technology-Enabled Solutions Revenue

~~PACE~~Value-Based Care Solutions

The Company provides medication safety services and health plan management services to PACE organizations. These services primarily include medication reviews, risk adjustment services, third-party administration services, and pharmacy benefit management (“PBM”) ~~solutions, and electronic health records software.~~solutions. Revenue related to these services primarily consists of a fixed monthly fee assessed based on number of members served (“per member, per month”), a fee for each claim adjudicated, and subscription fees. These fees are recognized when the Company satisfies its performance obligation to stand ready to provide PACE services, which occurs when the Company’s clients have access to the PACE services. The Company generally bills for PACE services on a monthly basis.

For client contracts for which the Company performs both medication fulfillment and PBM services, the Company recognizes revenue using the gross method at the contract price negotiated with its clients and when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescription drugs dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction, and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while performing the related PBM services. These factors indicate that the Company is the principal and, as such, the Company recognizes the total prescription price contracted with clients in revenue.

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

~~MedWise HealthCare~~

~~Medication Safety Services~~

The Company also provides medication safety services to other healthcare organizations, which include identification of high-risk individuals, medication regimen reviews, including patient and prescriber counseling, and targeted interventions to increase adherence and close gaps in care. Revenue related to these services primarily consists of per member, per month fees and fees for each medication review and clinical assessment completed. Revenue is recognized when the Company satisfies its performance obligation to stand ready to provide medication safety services, which occurs when the Company’s clients have access to the medication safety services and when medication reviews and clinical assessments are completed. The Company generally bills for the medication reviews and clinical assessments when they are completed. The Company generally bills for the medication safety services on a monthly basis.

Software Subscription and Services

The Company provides software as a service (“SaaS”) solutions which include electronic health records software and solutions that allow for the identification of individuals with high medication-related risk and for optimizing medication therapy. Revenues related to these ~~software services~~SaaS solutions primarily consist of monthly subscription fees and are recognized monthly as the Company meets its performance obligation to provide access to the software. Revenue for implementation and set-up services is generally recognized over the contract term as the software services are provided. The Company generally bills for the software services on a monthly basis.

~~Disaggregation of Revenue~~

~~In the following table, revenue is disaggregated by operating segment. Substantially all of the Company’s revenue is recognized in the U.S.~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021
CareVention HealthCare:

PACE product revenue

$
55,892

$
46,858

$
106,865

$
88,700
PACE solutions

15,853

14,347

31,188

28,266

$
71,745

$
61,205

$
138,053

$
116,966
MedWise HealthCare:

Medication safety services

$
774

$
3,037

$
1,493

$
5,997
Software subscription and services

78

55

161

112

$
852

$
3,092

$
1,654

$
6,109
Total revenue

$
72,597

$
64,297

$
139,707

$
123,075

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major revenue category. Substantially all of the Company’s revenue is recognized in the U.S.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2023		2022		2023		2022
Medication revenue	$	69,626	$	55,892	$	138,376	$	106,865
Technology-enabled solutions revenue:
Value-based care solutions		16,089		13,336		31,400		26,105
Software subscription and services		4,321		3,369		8,537		6,737
Total revenue	$	90,036	$	72,597	$	178,313	$	139,707

Contract Balances

Assets and liabilities related to the Company’s contracts are reported on a contract-by-contract basis at the end of each reporting period. Contract balances consist of contract assets and contract liabilities. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. Contract assets are classified as current or non-current based on the timing of the Company’s rights to the unconditional payments. Contract assets are generally classified as current and recorded within other current assets on the Company’s consolidated balance sheets.

Contract liabilities include advance customer payments and billings in excess of revenue recognized. The Company generally classifies contract liabilities in accrued expenses and other current liabilities and in other long-term liabilities on the Company’s consolidated balance sheets. The Company anticipates that it will satisfy most of its performance obligations associated with its contract liabilities within one year.

The following table provides information about the Company’s contract assets and contract liabilities from contracts with clients as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

June 30,

December 31,

2022

2021
Contract assets

$
22,043

$
12,695
Contract liabilities

2,902

2,191

~~Significant changes in the contract assets and the contract liabilities balances during the period are as follows:~~

June 30,

2022
Contract assets:

Contract assets, beginning of period

$
12,695
Decreases due to cash received

(10,627)
Changes to the contract assets at the beginning of the period as a result of changes in estimates

2,915
Changes during the year, net of reclassifications to receivables

17,060
Contract assets, end of period

$
22,043

Contract liabilities:

Contract liabilities, beginning of period

$
2,191
Revenue recognized that was included in the contract liabilities balance at the beginning of the period

(1,810)
Increases due to cash received, excluding amounts recognized as revenue during the year

2,521
Contract liabilities, end of period

$
2,902

~~During the six months ended June 30, 2021, the Company recognized $1,243 of revenue that was included in the December 31, 2020 contract liability balance of $1,982.~~


	June 30,		December 31,
	2023		2022
Contract assets	$	18,389	$	15,115
Contract liabilities		2,767		3,435

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Significant changes in the contract assets and the contract liabilities balances during the six months ended June 30, 2023 are as follows:



	June 30,
	2023
Contract assets:
Contract assets, beginning of period	$	15,115
Decreases due to cash received		(15,393)
Changes to the contract assets at the beginning of the period as a result of changes in estimates		820
Changes during the period, net of reclassifications to receivables		17,847
Contract assets, end of period	$	18,389

Contract liabilities:
Contract liabilities, beginning of period	$	3,435
Revenue recognized that was included in the contract liabilities balance at the beginning of the period		(2,481)
Increases due to cash received, excluding amounts recognized as revenue during the period		1,813
Contract liabilities, end of period	$	2,767

During the six months ended June 30, 2022, the Company recognized $1,810 of revenue that was included in the December 31, 2021 contract liability balance of $2,191.

5. Net Loss per Share

Basic and diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock of the Company outstanding during the period.

The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock:

Three Months Ended

Six Months Ended

June 30,

June 30,


2022

2021

2022

2021
Numerator (basic and diluted):

Net loss from continuing operations

$
(12,691)

$
(14,068)

$
(33,083)

$
(27,444)
Net loss from discontinued operations

(36,919)

(7,013)

(44,720)

(13,129)
Net loss

$
(49,610)

$
(21,081)

$
(77,803)

$
(40,573)
Denominator (basic and diluted):

Weighted average shares of common stock outstanding, basic and diluted

23,959,726

23,268,131

23,913,050

23,140,043

Net loss per share from continuing operations, basic and diluted

$
(0.53)

$
(0.60)

$
(1.38)

$
(1.19)
Net loss per share from discontinued operations, basic and diluted

(1.54)

(0.31)

(1.87)

(0.56)
Total net loss per share, basic and diluted

$
(2.07)

$
(0.91)

$
(3.25)

$
(1.75)

The following potential common shares, presented based on amounts outstanding as of June 30, 2022 and 2021, were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect.

June 30,

2022

2021
Stock options to purchase common stock

1,448,537

1,741,465
Unvested restricted stock and restricted stock units

2,324,497

1,658,481
Common stock warrants

4,646,393

4,646,393
Conversion of convertible senior subordinated notes

4,646,393

4,646,393

13,065,820

12,692,732

~~For the three and six months ended June 30, 2022 and 2021, shares related to the conversion of the convertible senior subordinated notes were included in the table above using the if-converted method.~~

For the three and six months ended June 30, 2022, shares related to the performance stock units were excluded from the table above, as the performance conditions were unmet as of June 30, 2022 (see Note 13).


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator (basic and diluted):
Net loss from continuing operations	$	(9,743)	$	(12,691)	$	(16,817)	$	(33,083)
Net loss from discontinued operations		(108)		(36,919)		(8,932)		(44,720)
Net loss	$	(9,851)	$	(49,610)	$	(25,749)	$	(77,803)
Denominator (basic and diluted):
Weighted average shares of common stock outstanding, basic and diluted		25,422,032		23,959,726		25,333,137		23,913,050

Net loss per share from continuing operations, basic and diluted	$	(0.38)	$	(0.53)	$	(0.66)	$	(1.38)
Net loss per share from discontinued operations, basic and diluted		—		(1.54)		(0.35)		(1.87)
Total net loss per share, basic and diluted	$	(0.38)	$	(2.07)	$	(1.01)	$	(3.25)

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~6. Other Current Assets~~The following potential common shares, presented based on amounts outstanding as of June 30, 2023 and 2022, were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect.


	June 30,
	2023	2022
Stock options to purchase common stock	798,896	1,448,537
Unvested restricted stock and restricted stock units	2,314,917	2,324,497
Unvested performance stock units	103,409	—
Common stock warrants	4,646,393	4,646,393
Conversion of convertible senior subordinated notes	4,646,393	4,646,393
	12,510,008	13,065,820

As of June 30, 2023 and 2022, ~~and December 31, 2021, other current assets consisted~~shares related to the conversion of the ~~following:~~convertible senior subordinated notes were included in the table above using the if-converted method.

June 30, 2022

December 31, 2021
Contract assets

$
22,043

$
12,695
Non-trade receivables

778

3,289
Other

2,200

2,049
Total other current assets

$
25,021

$
18,033

As of June 30, 2023, all shares related to performance stock units granted on April 27, 2021 and June 1, 2023 were excluded from the table above, as the performance conditions were unmet as of June 30, 2023 (see Note 14).

As of ended June 30, 2022, all shares related to performance stock units were excluded from the table above, as the performance conditions were unmet as of June 30, 2022 (see Note 14).

~~7. Property and Equipment~~

Accumulated depreciation was $18,131 and $17,427 as of June 30, 2022 and December 31, 2021, respectively. Depreciation expense on property and equipment for the three months ended June 30, 2022 and 2021 was $1,214 and $900~~, respectively. Depreciation expense on property and equipment for the six months ended June 30, 2022 and 2021 was~~ ~~$2,061 and $1,847, respectively.~~

~~8. Software Development Costs~~6. Other Current Assets

The Company capitalizes certain costs incurred in connection with obtaining or developing its proprietary software platforms, which support its product and service contracts. These costs include third-party contractors and payroll for employees directly involved with the software development, including external direct costs of material and services, and interest expense related to the borrowings attributable to software development. As of June 30, 2023 and December 31, 2022, ~~and December~~ ~~31,~~ ~~2021, capitalized software costs~~other current assets consisted of the following:

June 30, 2022

December 31, 2021
Software development costs
$
46,750

$
49,481
Less: accumulated amortization

(15,475)

(20,227)
Software development costs, net
$
31,275

$
29,254

Capitalized software development costs included above not yet subject to amortization
$
8,379

$
5,328


	June 30, 2023		December 31, 2022
Contract assets	$	18,389	$	15,115
Divestiture-related contingent consideration receivable		100		—
Non-trade receivables		445		719
Other		3,744		2,353
Total other current assets	$	22,678	$	18,187

Amortization expense for the three months ended June 30, 2022 and 2021 was $2,581 and $2,165, respectively. Amortization expense for the six months ended June 30, 2022 and 2021 was $5,781 and $4,103, respectively.

~~During~~

7. Divestiture-Related Notes Receivable

In connection with the ~~first quarter~~sale of ~~2022,~~the DoseMe Business on January 20, 2023, the Company ~~became aware~~and DoseMe Operations executed a note receivable with principal of ~~changes in circumstances impacting~~$3,000 and an annual interest rate of 7.0%, which matures on January 20, 2027. Pursuant to the ~~future functionality of certain capitalized software development costs in the MedWise HealthCare segment and evaluated the recoverability~~terms of the ~~related long-lived assets by comparing their carrying amount~~sale agreement, the principal of the note receivable was adjusted for certain customary post-closing adjustments to $2,884 as of June 30, 2023. The note receivable was recorded at the future net undiscounted cash flows expected to be generated by the assets to determine if the carrying value was not recoverable. The recoverability test indicated that certain capitalized software development costs were impaired and, as a result, the Company used an income approach to measure theestimated fair value of $1,598, adjusted for certain customary post-closing adjustments, on the DoseMe Sale Date of January 20, 2023 utilizing an imputed interest rate of 21.2%, which considers the risk-free rate corresponding to the term of the note receivable and risk premium attributed to the buyer’s credit rating for a secured or collateralized instrument. The divestiture-related note receivable is recorded in other assets ~~and recognized non-cash impairment charges of $4,062 for~~on the ~~six months ended June 30, 2022. There were no identified circumstances that would impact the future functionality of capitalized software development costs during the three months ended June 30, 2022.~~Company’s consolidated balance sheet.

In connection with the sale of the SinfoníaRx Business on March 2, 2023, the Company and Symphony executed a note receivable with principal of $3,600 and an annual interest rate of 3.0%, which matures on December 31, 2023. The note receivable was recorded at the estimated fair value of $3,480 on the SinfoníaRx Sale Date of March 2, 2023 utilizing an imputed interest rate of 7.0%, which considers the risk-free rate corresponding to the term of the note receivable and risk premium attributed to the buyer’s credit rating for a secured or collateralized instrument.

On the DoseMe Sale Date and SinfoníaRx Sale Date, the Company estimated an aggregate allowance for credit losses of $151 on divestiture-related notes receivable based on the expected future cash flows and assessment of debtor’s

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

credit quality. The Company recorded a $2 decrease to the allowance for credit losses for the three months ended June 30, 2023 due to a change in the estimated fair value of the divestiture-related note receivables as a result of certain customary post-closing adjustments.

The following summarizes the divestiture-related notes receivable balances as of June 30, 2023:


			Allowance for		Balance as of
	Amortized Cost		Credit Losses		June 30, 2023
Divestiture-related note receivable current	$	3,527	$	—	$	3,527
Divestiture-related note receivable long-term		1,654		(149)		1,505
Total	$	5,181	$	(149)	$	5,032

The following summarizes changes in the allowance for expected credit losses:


	Allowance for
	Credit Losses
Balance at January 1, 2023	$	—
Provision for credit losses		(151)
Change in provision for expected credit losses		2
Balance at June 30, 2023	$	(149)

8. Property and Equipment

Accumulated depreciation was $20,658 and $19,024 as of June 30, 2023 and December 31, 2022, respectively. Depreciation expense on property and equipment for the three months ended June 30, 2023 and 2022 was $790 and $1,214, respectively. Depreciation expense on property and equipment for the six months ended June 30, 2023 and 2022 was $1,716 and $2,061, respectively.

9. Software Development Costs

The Company capitalizes certain costs incurred in connection with obtaining or developing its proprietary software platforms, which are used to support its service contracts, including external direct costs of third-party professional services, payroll costs for employees directly involved with the software development, and interest expense related to the borrowings attributable to software development. As of June 30, 2023 and December 31, 2022, capitalized software costs consisted of the following:


	June 30, 2023		December 31, 2022
Software development costs	$	62,729	$	54,853
Less: accumulated amortization		(29,652)		(22,261)
Software development costs, net	$	33,077	$	32,592

Capitalized software development costs included above not yet subject to amortization	$	8,246	$	4,997

Amortization expense for the three months ended June 30, 2023 and 2022 was $3,715 and $2,581, respectively. Amortization expense for the six months ended June 30, 2023 and 2022 was $7,390 and $5,781, respectively.

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

During the first quarter of 2022, the Company became aware of changes in circumstances impacting the future application of certain capitalized software development costs and determined an indicator of impairment was present. The Company evaluated the recoverability of the related long-lived assets by comparing their carrying amount to the future net undiscounted cash flows expected to be generated by the assets to determine if the carrying value was not recoverable. The recoverability test indicated that certain capitalized software development costs were impaired. As a result, the Company recognized an impairment charge equal to $4,062 for the six months ended June 30, 2022. There were no identified circumstances that would impact the future functionality of capitalized software development costs during the six months ended June 30, 2023.

9.10. Goodwill and Intangible Assets

The Company’s goodwill as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$115,323, which relates to the Company’s CareVention HealthCare segment.~~$115,323.

During the first and second quarters of 2022, the Company experienced a sustained decline in the market price of its common stock and determined that an indicator of impairment was present. The Company performed a quantitative goodwill impairment assessment as of June 30, 2022, estimating the fair value of the Company’s reporting unit using a market approach. Based on the analysis performed, the Company determined that the estimated fair value of the Company’s reporting unit exceeded its carrying value, and, as a result, goodwill was not impaired as of June 30, 2022. No indicators of impairment were identified during the six months ended June 30, 2023.

Intangible assets consisted of the following as of June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


	Weighted Average							Weighted Average
	Amortization Period			Accumulated		Intangible		Amortization Period			Accumulated		Intangible
	(in years)	Gross Value		Amortization		Assets, net		(in years)	Gross Value		Amortization		Assets, net
June 30, 2022
June 30, 2023
Trade names	2.9	$	1,340	$	(939)	$	401	2.6	$	1,340	$	(1,035)	$	305
Client relationships	11.7		51,264		(13,306)		37,958	11.7		51,264		(17,939)		33,325
Non-competition agreements	5.0		1,640		(1,139)		501	5.0		1,640		(1,466)		174
Developed technology	6.2		14,720		(11,640)		3,080	6.2		14,720		(13,419)		1,301
Domain name	10.0		59		(29)		30	10.0		59		(35)		24
Total intangible assets		$	69,023	$	(27,053)	$	41,970		$	69,023	$	(33,894)	$	35,129


	Weighted Average							Weighted Average
	Amortization Period			Accumulated		Intangible		Amortization Period			Accumulated		Intangible
	(in years)	Gross Value		Amortization		Assets, net		(in years)	Gross Value		Amortization		Assets, net
December 31, 2021
December 31, 2022
Trade names	2.9	$	1,340	$	(853)	$	487	2.6	$	1,340	$	(1,000)	$	340
Client relationships	11.7		51,264		(11,042)		40,222	11.7		51,264		(15,781)		35,483
Non-competition agreements	5.0		1,640		(975)		665	5.0		1,640		(1,303)		337
Developed technology	6.2		14,720		(10,768)		3,952	6.2		14,720		(12,580)		2,140
Domain name	10.0		59		(27)		32	10.0		59		(33)		26
Total intangible assets		$	69,023	$	(23,665)	$	45,358		$	69,023	$	(30,697)	$	38,326

Amortization expense for intangible assets for the three months ended June 30, 2023 and 2022 was $1,598 and ~~2021 was~~ $1,695, ~~and $1,915,~~ respectively. Amortization expense for intangible assets for the six months ended June 30, 2023 and 2022 was $3,197 and ~~2021 was~~ $3,389, ~~and $3,831,~~ respectively.

~~The estimated amortization expense for the remainder of 2022 and each of the next five years and thereafter is as follows:~~

Years Ending December 31,

2022 (July 1 – December 31)

$
3,363
2023

6,162
2024

4,684
2025

4,466
2026

4,338
2027

4,271
Thereafter

14,686
Total estimated amortization expense

$
41,970

1720

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The estimated amortization expense for the remainder of 2023 and each of the next five years and thereafter is as follows:


Years Ending December 31,
2023 (July 1 – December 31)	$	2,685
2024		4,684
2025		4,466
2026		4,338
2027		4,271
2028		3,681
Thereafter		11,004
Total estimated amortization expense	$	35,129

~~10.~~11. Accrued Expenses and Other Liabilities

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, accrued expenses and other liabilities consisted of the following:


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Employee related expenses	$	5,442	$	8,595	$	10,257	$	10,780
Contract liability		2,751		2,015		2,311		3,309
Customer deposits		904		904		904		904
Client funds obligations*		7,062		6,038		10,400		12,372
Contract labor		2,331		838
Interest		2,340		2,281		2,133		2,133
Vendor financing arrangements		96		—		627		568
Professional fees		1,438		1,327
Professional fees and contract labor						2,605		751
Consideration payable to customer		24,587		15,971		24,015		20,311
Income and non-income taxes payable		45		15		106		8
Other expenses		3,183		3,013		5,747		4,609
Total accrued expenses and other liabilities	$	50,179	$	40,997	$	59,105	$	55,745

*This amount represents client funds held by the Company, with an offsetting amount included in restricted cash.

~~11. Lines~~12. Line of Credit and Long-Term Debt

(a) ~~Lines~~Line of Credit

On December 18, 2020, the Company and its subsidiaries entered into a Loan and Security Agreement (the “2020 Credit Facility”), with Western Alliance Bank (“WAB”). The 2020 Credit Facility provided for a $120,000 secured revolving credit facility, with a $1,000 sublimit for cash management services and letters of credit and foreign exchange transactions.

Amounts under the 2020 Credit Facility could be borrowed, repaid, and re-borrowed from time to time until the maturity date on May 16, 2025, and were permitted to be used for, among other things, working capital and other general corporate purposes. Loans under the 2020 Credit Facility bore interest at a rate equal to the LIBOR rate plus 3.25%. In the event LIBOR for any applicable interest period was less than zero percent, then the LIBOR rate would have been determined as zero percent for such interest period. If LIBOR ceased to exist or was no longer available, then the interest rate would have been replaced with an alternate base rate and spread. The obligations under the 2020 Credit Facility were secured by all of the assets of the borrowers, subject to certain exceptions and exclusions as set forth in the 2020 Credit Facility.

The 2020 Credit Facility contained certain affirmative and negative covenants that were binding on the Company, including, but not limited to, restrictions (subject to specified exceptions and qualifications) on the Company’s ability to incur indebtedness, create liens, merge or consolidate, make dispositions, pay dividends or make distributions, make investments, pay any subordinated indebtedness, enter into certain transactions with affiliates, or make capital expenditures. In addition, the 2020 Credit Facility imposed certain financial covenants, including that the Company (i) maintain unrestricted cash balances with WAB, plus amounts available for draw under the 2020 Credit Facility of at least $10,000 at all times, and (ii) maintain a leverage ratio of less than 3.00:1.00, on a trailing ~~twelve-month~~ ~~basis, measured quarterly. The 2020 Credit Facility defined amounts available for borrowing as 3 times the Company’s trailing~~ ~~twelve months~~ ~~EBITDA (as defined therein) less amounts outstanding under the 2020 Credit Facility.~~

The 2020 Credit Facility was subject to a commitment fee of 0.50% of the total commitment amount payable on the closing date and 0.25% of the total commitment amount payable on each anniversary thereafter. Additionally, the 2020 Credit Facility was subject to an unused line fee.

1821

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

As of June 30, 2022, the Company had $57,200 outstanding under the 2020 Credit Facility, plus an outstanding letter of credit of $100 issued in connection with the Company’s lease agreement for its office space in Moorestown, New Jersey. The letter of credit renewed annually until its expiration in September 2027, and reduced amounts available under the 2020 Credit Facility. As discussed in Note 18, onOn August 1, 2022, the Company entered into a payoff letter with WAB with respect to the 2020 Credit Facility, pursuant to which the Company voluntarily elected to pay all amounts outstanding, including principal and interest, under the 2020 Credit Facility and related loan documents (the “Pay Off”) using cash on hand and proceeds from the sale of the PrescribeWellness Business. Accordingly, the Company paid a total of $57,406 to WAB for the Pay Off and terminated the 2020 Credit Facility and ~~all~~ related loan ~~documents.~~

~~As of June 30, 2022,~~documents (the “Termination”). The Company did not incur any prepayment or early termination penalties in connection with either the ~~interest rate on~~Pay Off or the ~~2020 Credit Facility was 4.37%~~Termination. Upon the Termination and in connection with the ~~effective rate for~~Pay Off, all security interests and pledges granted to the ~~unused line fee was 0.35%. Interest expense on the 2020 Credit Facility was $637~~secured parties thereunder were terminated and $1,097 for the three and six months ended June 30, 2022, respectively. As of June 30, 2021, the interest rate on the 2020 Credit Facility was 3.34% and the effective rate for the unused line fee was 0.45%. Interest expense on the 2020 Credit Facility was $267 and $528 for the three and six months ended June 30, 2021, respectively.released.

In connection with the 2020 Credit Facility, the Company recorded deferred financing costs of $1,534. The Company ~~is amortizing~~amortized the deferred financing costs associated with the 2020 Credit Facility to interest expense using the effective-interest method over the ~~term of the agreement.~~term. The Company amortized $138 and $275 to interest expense for the three and six months ended June 30, 2022, respectively, for deferred financing costs. ~~The Company~~On August 1, 2022, in connection with the Termination, the remaining balance of deferred financing costs was amortized ~~$135 and $268~~ to interest expense. Interest expense ~~during~~on the 2020 Credit Facility was $637 and $1,097 for the three and six months ended June 30, 2021, respectively, for deferred financing costs. Deferred financing costs of $699 and $624, net of accumulated amortization, are included in other assets on the accompanying consolidated balance sheets as of June 30, 2022, ~~and December 31, 2021,~~ respectively. The remaining balance of deferred financing costs will be amortized to interest expense during the third quarter of 2022 in connection with the termination of the 2020 Credit Facility as described in Note 18.

(b) Convertible Senior Subordinated Notes

On February 12, 2019, the Company issued and sold an aggregate principal amount of $325,000 of 1.75% convertible senior subordinated notes (the “2026 Notes”) in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2026 Notes bear interest at a rate of 1.75% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2019. The 2026 Notes will mature on February 15, 2026, unless earlier converted or repurchased. The initial conversion rate for the ~~notes~~2026 Notes is 14.2966 shares of the Company’s common stock per $1 principal amount of the 2026 Notes. This conversion rate is equal to an initial conversion price of approximately $69.95 per share of the Company’s common stock. Net proceeds from the 2026 Notes were used to pay the cost of convertible note hedge transactions (described below), repay amounts outstanding under the Company’s 2015 Line of Credit, fund the PrescribeWellness acquisition, fund the payment of the acquisition-related contingent consideration liabilities, and for general corporate purposes.

Holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the business day immediately preceding August 15, 2025 only under the following circumstances: (1) during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5five business day period after any 5five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the 2026 Notes) per $1 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change or make-whole fundamental change (as defined in the indenture governing the 2026 Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets. On or after August 15, 2025 until the close of business on the first scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2026 Notes regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver shares of ~~our~~its common stock, cash, or a combination thereof at the Company’s option. As of June 30, ~~2022,~~2023, none of the conditions allowing holders of the 2026 Notes to convert had been met. Debt issuance costs related to the 2026 Notes of $9,372 are being amortized to interest expense using the effective interest method over the contractual term, resulting in an effective interest rate of 2.20%.

During the three months ended June 30, 2023, the Company recognized $1,762 of interest expense related to the 2026 Notes, of which $1,422 was paid or accrued and $340 was noncash accretion of the debt discounts recorded. During the six months ended June 30, 2023, the Company recognized $3,522 of interest expense related to the 2026 Notes, of which $2,844 was paid or accrued and $678 was noncash accretion of the debt discounts recorded.

1922

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

During the three months ended June 30, 2022, the Company recognized $1,755 of interest expense related to the 2026 Notes, of which $1,422 was paid or accrued and $333 was ~~non-cash~~noncash accretion of the debt discounts recorded. During the six months ended June 30, 2022, the Company recognized $3,508 of interest expense related to the 2026 Notes, of which $2,844 was paid or accrued and $664 was ~~non-cash~~noncash accretion of the debt discounts recorded.

During the three months ended June 30, 2021, the Company recognized $1,747 of interest expense related to the 2026 Notes, of which $1,421 was paid or accrued, and $326 was non-cash accretion of the debt discounts recorded. During the six months ended June 30, 2021, the Company recognized $3,493 of interest expense related to the 2026 Notes, of which $2,843 was paid or accrued, and $650 was non-cash accretion of the debt discounts recorded. In addition, unpaid additional interest payable as a result of the failure to remove the restrictive legend on the 2026 Notes had accrued on the 2026 Notes from and including February 17, 2020, but ceased accruing on February 16, 2021 as a result of the restrictive legend being removed. The Company recorded $212 of additional interest expense for the six months ended June 30, 2021.

As of June 30, ~~2022,~~2023, total accrued interest payable related to the 2026 Notes was $2,133, which is included in accrued expenses and other liabilities on the consolidated balance sheets. The 2026 Notes have a carrying value of ~~$319,963~~$321,312 as of June 30, ~~2022.~~ 2023. The 2026 Notes are classified as long-term debt on the Company’s consolidated balance sheets, and will be until such 2026 Notes are within one year of maturity.

(c)Convertible Note Hedge and Warrant Transactions

In connection with the offering of the 2026 Notes, the Company entered into convertible note hedge transactions with affiliates of certain of the initial purchasers (the “option counterparties”) of the 2026 Notes pursuant to the terms of call option confirmations. The Company has the option to purchase a total of 4,646,393 shares of its common stock at a price of approximately $69.95 per share. The total premiums paid for the note hedges were $101,660. The Company also entered into warrant transactions with the option counterparties whereby they have the option to purchase 4,646,393 shares of the Company’s common stock at a price of $105.58 per share. The Company received $65,910 in cash proceeds from the sale of the warrants. As these instruments are considered indexed to the Company's own stock and are considered equity classified, the convertible note hedges and warrants are recorded in stockholders’ equity (deficit), are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheets.

The convertible note hedge transactions are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the 2026 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2026 Notes, as the case may be. The warrant transactions could separately have a dilutive effect on the Company’s common stock to the extent that the market price per share of the Company’s common stock exceeds the strike price of the warrants.

As of June 30, ~~2022, 0~~2023, no warrants ~~have~~had been exercised and all warrants to purchase shares of the Company’s common stock were outstanding.

(d) Long-Term Debt

The following table represents the total long-term debt obligations of the Company at June 30, 2023 and December 31, 2022:


	June 30, 2023		December 31, 2022
Convertible senior subordinated notes	$	235,272	$	235,272
Convertible senior subordinated notes - related party		89,728		89,728
Unamortized discount, including debt issuance costs, on convertible senior subordinated notes		(3,688)		(4,366)
Total long-term debt, net	$	321,312	$	320,634

13. Income Taxes

For the three months ended June 30, 2023 and 2022, the Company recorded income tax expense of $133 and $159, respectively, which resulted in effective tax rates of (1.4)% and (1.3)%, respectively.

For the six months ended June 30, 2023 and 2022, the Company recorded income tax expense of $238 and $375, respectively, which resulted in effective tax rates of (1.4)% and (1.1)%, respectively.

2023

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~(d) Long-Term Debt~~

~~The following table represents the total long-term debt obligations of the Company at June 30, 2022 and December 31, 2021:~~

June 30, 2022

December 31, 2021
Convertible senior subordinated notes

$
235,272

$
325,000
Convertible senior subordinated notes - related party

89,728

—
Unamortized discount, including debt issuance costs, on convertible senior subordinated notes

(5,037)

(5,701)
Total long-term debt, net

$
319,963

$
319,299

~~12. Income Taxes~~

~~For the three months ended June 30, 2022 and 2021, the Company recorded income tax expense of $159 and $81, respectively, which resulted in effective tax rates of (1.3%) and (0.6)%, respectively.~~

~~For the six months ended June 30, 2022 and 2021, the Company recorded income tax expense of $375 and $202, respectively, which resulted in effective tax rates of (1.1%) and (0.7)%, respectively.~~

The effective tax rates differ from the U.S. statutory tax rate primarily due to the full valuation allowance recorded that is currently limiting the realizability of the Company’s net deferred tax assets as of the end of the periods presented. As of June 30, 2023 and 2022, the Company has recorded a full valuation allowance against its deferred tax assets. Accordingly, the tax benefit was limited due to unbenefited losses in the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company calculates its provision for income taxes during its interim periods by applying the estimated annual effective tax rate for the full year ordinary income or loss to the respective reporting period’s year to date income or loss, while also adding any income tax expense or benefit related to discrete items occurring within that interim period.

On February 12, 2021, the Company received a private letter ruling from the Internal Revenue Service, which determined, based on information submitted and representations made by the Company, that the Company met the requirements to deduct the interest expense resulting from the amortization of the debt discount associated with the 2026 Notes. As a result, the Company recorded a deferred tax asset of $26,313 and a corresponding $26,313 increase to its valuation allowance.

~~13.~~14. Stock-Based Compensation

In September 2016, the Company adopted the 2016 Equity Compensation Plan (“2016 Plan”). During the term of the 2016 Plan, the share reserve will automatically increase on the first trading day in January of each calendar year by an amount equal to the lesser of 5% of the total number of outstanding shares of common stock on the last trading day in December of the prior calendar year or such other number set by the ~~Company’s~~ Board of Directors (the “Board”). In accordance with the terms of the 2016 Plan, the share reserve increased by ~~1,283,321~~1,356,454 shares on ~~February 25, 2022.~~March 10, 2023. As of June 30, ~~2022, 1,817,777~~2023, 2,236,092 shares were available for future grants under the 2016 Plan.

The ~~following~~ stock-based compensation information disclosed below ~~include~~includes results of both continuing and discontinued operations.

Restricted Stock Awards

The Company issues restricted stock awards pursuant to the 2016 Plan to employees and non-employee directors. Restricted stock awards generally vest over a one to four-year period and the unvested portion of these awards is forfeited if the employee or non-employee director leaves the Company before the vesting period is completed. The grant-date fair value of restricted stock awards is determined using the Company’s closing stock price at grant date.

The following table summarizes the aggregate restricted stock award activity, inclusive of performance-based restricted stock awards, under the 2016 Plan for the six months ended June 30, 2023:


		Weighted
		average
	Number	grant-date
	of shares	fair value
Outstanding at December 31, 2022	2,193,444	$	18.33
Granted	230,295		6.71
Vested	(707,195)		20.35
Forfeited	(268,515)		31.69
Outstanding at June 30, 2023	1,448,029	$	13.02

For the three months ended June 30, 2023 and 2022, $2,139 and $5,578, respectively, of expense was recognized related to restricted stock awards, excluding performance-based restricted stock awards described below. For the six months ended June 30, 2023 and 2022, $4,339 and $12,847, respectively, of expense was recognized related to restricted stock awards, excluding performance-based restricted stock awards described below.

As of June 30, 2023, there was unrecognized compensation expense of $14,531 related to unvested restricted stock awards, excluding performance-based restricted stock awards described below, under the 2016 Plan, which are expected to be recognized over a weighted average period of 1.8 years.

2124

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~Restricted Common Stock and~~ Restricted Stock Units

The Company issues ~~restricted stock awards and~~ restricted stock units pursuant to the 2016 Plan to employees and non-employee directors. Restricted stock ~~awards and restricted stock~~ units generally vest over a one- to four-year period and the unvested portion of these awards is forfeited if the employee or non-employee director leaves the Company before the vesting period is completed. The grant-date fair value of restricted stock ~~awards and restricted stock~~ units is determined using the Company’s closing stock price at the grant date.

The following table summarizes the aggregate ~~restricted stock award activity, inclusive of performance based restricted stock awards, and~~ restricted stock unit activity under the 2016 Plan for the six months ended June 30, ~~2022.:~~2023:


		Weighted			Weighted
		average			average
	Number	grant-date		Number	grant-date
	of shares	fair value		of shares	fair value
Outstanding at December 31, 2021	2,196,566	$	40.19
Outstanding at December 31, 2022				109,453	$	6.71
Granted	768,351		5.32	811,396		5.44
Vested	(456,774)		44.01
Forfeited	(169,424)		36.67
Outstanding at June 30, 2022	2,338,719	$	28.24
Outstanding at June 30, 2023				920,849	$	5.59

The table above includes ~~14,222~~53,961 restricted stock units which ~~have~~had vested but had not been issued as of June 30, ~~2022, have not been issued.~~2023.

For the three months ended June 30, 2023 and 2022, $332 and ~~2021, an aggregate of $5,681 and $10,124~~$103, respectively, of expense ~~respectively,~~ was recognized related to restricted stock ~~awards and restricted stock units, excluding performance-based restricted stock awards described below.~~

units. For the six months ended June 30, 2023 and 2022, $389 and ~~2021, an aggregate of $13,068 and $16,399~~$221, respectively, of expense ~~respectively,~~ was recognized related to restricted stock ~~awards and restricted stock units, excluding performance-based restricted stock awards as described below.~~ units.

As of June 30, ~~2022,~~2023, there was unrecognized compensation expense of ~~$44,394~~$4,345 related to unvested restricted stock ~~awards and unvested restricted stock~~ units, ~~excluding performance-based restricted stock awards described below,~~ under the 2016 Plan, which isare expected to be recognized over a weighted average period of ~~2.4~~3.5 years.

Performance-Based Equity Awards

On May 4, 2020, pursuant to the 2016 Plan, the Board approved grants totaling 10,686 shares of restricted stock to an employee. The grants were recorded using a grant-date fair value of $56.14 per share which was based on the Company’s closing stock price on the grant date. The grants were subject to certain performance conditions for the two-year period ended March 2, 2022, which were not achieved. As a result, the grants expired, and 0 expense was recognized during the six months ended June 30, 2022.

On October 29, 2020, pursuant to the 2016 Plan, the Board approved grants totaling 26,400 shares of restricted stock to certain employees, of which 1,400 expired on April 30, 2021 and 12,500 expired on December 31, 2021. The remaining 12,500 shares fully vested subject to the achievement of certain milestones on December 31, 2021. The awards had a grant-date fair value of $35.95 per share based on the Company’s closing stock price on the grant date. Stock-based compensation costs associated with these grants were recognized over the service period based upon the Company’s assessment of the probability that the performance conditions would be achieved. The Company recognized $148 and $362 of stock-based compensation expense related to these grants for the three and six months ended June 30, 2021, respectively.

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

On April 27, 2021, pursuant to the 2016 Plan, the Board approved awards of performance stock units to certain employees. Each award reflects a target number of shares (“Target 2021 Shares”) that may be issued to the award recipient. ~~As of June 30, 2022, the number of Target Shares was 86,175 shares.~~ The awards are earned upon the Company’s achievement of certain revenue performance targets during the three-year performance period ending December 31, 2023. Depending on the results achieved during the performance period, the actual number of shares that a grant recipient may receive at the end of the performance period may range from 0% to 200% of the Target 2021 Shares granted. The performance stock unit awards have a grant-date fair value of $44.13 per share based on the Company’s closing stock price on the grant date. Stock-based compensation costs associated with these grants are recognized over the performance period based upon the Company’s assessment of the probability that the performance targets will be achieved. The Company did not recognize any stock-based compensation expense related to the performance stock units ~~resulting in 0 stock-based compensation expense~~ for the three and six months ended June 30, 2023 and 2022, as the achievement of the underlying performance targets was considered unlikely. During the six months ended June 30, ~~2022, 6,550~~2023, 14,650 performance stock units expired. As of June 30, ~~2022,~~2023, the number of Target 2021 Shares was 30,900 shares, the maximum number of achievable performance stock units was ~~172,350~~61,800 and the maximum unrecognized compensation expense was ~~$7,606~~$2,727.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

On August 22, 2022, pursuant to the 2016 Plan, the Board approved awards of performance stock units to certain executives. Each award reflects a target number of shares (“Target 2022 Shares”) that may be issued to the award recipient. The awards are earned upon the Company’s achievement of certain market performance targets during the three-year performance period ending December 31, 2024. Depending on the results achieved during the performance period, the actual number of shares that a grant recipient may receive at the end of the performance period may range from 0% to 200% of the Target 2022 Shares granted. The performance stock unit awards have a grant-date fair value of $4.38 per share based on the fair value of the Company’s stock price at grant date and the expected vesting units, taking into consideration the possibilities of all possible performance achievement levels. Stock-based compensation costs associated with these grants are recognized over the performance period. The Company recognized $162 and $322, respectively, of stock-based compensation expense related to the performance stock units for the three and six months ended June 30, 2023. As of June 30, 2023, the number of Target 2022 Shares was 350,000 shares, the maximum number of achievable performance stock units was 700,000, and the remaining unrecognized compensation expense was $978.

On June 1, 2023, pursuant to the 2016 Plan, the Board approved awards of performance stock units to certain employees. Each award reflects a target number of shares (“Target 2023 Shares”) that may be issued to the award recipient. The awards are earned based upon the Company’s achievement of certain performance targets during the three-year performance period ending December 31, 2025. Depending on the results achieved during the performance period, the actual number of shares that a grant recipient may receive at the end of the performance period may range from 0% to 200% of the Target 2023 Shares granted. The performance stock unit awards have a grant-date fair value of $5.44 per share based on the Company’s closing stock price on the grant date. Stock-based compensation costs associated with these grants are recognized over the performance period based upon the Company’s assessment of the probability that the performance targets will be achieved. The Company recognized $125 of stock-based compensation expense related to the performance stock units for the three and six months ended June 30, 2023. As of June 30, 2023, the number of Target 2023 Shares was 618,055 shares, the maximum number of achievable performance stock units was 1,236,110, and the maximum unrecognized compensation expense was $6,600.

Other Stock Awards

During the first quarter of 2021, the Board approved the grant of stock awards to certain non-employee directors and to a consultant pursuant to the 2016 Plan. The awards provided for the issuance of 1,416 shares of the Company’s common stock, which immediately vested on the grant date. These grants had a weighted average grant-date fair value of $40.85 per share. For the six months ended June 30, 2021, the Company recorded $58 of expense related to these stock awards.

During the first quarter of 2022, the Board approved grants of stock awards to certain non-employee directors and employees pursuant to the 2016 Plan. The awards provided for the issuance of 16,471 shares of the Company’s common stock, which immediately vested on the grant date. These grants had a weighted average grant-date fair value of $5.57 per share. For the six months ended June 30, 2022, the Company recorded $92 of expense related to these stock awards.

During the second quarter of 2022, the Board approved grants of stock awards to certain non-employee directors pursuant to the 2016 Plan. The awards provided for the issuance of 12,262 shares of the Company’s common stock, which immediately vested on the grant date. These grants had a weighted average grant-date fair value of $3.64 per share. For both the three and six months ended June 30, 2022, the Company recorded $45 of expense related to these stock awards.

Stock Options

The Company recorded ~~$966~~$12 and ~~$1,861~~$966 of stock-based compensation expense related to the vesting of employee and non-employee director stock options for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company recorded ~~$2,096~~$63 and ~~$3,916~~$2,096 of stock-based compensation expense related to the vesting of employee and non-employee director stock options for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company records forfeitures as they occur.

~~NaN~~No grants for employee and non-employee director stock options were made during the six months ended June 30, 2023 and 2022. ~~The table below sets forth the weighted average assumptions for employee grants during the six months ended June 30, 2021:~~


	~~Six Months Ended~~
~~Valuation assumptions:~~	~~June 30, 2021~~
~~Expected volatility~~	~~58.57~~	%
~~Expected term (years)~~	~~5.48~~
~~Risk-free interest rate~~	~~0.50~~	%
~~Dividend yield~~	—

2326

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

~~The weighted average grant date fair value of employee options granted during the six months ended June 30, 2021 was $28.26 per share.~~

The following table summarizes stock option activity under the 2016 Plan for the six months ended June 30, ~~2022:~~2023:


				Weighted						Weighted
		Weighted		average				Weighted		average
		average		remaining	Aggregate			average		remaining	Aggregate
	Number	exercise		contractual	intrinsic		Number	exercise		contractual	intrinsic
	of shares	price		term	value		of shares	price		term	value
Outstanding at December 31, 2021	1,604,226	$	29.90
Outstanding at December 31, 2022							1,177,805	$	28.39
Exercised	(12,573)		5.01				(138,715)		3.11
Forfeited	(143,116)		46.27				(240,194)		29.63
Outstanding at June 30, 2022	1,448,537	$	28.49	4.9	$	-
Options vested and expected to vest at June 30, 2022	1,448,537	$	28.49	4.9	$	-
Exercisable at June 30, 2022	1,379,541	$	27.16	4.8	$	-
Outstanding at June 30, 2023							798,896	$	32.40	4.3	$	96
Options vested and expected to vest at June 30, 2023							798,896	$	32.40	4.3	$	96
Exercisable at June 30, 2023							798,434	$	32.39	4.3	$	96

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the Company’s closing stock price or estimated fair value on the last trading day of the fiscal quarter for those stock options that had exercise prices lower than the fair value of the ~~Company's~~Company’s common stock. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised during the six months ended June 30, 2023 and 2022 was $458 and ~~2021 was~~ $2, ~~and $10,601,~~ respectively.

As of June 30, ~~2022,~~2023, there was ~~$2,057~~$9 of total unrecognized compensation cost related to ~~nonvested~~unvested stock options granted under the 2016 Plan, which is expected to be recognized over a weighted average period of ~~0.6~~0.3 years.

Cash received from option exercises for the six months ended June 30, 2023 and 2022 was $219 and ~~2021 was~~ $60, ~~and $3,082,~~ respectively.

During the six months ended June 30, 2023, restricted share award holders delivered 131,330 shares of common stock, with a fair value of $658, for employee payroll taxes owed for the vesting of restricted stock awards.

The Company recorded total stock-based compensation expense for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 in the following expense categories of its consolidated statements of operations:

Three Months Ended

Six Months Ended

June 30,

June 30,


2022

2021

2022

2021
Cost of revenue - product

$
223

$
337

$
447

$
596
Cost of revenue - service

570

898

1,471

1,748
Research and development

761

2,069

2,280

3,272
Sales and marketing

50

345

308

1,042
General and administrative

3,488

6,178

8,289

10,541
Discontinued operations

1,600

2,522

2,506

3,752
Total stock-based compensation expense

$
6,692

$
12,349

$
15,301

$
20,951


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of medication revenue	$	127	$	223	$	239	$	447
Cost of technology-enabled solutions revenue		378		570		745		1,471
Research and development		206		761		407		2,280
Sales and marketing		102		50		188		308
General and administrative		1,957		3,488		3,621		8,289
Discontinued operations		—		1,600		38		2,506
Total stock-based compensation expense	$	2,770	$	6,692	$	5,238	$	15,301

Employee Stock Purchase Plan

In February 2021, the Board, subject to stockholder approval, adopted the Tabula Rasa HealthCare, Inc. Employee Stock Purchase Plan (the “ESPP”), which allows eligible employees to purchase common shares of Company stock through payroll deductions at a 15% discount off the lower of (i) the fair market value per share of common stock on the start date of the applicable offering period or (ii) the fair market value per share of common stock on the purchase date. The ESPP was approved by the Company’s stockholders at the 2021 annual meeting of stockholders in June 2021. The number of shares of common stock reserved for issuance under the ESPP will initially be 480,097 shares, subject to adjustment as provided in the ESPP, all of which remained available as of June 30, ~~2022.~~2023.In connection with the

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

proposed Merger, as defined and further described in Note 19, the Company has suspended the ESPP, which will be terminated contingent upon, and effective immediately prior to, the closing of the Merger.

~~14.~~15. Fair Value Measurements

The Company’s financial instruments consist of money market funds, accounts receivable, client claims receivables, contract assets, contingent consideration receivable, accounts payable, client claims payable, contract liabilities, accrued expenses, vendor financing arrangements, ~~line of credit,~~ and long-term debt, which includes the Company’s convertible senior subordinated notes. The carrying values of accounts receivable, client claims receivables, contract assets, accounts payable, client claims payable, contract liabilities, and accrued expenses are representative of their fair values due to the relatively short-term nature of those instruments. Vendor financing arrangements are recorded at net carrying value, which approximates fair value. ~~The outstanding principal balance of the line of credit is representative of its fair value due to it being variable-rate debt.~~ See below for additional information on the Company’s contingent consideration receivable and convertible senior subordinated notes.

The Company had classified assets measured at fair value on a recurring basis at June 30, 2023 as follows:


	Fair Value Measurement
	at Reporting Date Using
							Balance as of
	Level 1		Level 2		Level 3		June 30, 2023
Assets
Money market funds	$	48,264	$	—	$	—	$	48,264
Contingent consideration receivable - current		—		—		100		100
Total	$	48,264	$	—	$	100	$	48,364

Level 1 instruments include investments in money market funds with an original maturity of three months or less and are valued based on quoted prices in active markets at the measurement date.

In connection with the sale of the PrescribeWellness Business on August 1, 2022, additional consideration (“PW Contingent Consideration Receivable”) may be payable to the Company based on the achievement of certain customer and revenue metrics, as defined in the corresponding purchase agreement, for the years ending December 31, 2023 and 2024. See Note 3 for additional information regarding the sale of the PrescribeWellness Business.

In connection with the sale of the SinfoníaRx Business on March 2, 2023, additional consideration (“SinfoníaRx Contingent Consideration Receivable”) may be payable to the Company based upon potential regulatory changes affecting the business, as defined in the corresponding purchase agreement. See Note 3 for additional information regarding the sale of the SinfoníaRx Business.

The contingent consideration receivables are classified as a current or noncurrent asset based on their expected payment dates, and they are subject to remeasurement at each balance sheet date. The contingent consideration receivables are measured at fair value on a recurring basis and may include the use of significant unobservable inputs, hence these instruments represent Level 3 measurements within the fair value hierarchy. All changes in contingent consideration subsequent to the initial sale-date measurement are recorded in net income or loss.

The fair value of the PW Contingent Consideration Receivable was determined using a Monte Carlo simulation with the assistance of a third-party appraiser. The contingent consideration receivable was recorded at the estimated fair value of $7,000 at the sale date of August 1, 2022. During the three and six months ended June 30, 2023, the Company recorded a charge of $3,350 to decrease the fair value of the contingent consideration receivable to zero based on updated estimates utilized in the contingent consideration valuation.

The fair value of the SinfoníaRx Contingent Consideration Receivable was determined using a scenario-based method. The contingent consideration receivable was recorded at the estimated fair value of $500 at the sale date of March 2, 2023. During the six months ended June 30, 2023, the Company recorded a charge of $400 to decrease the fair value of the SinfoníaRx Contingent Consideration Receivable primarily due to updated estimates used in the contingent

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

consideration valuation. The estimated fair value of the SinfoníaRx Contingent Consideration Receivable was $100 as of June 30, 2023 and was included in other current assets on the Company’s consolidated balance sheet.

The changes in fair value of the Company’s contingent consideration receivables for the six months ended June 30, 2023 was as follows:


Balance at December 31, 2022	$	3,350
Fair value of SinfoníaRx Contingent Consideration Receivable		500
Adjustments to fair value measurement		(3,750)
Balance at June 30, 2023	$	100

The following table presents the financial instruments that are not carried at fair value but require fair value disclosure as of June 30, ~~2022:~~2023:


	Face Value		Carrying Value		Fair Value		Face Value		Carrying Value		Fair Value
1.75% Convertible Senior Subordinated Notes due 2026	$	325,000	$	319,963	$	219,193	$	325,000	$	321,312	$	271,255

The fair value of the 2026 Notes at each balance sheet date is determined based on recent quoted market prices for these notes which is a Level 2 measurement. As discussed in Note ~~11,~~12, the 2026 Notes are carried at their aggregate face value of $325,000, less any unamortized debt issuance costs.

~~15.~~16. Commitments and Contingencies

(a) Employment Agreements

The Company has change-in-control and severance agreements with each of the Company’s named executive officers and other key members of management that provide for, among other things, salary, performance bonuses, or other incentive compensation, payments in the event of termination of the executives upon the occurrence of a change in control, and restrictive covenants pursuant to which the employees have agreed to refrain from competing with the Company or soliciting the Company’s employees or clients for a period following the employee’s termination of employment.

(b) ��Legal Proceedings

~~The~~As of June 30, 2023, the Company iswas not ~~currently~~ involved in any significant claims or legal actions that, in the opinion of management, ~~are expected to~~would have a material adverse impact on the Company.

On March 29, 2019, the Company entered into an Affiliated Pharmacy Agreement and Pharmaceutical Program Supply Agreement (the “Prior Thrifty Drug Agreements”) with Thrifty Drug Stores, Inc. (“Thrifty Drug”). On July 1, 2020, the Company entered into a new Affiliated Pharmacy Agreement and Pharmaceutical Program Supply Agreement with Thrifty Drug (the “Thrifty Drug Agreements”) to replace the Prior Thrifty Drug Agreements, which, among other things, extended the Company’s agreement with Thrifty Drug through ~~September 30, 2023.~~March 31, 2024. Pursuant to the terms of the Thrifty Drug Agreements, the Company has agreed to purchase not less than 98% of the Company’s total prescription product requirements from Thrifty Drug. The Company commenced purchasing prescription products under the Prior Thrifty Drug Agreements in May 2019 and has continued to do so under the Thrifty Drug Agreements beginning in July 2020. Both the Prior Thrifty Drug Agreements and the Thrifty Drug Agreements authorize Thrifty Drug to hold a security interest in all of the products purchased by the Company under the respective agreements.

As of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 the Company had ~~$1,723~~$2,172 and ~~$1,854,~~$4,608, respectively, due to Thrifty Drug ~~as a result of~~for prescription drug purchases.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

In December 2019, the Company entered into an updated agreement with its data aggregation partner related to the Company’s pharmacy cost management services. The agreement is effective January 1, 2020 with a three-year term expiring December 31, 2022June 2021 and ~~commits the Company to a monthly minimum purchase obligation of $30.~~

~~In June~~October 2021, the Company entered into ~~an updated agreement~~agreements with ~~its~~a provider offor cloud hosting and support services. The June 2021 agreement iswas effective as of June 3, 2021 and ~~expires~~will expire on April 28, ~~2024 and commits~~2024. Pursuant to the June 2021 agreement, the Company is committed to a minimum purchase obligation of $1,272 over the ~~contract term.~~term of the agreement. The October 2021 agreement was effective as of October 1, 2021 and will expire on September 30, 2024. Pursuant to the October 2021 agreement, the Company is committed to a minimum purchase obligation of $7,050 over the term of the agreement. Commitments under the October 2021 agreement are inclusive of commitments under the June 2021 agreement. As of June 30, ~~2022,~~2023, the Company had a remaining commitment of ~~$802.~~$2,350 under the October 2021 agreement, of which $253 pertained to the June 2021 agreement.

In August 2021, the Company entered into an agreement with a third party to provide enterprise support and information technology services. The agreement iswas effective as of November 1, 2021 and ~~expires~~will expire on October 31, 2026 and commits the Company to a minimum purchase obligation of $8,960 through October 31, 2024. As of June 30, ~~2022,~~2023, the Company had a remaining commitment of ~~$6,969.~~

In October 2021, the Company entered into an agreement with a provider for enterprise support services. The agreement is effective October 1, 2021 and expires on September 30, 2024. The three-year contract commits the Company to an obligation of $7,050 over the duration of the contract term. As of June 30, 2022, the Company had a remaining commitment of $5,159.

In November 2021, the Company entered into an agreement with a new provider for additional hosting services. The agreement is effective November 25, 2021 and expires on November 25, 2022 and commits the Company to a minimum purchase obligation of $1,598 over the contract term. As of June 30, 2022, the Company had a remaining commitment of $729.$3,876.

~~16. Segment Reporting~~

~~The Company operates its business through 2 segments. As discussed in Note 3 above, the divestiture of the PrescribeWellness business and the planned~~ ~~divestitures of the DoseMe and~~ ~~SinfoníaRx businesses, which collectively comprise the majority of the Company’s MedWise HealthCare segment,~~ represent a strategic business shift in the Company’s operations. The Company determined that these businesses met the requirements of discontinued operations as of June 30, 2022, and as a result, are excluded from the Company’s segment reporting. The Company presents continuing operations of the remaining components of the MedWise HealthCare segment combined with its shared services.

The Company's chief operating decision maker (“CODM”), the Chief Executive Officer, allocates resources and assesses performance based upon financial information at the reportable segment level. Substantially all revenues are generated and substantially all tangible assets are held in the U.S.

CareVention HealthCare primarily provides services to PACE organizations that include medication fulfillment pharmacy services and PACE solutions, such as medication safety services, PBM solutions, and health plan management services.

~~MedWise HealthCare primarily generates revenues from~~ ~~medication safety services and software subscription solutions,~~ ~~which identify individuals with high medication-related risk and optimize medication therapy.~~

~~Shared services primarily consist of~~ ~~unallocated~~ ~~corporate sales and marketing expenses and general and administrative expenses associated with the management and administration of the Company’s business objectives.~~

~~The CODM uses revenue in accordance with GAAP and Adjusted EBITDA as the relevant segment performance measures to evaluate the performance of the segments and allocate resources.~~

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

Adjusted EBITDA is a segment performance financial measure that offers a useful view of the overall operation of the Company’s businesses and may be different from similarly titled segment performance financial measures used by other companies.

Adjusted EBITDA consists of net loss plus certain other expenses, which include interest expense, income tax expense, depreciation and amortization, impairment charges, settlement costs, business optimization expenses, severance costs, executive transition costs, divestiture-related expense, acquisition-related expense, and stock-based compensation expense. The Company considers settlement costs to include amounts payable by the Company or reductions to amounts owed to the Company as a result of a contractual settlement. The Company considers business optimization expenses to include contract termination payments, severance, retention payments, and other employee and non-recurring vendor costs incurred related to its business optimization initiatives during 2022. The Company considers severance costs to include severance payments related to the realignment of its resources. The Company considers executive transition costs to include nonrecurring costs related to hiring and onboarding of new named executive officers. The Company considers divestiture-related expense to include nonrecurring direct transaction costs. The Company considers acquisition-related expense to include nonrecurring direct transaction and integration costs.

Management considers revenue and Adjusted EBITDA to be the appropriate metric to evaluate and compare the ongoing operating performance of the Company’s segments on a consistent basis across reporting periods as it eliminates the effect of items which are not indicative of each segment’s core operating performance.

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

~~The following tables present the Company’s segment information:~~

CareVention HealthCare

Shared Services and Other

Consolidated
Revenue:

Three Months Ended June 30, 2022

Product revenue

$
55,892

$
—

$
55,892
Service revenue

PACE solutions

15,853

—

15,853
Medication safety services

—

774

774
Software subscription and services

—

78

78
Total service revenue

15,853

852

16,705
Total revenue

$
71,745

$
852

$
72,597

Three Months Ended June 30, 2021

Product revenue

$
46,858

$
—

$
46,858
Service revenue

PACE solutions

14,347

—

14,347
Medication safety services

—

3,037

3,037
Software subscription and services

—

55

55
Total service revenue

14,347

3,092

17,439
Total revenue

$
61,205

$
3,092

$
64,297

Six Months Ended June 30, 2022

Product revenue

$
106,865

$
—

$
106,865
Service revenue

PACE solutions

31,188

—

31,188
Medication safety services

—

1,493

1,493
Software subscription and services

—

161

161
Total service revenue

31,188

1,654

32,842
Total revenue

$
138,053

$
1,654

$
139,707

Six Months Ended June 30, 2021

Product revenue

$
88,700

$
—

$
88,700
Service revenue

PACE solutions

28,266

—

28,266
Medication safety services

—

5,997

5,997
Software subscription and services

—

112

112
Total service revenue

28,266

6,109

34,375
Total revenue

$
116,966

$
6,109

$
123,075

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

CareVention HealthCare

Shared Services and Other

Consolidated
Adjusted EBITDA (loss) from Continuing Operations:

Three Months Ended June 30, 2022

Adjusted EBITDA (loss)

$
13,396

$
(11,339)

$
2,057

Three Months Ended June 30, 2021

Adjusted EBITDA (loss)

$
14,059

$
(10,796)

$
3,263

Six Months Ended June 30, 2022

Adjusted EBITDA (loss)

$
25,480

$
(22,341)

$
3,139

Six Months Ended June 30, 2021

Adjusted EBITDA (loss)

$
26,969

$
(22,123)

$
4,846

~~The following table presents the Company’s reconciliation of the segments’ total Adjusted EBITDA to net loss as presented in the consolidated statements of operations:~~

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations

Net loss

$
(49,610)

$
(21,081)

$
(77,803)

$
(40,573)
Add:

Interest expense, net

2,444

2,182

4,713

4,729
Income tax expense

159

81

375

202
Depreciation and amortization

5,489

4,980

11,231

9,781
Impairment charges

—

—

4,062

—
Business optimization expenses

—

—

787

—
Severance costs

—

162

575

162
Executive transition

150

—

150

—
Divestiture-related expense

1,414

—

1,534

—
Acquisition-related expense

—

99

—

217
Stock-based compensation expense

5,092

9,827

12,795

17,199
Loss from discontinued operations

36,919

7,013

44,720

13,129
Adjusted EBITDA from continuing operations

$
2,057

$
3,263

$
3,139

$
4,846
Adjusted EBITDA from discontinued operations

1,117

2,700

2,557

4,716
Total Adjusted EBITDA

$
3,174

$
5,963

$
5,696

$
9,562

~~Table of Contents~~

~~TABULA RASA HEALTHCARE, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands, except share and per share data)~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021
Reconciliation of Net Loss from Discontinued Operations, net of tax to Adjusted EBITDA from Discontinued Operations

Net loss from discontinued operations, net of tax

$
(36,919)

$
(7,013)

$
(44,720)

$
(13,129)
Add:

Income tax (benefit) expense

(686)

52

(568)

130
Depreciation and amortization

—

6,639

7,331

13,463
Impairment charges

35,608

—

36,448

—
Settlement

1,448

500

1,448

500
Divestiture-related expense

66

—

112

—
Stock-based compensation expense

1,600

2,522

2,506

3,752
Adjusted EBITDA from discontinued operations

$
1,117

$
2,700

$
2,557

$
4,716

~~Asset information by segment is not a key measure of performance used by the CODM. Accordingly, the Company has not disclosed asset information by segment.~~

17. Related Party Transactions

The ~~Company’s CareVention HealthCare segment~~Company provides medication fulfillment pharmacy services and certain PACE solutions services to a client whose Chief Executive Officer is a member of the Board. For the three months ended June 30, 2023 and 2022, $1,854 and ~~2021,~~ $1,888, ~~and $1,696,~~ respectively, of revenue related to this client was included in the Company’s consolidated statements of operations. For the six months ended June 30, 2023 and 2022, $3,730 and ~~2021,~~ $3,647, ~~and $3,155,~~ respectively, of revenue related to this client was included in the Company’s consolidated statements of ~~operations,~~operations. As of June 30, 2023 and ~~$147~~December 31, 2022, $209 and ~~$67~~$145, respectively, was included in accounts receivable, net, ~~as of June 30, 2022 and December 31, 2021, respectively,~~ on the Company’s consolidated balance sheets. ~~The Company believes that these transactions are on terms comparable to those that the Company could reasonably expect in an arm’s length transaction with an unrelated third party.~~

AsDuring the second quarter of ~~June 30,~~ 2022, a holder of the Company’s convertible senior subordinated notes became a significant stockholder. The stockholder held approximately ~~$88,337~~$88,709 and $88,522 of the Company’s convertible senior subordinated notes, net of discount, which is presented on the Company’s consolidated balance ~~sheet~~sheets as of June 30, ~~2022.~~2023 and December 31, 2022, respectively. See Note 1112 for more information on the Company’s convertible senior subordinated notes.

~~18. Subsequent Events~~

~~a) Closing~~On September 13, 2022, in connection with the entry into separation agreements with two retired named executive officers, the Company incurred $9,927 of ~~Sale~~separation costs, which included stock-based compensation related to the accelerated vesting of ~~PrescribeWellness Business~~unvested shares of restricted stock, severance payments and benefits, relevant payroll taxes, and outplacement services. These costs were included within general and administrative expenses in the Company’s consolidated statement of operations during the third quarter of 2022. As of June 30, 2023, $787 is included within accrued expenses and other liabilities on the Company’s consolidated balance sheets.

OnAs discussed in Note 19, on August ~~1, 2022 (the “Closing Date”),~~5, 2023, the Company ~~completed~~entered into the ~~sale~~Voting Agreement with the Specified Stockholders, including a director of the Company. See Note 19 for more information on the Voting Agreement.~~PrescribeWellness Business~~

18. Rights Plan

On July 25, 2022, the Board approved and adopted a Rights Agreement (the “Rights Agreement”), by and between the ~~acquisition~~Company and American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the Rights Agreement, the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of common stock. The Rights are distributable to stockholders of record as of the ~~KD Assets. At~~close of business on August 5, 2022 and are not exercisable initially. If the ~~closing, pursuant~~Rights become exercisable, each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of a newly-designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.0001 per share, of the Company, at an exercise price of $26.00, subject to adjustment. The Rights expired on July 25, 2023 in accordance with the terms of the ~~PW Purchase Agreement and as consideration for the transactions contemplated thereby, TDS paid to Seller approximately $125,000 in cash, subject to certain adjustments as forth in the PW Purchase~~Rights Agreement.

~~(b) 2020 Credit Facility Payoff and Termination~~

~~Also on the Closing Date, the Company entered into an agreement with WAB with respect to the~~ 2020 Credit Facility (the “Payoff Letter”), pursuant to which the Company voluntarily elected to pay all amounts outstanding under the 2020 Credit Facility and related loan documents (the “Repayment”) using cash on hand and proceeds from the sale of the PrescribeWellness Business. Accordingly, on the Closing Date, the Company paid a total of $57.4 million to WAB for the Repayment, and terminated the 2020 Credit Facility and related loan documents (the “Termination”). The

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Company did not incur any prepayment or early termination penalties in connection with either the Repayment or the Termination. Upon the Termination and in connection with the Repayment Letter, all security interests and pledges granted to the secured parties thereunder were terminated and released.

19. Subsequent Event

~~(c) Rights~~MergerAgreement

On August 5, 2023, the Company entered into an Agreement and Plan ~~Adoption~~of Merger (the “Merger Agreement”) with Locke Buyer, LLC, a Delaware limited liability company (“Parent”), and Locke Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, on the terms and conditions set forth therein and in accordance with the Delaware General Corporation Law (the “DGCL”), Merger Sub will merge with and into the Company with the Company surviving the merger as a wholly owned subsidiary of Parent (the “Merger”). Consummation of the Merger is subject to the approval of the Company’s stockholders, receipt of certain required regulatory approvals, and other customary closing conditions.

On ~~July 25, 2022,~~ the ~~Board~~terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved by the Board, at the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock issued and ~~adopted~~outstanding immediately prior to the Effective Time (other than shares of Company common stock (i) owned by Parent or Merger Sub, (ii) owned by the Company as treasury shares or (iii) held by any person who properly exercises appraisal rights under the DGCL) shall be converted into the right to receive an amount in cash equal to $10.50 per share, without interest (the “Merger Consideration”).

In addition, on the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, each outstanding (i)(A) restricted stock unit that is subject solely to time-based vesting conditions, whether vested or unvested, and (B) share of Company common stock that is subject to vesting, repurchase or forfeiture, and (ii) restricted stock unit that is subject to both performance-based and time-based vesting conditions (each, a ~~Rights Agreement, dated~~“Company PSU”) that is vested as of ~~July 25, 2022 (the “Rights Agreement”~~immediately prior to the Effective Time but not yet settled or that automatically vests as a result of the Merger in accordance with its terms and without the exercise of discretion (each, a “Vested Company PSU”), in the case of each of clause (i) and (ii), will be canceled and the holder thereof will be entitled to receive an amount in cash equal to the Merger Consideration, provided that any Company PSU that does not constitute a Vested Company PSU will be forfeited and canceled for no consideration. Moreover, at the Effective Time, each outstanding option to purchase shares of Company common stock as of immediately prior to the Effective Time, whether vested or unvested, will be canceled and the holder thereof will be entitled to receive an amount in cash equal to the product of the number of shares of Company common stock subject to such option, multiplied by the excess of the Merger Consideration over the exercise price per share, provided that any such option with an exercise price per share equal to or greater than the Merger Consideration will be canceled for no consideration.

The consummation of the Merger is subject to certain closing conditions, including, among other things: (i) the approval of the Company’s stockholders; (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the receipt of certain other regulatory approvals or consents; (iv) the absence of legal restraints prohibiting the Merger and ~~between~~(v) other customary conditions specified in the Merger Agreement.

The Merger Agreement contains certain termination rights for the Company and ~~American Stock Transfer & Trust~~Parent, including, among others, the right of (i) either party to terminate the Merger Agreement if the Merger is not consummated by February 5, 2024, (ii) the Company ~~LLC, as Rights Agent (the “Rights Agent”). Pursuant~~to terminate the Merger Agreement in order to enter into a definitive acquisition agreement providing for a Superior Proposal (as defined in the Merger Agreement) and (iii) Parent to terminate the Merger Agreement if the Board changes its recommendation with respect to the ~~Rights~~Merger Agreement.

Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee. If the termination fee becomes payable as a result of the Company terminating the Merger Agreement in order to enter into a definitive acquisition agreement (i) prior to August 26, 2023 or (ii) with an Excluded Party (as defined in the Merger Agreement) prior to September 5, 2023, the amount of the termination fee will be $5,285. If the termination fee becomes payable in other circumstances, the amount of the termination fee will be

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

$10,570. If the Company terminates the Merger Agreement because Parent fails to consummate the Merger when required by the Merger Agreement, the ~~Board declared~~Company will be entitled to a ~~dividend~~termination fee of ~~1 preferred share purchase right (each, a “Right”) for each outstanding share of common stock. The Rights are distributable to stockholders of record as~~$21,140.

Voting and Support Agreement

Concurrently with the execution of the ~~close~~Merger Agreement, Parent and the Company entered into a voting and support agreement (the “Voting Agreement”) with Indaba Capital Management, L.P., Indaba Capital Fund, L.P., IC GP, LLC and Derek Schrier (collectively, the “Specified Stockholders”), who, directly or indirectly, collectively beneficially own approximately 25% of ~~business on August 5, 2022. See Exhibit 4.1 as filed with Form 8-K on July 26, 2022, incorporated~~the outstanding shares of Company common stock (the “Covered Shares”), pursuant to which, among other things, each Specified Stockholder has (i) agreed to vote (or cause to be voted) all of its Covered Shares in favor of, among other things, approval of the Merger Agreement and the transactions contemplated by ~~reference on this Quarterly Report on Form 10-Q, for additional information.~~the Merger Agreement (including the Merger) and against any alternative Takeover Proposal and (ii) agreed, subject to certain exceptions, not to transfer its Covered Shares during the term of the Voting Agreement; provided, that the Voting Agreement will terminate in the event that, among other things, the Board changes its recommendation that the Company’s stockholders adopt the Merger Agreement.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes and other financial information included in Part 1, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes thereto for the year ended December 31, ~~2021,~~2022, included in our ~~2021~~2022 Form 10-K.

Forward-Looking Statements

This discussion contains certain 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. Forward-looking statements may be identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” ~~“potentially”~~“potentially,” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to, without limitation, our future plans, objectives, expectations, intentions, ~~the sale of the PrescribeWellness business and the potential sales of the SinfoníaRx and DoseMe businesses of the Company and the timing and benefits thereof, and~~ financial performance, the proposed transaction with Locke Buyer, LLC, an affiliate of Nautic Partners, and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to: (i) our expectations regarding industry and market trends, including the ~~impacts of the current COVID-19 pandemic~~expected growth and ~~other health epidemics; (ii) our ability to adapt to changes or trends within~~continued structural change and consolidation in the market for healthcare in the ~~U.S.;~~United States; (ii) our expectations about the growth of Programs of All-Inclusive Care for the Elderly (“PACE”) organizations; (iii) our expectations about private payers establishing their own at-risk programs; (iv) the advantages of our solutions as compared to those of competitors; (v) our estimates about our financial performance; (vi) the visibility into future cash flows from our business model; (vii) our ability to reduce expenses as a ~~significant increase~~result of our disposition of non-core businesses; (viii) our growth strategy, including our ability to grow our client base; (ix) our plans to further penetrate existing markets and enter new markets; (x) expectations of earnings, revenue, and other financial items; (xi) plans, strategies, and objectives of management for future operations; (xii) our ability to establish and maintain intellectual property rights; (xiii) our ability to retain and hire necessary associates and appropriately staff our operations; (xiv) future capital expenditures; (xv) future economic conditions or performance; (xvi) our plans to pursue strategic acquisitions and partnerships; (xvii) our plans to expand and enhance our solutions; (xviii) our estimates regarding capital requirements and needs for additional financing; (xix) the risk that the proposed transaction may not be completed in ~~competition from~~ a ~~variety of companies in~~timely manner or at all; (xx) the ~~healthcare industry; (iv) developments and changes in laws and regulations, including increased regulation~~failure to receive, on a timely basis or otherwise, the required approval of the ~~healthcare industry through legislative action~~proposed transaction by our stockholders; (xxi) the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (xxii) the possibility that competing offers or acquisition proposals for the Company will be made; (xxiii) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances which would require the Company to pay a termination fee; (xxiv) the effect of the announcement or pendency of the proposed transaction on our ability to attract, motivate or retain key executives and revised rules and standards; (v) the extent to which we are successful in gaining new long-term relationships with clients or retaining existing clients; (vi) the growth and success of our clients, which is difficult to predict and is subject to factors outside of our control; (vii)employees, our ability to maintain relationships with ~~a specified drug wholesaler; (viii) increasing consolidation in the healthcare industry; (ix) managing~~ our ~~growth effectively; (x) fluctuations in~~customers, vendors, service providers and others with whom we do business, or our operating ~~results; (xi) our ability to manage our cash flows; (xii) failure or disruption of our information technology~~results and security systems; (xiii) dependence on our senior management and key employees; (xiv) our future indebtedness and our ability to obtain additional financing, reduce expenses, or generate funds when necessary; (xv) macroeconomic conditions, including the impact of inflation, on our business ~~and operations; (xvi)~~generally; (xxv) risks related to ~~actions of activist stockholders; (xvii) our ability to execute on our planned divestitures of our SinfoníaRx and DoseMe businesses,~~ the ~~costs associated therewith, and risks related to~~proposed transaction diverting management’s attention from ~~the Company’s~~our ongoing business operations; ~~(xviii) risks related to~~(xxvi) the ~~volatility~~risk of shareholder litigation in ~~our stock price;~~connection with the proposed transaction, including resulting expense or delay; and ~~(xix)~~(xxvii) the risks described in Part I, Item 1A of our ~~2021~~2022 Form 10-K, filed with the SEC on March 10, 2023, and our other filings and reports filed with or furnished to the Securities and Exchange Commission. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments, except as required by applicable law. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

Overview

Tabula Rasa HealthCare, Inc. (the “Company,” “we,” “us,” and “our”) is a healthcare technology company ~~advancing~~enabling simplified and individualized care that improves the ~~safe use~~health of medications by creating solutions designed to empower pharmacists, providers, and patients to optimize medication regimens. Our advanced proprietary technology, MedWise®, identifies causes of and risks for medication-related problems, including adverse drug events (“ADEs”), so healthcare professionals can minimize harm and reduce medication-related risks. Our software and services help improve patient outcomes and lower healthcare costs through reduced hospitalizations, emergency department visits, and healthcare utilization. Our vision and mission are supported by our industry-recognized leadership team, our significant investments, and collaborations to advance precision pharmacotherapy research and its application in clinical practice, and our culture.

those we serve. We ~~operate our business through two segments, CareVention HealthCare and MedWise HealthCare.~~

offer comprehensive

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~~CareVention HealthCare~~pharmacy services that include personalized, precision medication management and delivery, as well as a suite of clinical and business management tools that help health plans and at-risk provider groups optimize utilization and improve patient health. Our vision and mission are supported by our experienced leadership team, our significant investments in our technology, services, and people, and partnerships with our healthcare clients, including health plans and provider organizations, to manage the most complex and vulnerable individuals.

We provide our clients, primarily organizations with PACE, with medication fulfillment services, cloud-based software, pharmacy benefit management (“PBM”) solutions, and clinical pharmacist services at the point-of-care. PACE ~~which~~ is a Centers for Medicare & Medicaid Services (“CMS”) sponsored program providing comprehensive medical and social services to adults ~~age~~aged 55 and older who need a nursing facility level of care but can live safely in community settings. Our clients include ArchCare Senior Life, Trinity Health, Palm Beach PACE, St. Paul’s PACE, and Welbe Health. We access the market through a number of different service lines and brands, including CareKinesis®, Capstone Risk Adjustment Services, CareVention Consulting™, PACElogic™, TruChart®, PeakTPA, PersonifilRx®, and Pharmastar®. We serve more than 150 healthcare organizations.

Our largest ~~CareVention HealthCare revenue~~service offering is our medication fulfillment services, which isare built around our ~~novel and~~advanced proprietary ~~MedWise®~~MedWise technology, designed to enable clinicians to increase patient safety, create individualized medication regimens, promote adherence, and eliminate unnecessary prescriptions.Our medication fulfillment and adherence packaging services utilize MedWise technology to reduce medication-related risk for the high-cost, high-risk PACE population. ~~The CareVention HealthCare suite of offerings~~Our medication revenue model is primarily based on payments for charges and dispensing fees for medication fulfillment.

We also ~~includes~~offer technology-enabled solutions, which include risk adjustment services, ~~pharmacy benefit management (“PBM”)~~PBM solutions, cloud-based electronic health records ~~(“EHR”)~~ solutions, and third-party administration services ~~which are all~~ specifically tailored to the PACE market. ~~Our CareVention HealthCare segment serves more than 150~~We also provide technology-enabled solutions that promote medication safety and adherence to improve patient outcomes and reduce healthcare ~~organizations.~~

costs. The ~~CareVention HealthCare segment~~technology-enabled solutions revenue model is primarily based on payments on a per-member, per-month (“PMPM”) basis, payments on a subscription basis, payments on a ~~transaction~~per claim basis, or payments on a fee-for-service basis for each medication safety review and ~~payments for medication charges and dispensing fees for medication fulfillment.~~clinical assessment completed.

~~In February~~On August 5, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Locke Buyer, LLC, a Delaware limited liability company (“Parent”), and Locke Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, subject to the terms and conditions thereof and in accordance with the Delaware General Corporation Law (the “DGCL”), Merger Sub will merge with and into the Company with the Company surviving the merger as a wholly owned subsidiary of Parent (the “Merger”). Consummation of the Merger is subject to the approval of the Company’s stockholders, receipt of certain required regulatory approvals, and other customary closing conditions. See Note 19 in the notes to our consolidated financial statements as reported in this Quarterly Report on Form 10-Q for additional information.

Divestiture of Non-Core Businesses and Segment Change

During first quarter of 2022, we announced plans to evaluate non-core assets to refocus our corporate strategy and increase stockholder value, and we commenced ~~an initial plan~~plans to sell the PrescribeWellness, DoseMe ~~business,~~and SinfoníaRx Businesses (as defined below), which we acquired in January ~~2019. In~~2019, March ~~2022,~~2019, and September 2017, respectively. As described further below, we completed our ~~evaluation of additional divestiture opportunities and commenced plans to sell~~ ~~the SinfoníaRx and~~ ~~PrescribeWellness businesses, acquired in September 2017 and March 2019, respectively.~~

On June 18, 2022 (the “Signing Date”), we entered into an Asset Purchase Agreement (the “PW Purchase Agreement”), by and among our Company, Tabula Rasa HealthCare Group, Inc., a wholly owned subsidiary of the Company (the “Seller”), and Transaction Data Systems, Inc. (“TDS”), a leading provider of pharmacy-focused, patient-centric solutions, pursuant to which Seller agreed to sell to TDS its unincorporated PrescribeWellness business division (the “PrescribeWellness Business”), the assets, properties, and rights that are primarily used or held for use in connection with the PrescribeWellness Business, and the KD Assets (as defined below) for an all-cash purchase price of up to $140 million in cash. On the Signing Date and as a condition to TDS’s entry into the PW Purchase Agreement, Seller also entered into an asset purchase agreement (the “KD Purchase Agreement”) with karmadata, Inc., a Delaware corporation (“KD”), pursuant to which Seller agreed to purchase all of KD’s rights, title, and interests in and to certain intellectual property of KD that has historically been licensed to Seller, all intellectual property owned by KD that was developed or improved pursuant to that certain IP Development Agreement, by and between Seller and KD, dated as of December 1, 2016, as amended, and all authorization rights and claims or causes of action with respect to the foregoing (collectively, the “KD Assets”).

~~On August 1, 2022, we completed the sale~~sales of the PrescribeWellness, ~~Business and the acquisition of the KD Assets. In connection with the closing, we received $125 million in cash,~~excluding certain adjustments related to the net working capital of the PrescribeWellness Business, and may receive up to an additional $15 million contingent upon the PrescribeWellness Business’s achievement of certain performance-based metrics during the fiscal years ending December 31, 2023 and 2024.

On the Signing Date, we also announced a strategic partnership to offer our proprietary MedWise® Science, an accumulative, simultaneous, multi-drug analysis tool that identifies medication related risk, into TDS’s pharmacy management systems upon the consummation of the transaction.

~~The DoseMe, SinfoníaRx, and PrescribeWellness businesses collectively comprised the majority of our MedWise HealthCare segment. Our sale of the PrescribeWellness business and plans to sell the~~ DoseMe and SinfoníaRx ~~businesses represent a strategic business shift having a significant effect on our Company’s operations~~Businesses in August 2022, January 2023, and ~~financial results. As a result, we~~March 2023, respectively. We determined that these businesses met the requirements to be classified as held for sale and discontinued operations as of March 31, 2022 and continued to meet ~~such~~the requirements asthrough the dates of ~~June 30, 2022.~~their respective sales. Accordingly, ~~the accompanying consolidated financial statements in this Quarterly Report on Form 10-Q have been recast for all periods presented to reflect~~ the assets, liabilities, revenue, and expenses related to these businesses are reflected as discontinued ~~operations. We present continuing~~ operations ofin the ~~remaining components of our MedWise HealthCare segment combined with our shared services.~~accompanying consolidated financial statements for all periods presented in this Quarterly Report on Form 10-Q.

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On August 1, 2022 (the “PW Sale Date”), we completed the sale of our unincorporated PrescribeWellness business division (the “PrescribeWellness Business”), and the assets, properties, and rights that were primarily used or held for use in connection with the PrescribeWellness Business, and the KD Assets (as defined below), to Transaction Data Systems, Inc. (“TDS”). On the PW Sale Date, we also completed the acquisition of certain intellectual property from karmadata, Inc. (“KD”), which had historically been licensed to us (the “KD Assets”). The KD Assets acquired were simultaneously transferred to TDS on the PW Sale Date. The purchase consideration included $125 million in cash, subject to certain customary post-closing adjustments, of which $118.6 million was paid directly to us and $5.9 million was paid to KD on the PW Sale Date. In October 2022, TDS also paid us $1.5 million for certain customary post-closing adjustments. We are also entitled to receive up to $15.0 million in contingent consideration based upon the PrescribeWellness Business’s achievement of certain performance-based metrics during the fiscal years ending December 31, 2023 and 2024.

On January 20, 2023 (the “DoseMe Sale Date”), we entered into a Share and Asset Purchase Agreement with DoseMe Operations Inc. (“DoseMe Operations”) and completed the sale of our unincorporated DoseMe business (the “DoseMe Business”), and the assets, properties, and rights that are primarily used or held for use in connection with the DoseMe Business. The ~~continuing operations~~purchase consideration included $2.0 million in cash, subject to certain customary post-closing adjustments, which was paid directly to us in January 2023. The purchase consideration also included a note receivable of $3.0 million with an annual interest rate of 7.0%, which matures on January 20, 2027.

On March 2, 2023 (the “SinfoníaRx Sale Date”), we entered into an Asset Purchase Agreement with Symphony Clinic, LLC (“Symphony”) and completed the ~~remaining components~~sale of our unincorporated SinfoníaRx business (the “SinfoníaRx Business”), and the assets, properties, and rights that are primarily used or held for use in connection with the SinfoníaRx Business. The purchase consideration included $1.4 million in cash, subject to certain customary post-closing adjustments, which was paid directly to us on the SinfoníaRx Sale Date. The purchase consideration also included a note receivable of $3.6 million with an annual interest rate of 3.0%, which matures on December 31, 2023. We may also be entitled to receive up to $1.0 million in contingent consideration based upon potential regulatory changes affecting the SinfoníaRx Business.

We previously operated our business through two segments, CareVention HealthCare and MedWise HealthCare. When we commenced plans to sell the PrescribeWellness, DoseMe and SinfoníaRx Businesses, these businesses collectively comprised the majority of our MedWise HealthCare segment, ~~promote medication safety~~with PrescribeWellness Business representing the most significant portion of this segment. The disposition of these non-core businesses represented the completion of our previously-announced strategic business shift. Subsequent to the sales of these business, our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates performance and ~~adherence~~allocates resources based on the consolidated results of the Company. Therefore, we consolidated our two operating segments to ~~improve patient outcomes~~one segment by merging the CareVention HealthCare segment and ~~reduce healthcare costs. The~~the remaining MedWise HealthCare segment. We now operate our business as one segment revenue model is primarily based on payments on a PMPM basis, payments on a subscription basis, and payments on a fee-for-service basis for each medication safety review and clinical assessment completed.effective as of March 31, 2023. Prior comparative periods have been revised to conform with the current period segment presentation.

Unless otherwise noted, management’s discussion and analysis of our Company’s results of operations relate to our Company’s continuing operations.

Substantially all of our revenue is recognized in the U.S. and substantially all of our long-lived assets are located in the U.S.

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Key Business Metrics

We continually monitor certain corporate metrics, including the following key metrics, that we believe are useful in evaluating and managing our operating performance as compared to that of other companies in our industry.


	Three Months Ended								Three Months Ended
	June 30,				Change				June 30,				Change
	2022		2021		$		%		2023		2022		$		%

		(Dollars in thousands)								(Dollars in thousands)
Revenues from continuing operations	$	72,597	$	64,297	$	8,300	13	%	$	90,036	$	72,597	$	17,439	24	%
Net loss from continuing operations		(12,691)		(14,068)		1,377	10			(9,743)		(12,691)		2,948	23
Adjusted EBITDA from continuing operations		2,057		3,263		(1,206)	(37)

	Six Months Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2022		2021		$		%		2023		2022		$		%

		(Dollars in thousands)								(Dollars in thousands)
Revenues from continuing operations	$	139,707	$	123,075	$	16,632	14	%	$	178,313	$	139,707	$	38,606	28	%
Net loss from continuing operations		(33,083)		(27,444)		(5,639)	(21)			(16,817)		(33,083)		16,266	49
Adjusted EBITDA from continuing operations		3,139		4,846		(1,707)	(35)

We monitor the key metrics set forth in the preceding table to help us evaluate trends, establish budgets, and measure the effectiveness and efficiency of our ~~operations, and gauge our cash generation. We discuss Adjusted EBITDA in more detail in “Non-GAAP Financial Measures.”~~operations. We also monitor revenue retention rate on an annual basis, which is described in our ~~2021~~2022 Form 10-K.

Factors Affecting our Future Performance

General

We believe that our future success depends on many factors, including our ability to maintain and grow our relationships with existing clients, expand our client base, continue to enter new markets, and expand our offerings to meet evolving market needs. While these areas present significant ~~opportunity,~~opportunities, they also present risks that we must manage to ensure successful results. ~~Please~~For additional information about risks and uncertainties that may impact our future success, please refer to “Item 1A – Risk Factors” in our ~~2021~~2022 Form 10-K ~~for a discussion of certain risks and uncertainties that may impact our future success.~~

~~Divestitures of Non-Core Businesses~~as supplemented by the additional factors set forth under “Item 1A – Risk Factors” included in this Quarterly Report on Form 10-Q.

As described above, ~~on August 1,~~we completed the sales of the PrescribeWellness, DoseMe and SinfoníaRx Businesses in 2022 ~~we completed~~and the first quarter of 2023. We used the cash proceeds from the sale of the PrescribeWellness Business to pay off our line of credit with Western Alliance Bank (the “2020 Credit Facility”) and ~~have commenced plans to sell~~ increase our liquidity. The remaining cash proceeds, along with cash proceeds received and promissory notes from the divestitures of the DoseMe and SinfoníaRx ~~businesses. We anticipate that proceeds from these divestitures~~Businesses, will provide ~~the Company~~us with the financial flexibility to optimize our capital structure, ~~including significantly reducing net debt and increasing liquidity,~~ as well as to focus on our core value-based care business and our MedWise science, including our offerings targeted at the PACE market ~~and our MedWise science.~~.

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We anticipate that proceeds from such divestitures will provide our Company the financial flexibility to optimize our capital structure, including significantly reducing net debt and increasing liquidity, as well as to focus on our core value-based care business, including our offerings targeted at the PACE market and our MedWise Science and care platforms.

~~COVID-19 Pandemic~~

We continue to actively monitor the impact of the ongoing COVID-19 pandemic on both our employees and operations. In response to the pandemic, we have implemented measures to protect the health and safety of our employees, including hybrid and remote work arrangements, reduced density in our buildings, guidelines to ensure safe business travel, and safety protocols for on-site employees, including social distancing, enhanced cleaning, and contact tracing. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not able to predict the continuing effects that the COVID-19 pandemic may have on our results of operations, financial condition, or liquidity. We are prepared to mitigate potential adverse impacts to our business, including our financial position, liquidity, operations, suppliers, industry, and workforce.

Components of Our Results of Operations

Revenue

Our revenue is derived from our ~~product sales~~medication revenue and ~~service activities under our CareVention HealthCare and MedWise HealthCare segments.~~technology-enabled solutions revenue. For both the three months ended June 30, 2023 and 2022, ~~and 2021, product~~medication revenue represented 77% ~~and 73%~~ of our total revenue ~~respectively,~~from continuing operations, and ~~service~~technology-enabled solutions revenue represented 23% ~~and 27%~~, of our total revenue ~~respectively.~~from continuing operations. For the six months ended June 30, 2023 and 2022, ~~and 2021, product~~medication revenue represented ~~77%~~78% and ~~72%~~76%, respectively, of our total revenue ~~respectively,~~from continuing operations, and ~~service~~technology-enabled solutions revenue represented ~~23%~~22% and ~~28%~~24%, respectively, of our total revenue ~~respectively.~~from continuing operations.

~~CareVention HealthCare~~Medication Revenue

~~PACE Product Revenue~~

We provide medication fulfillment pharmacy services to PACE organizations. While the majority of medications are routinely filled in order to treat chronic conditions, the mix and quantity of medications can vary. Revenue from medication fulfillment services is generally billed monthly or weekly, depending on whether the PACE

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organization is contracted with a pharmacy benefit manager, and is recognized when medications are delivered and control has passed to the client. At the time of delivery, we have performed substantially all of our performance obligations under our client contracts. We do not experience a significant level of returns or reshipments.

Technology-Enabled Solutions Revenue

~~PACE~~Value-Based Care Solutions

We provide medication safety services and health plan management services to PACE organizations. These services primarily include medication safety services, risk adjustment services, PBM ~~solutions, EHR~~ solutions, and third-party administration services. Revenue related to these services primarily consists of a fixed monthly fee assessed on a PMPM basis, a fee for each claim adjudicated, and subscription fees. These fees are recognized when we satisfy our performance obligation to stand ready to provide PACE services, which occurs when our clients have access to the PACE services. We generally bill for PACE services on a monthly basis as the services are provided.

~~MedWise HealthCare~~

~~Medication Safety Services~~

We also provide medication safety services to other healthcare organizations, which include identification of high-risk individuals, medication regimen reviews, including patient and prescriber counseling, and targeted interventions to increase adherence and close gaps in care. Revenue related to these services primarily consists of PMPM fees and fees for each medication review and clinical assessment completed. Revenue is recognized when we satisfy our performance obligation to stand ready to provide medication safety services, which occurs when our clients have access to the medication safety services and when medication reviews and clinical assessments are completed. We generally bill for the medication safety services on a monthly basis.

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Software Subscription and Services

We provide software as a service (“SaaS”) solutions, which include electronic health records software and solutions which allow for the identification of individuals with high medication-related risk. Revenues related to ~~these software services~~SaaS solutions primarily consist of monthly subscription fees and are recognized monthly as we meet our performance obligation to provide access to the software. Revenue for implementation and set-up services is generally recognized over the contract term as the software services are provided. We generally bill for the software services on a monthly basis.

Cost of Revenue (exclusive of depreciation and amortization)

~~Product~~ Cost of Medication Revenue

Cost of ~~product~~medication revenue includes all costs directly related to the fulfillment and distribution of ~~medications under our CareVention HealthCare offerings. Costs~~medications. These costs consist primarily of the purchase price of the ~~prescription~~ medications we dispense, which for the three months ended June 30, 2022 and 2021, represented 80% and 81%, respectively, of our total product costs. For the six months ended June 30, 2022 and 2021, medication costs represented 81% and 80%, respectively, of our total product costs. In addition to costs incurred to purchase the medications we dispense, other costs include shipping; packaging;shipping, packaging, expenses associated with operating our medication fulfillment centers, including ~~salaries~~employment costs and ~~related costs, such as~~ stock-based compensation, ~~for personnel;~~and technology ~~expenses;~~expenses. Such costs also include direct overhead ~~expenses;~~expenses and allocated indirect overhead costs. We allocate indirect overhead costs among functions based on employee headcount. For the three months ended June 30, 2023 and 2022, the purchase price of medications represented 82% and 80%, respectively, of our total cost of medication revenue. For the six months ended June 30, 2023 and 2022, the purchase price of medications represented 82% and 81%, respectively, of our total cost of medication revenue.

~~Service~~ Cost of Technology-Enabled Solutions Revenue

Cost of ~~service~~technology-enabled solutions revenue includes all costs directly related to servicing our ~~CareVention HealthCare~~technology service contracts and ~~MedWise HealthCare service contracts. These costs~~ primarily ~~consist~~consists of ~~labor~~employment costs, including stock-based compensation, outside contractors, expenses related to supporting our software platforms, direct overhead expenses, and allocated indirect overhead costs. We allocate indirect overhead costs among functions based on employee headcount.

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Research and Development Expenses

Our research and development expenses consist primarily of ~~salaries and related~~employment costs, including stock-based compensation, for ~~personnel in our research and development functions. This personnel includes~~ employees engaged in scientific research, healthcare analytics, the design and development of new scientific algorithms, and the enhancement of our software and technology platforms. Research and development expenses also include fees paid to third-party consultants, costs related to quality assurance and testing, and other allocated facility-related overhead and expenses.

We capitalize certain costs incurred in connection with obtaining or developing the proprietary software platforms that support our ~~product~~medication and technology service contracts, including third-party contractors and payroll costs for employees directly involved with the software development. Capitalized software development costs are amortized beginning when the software project is substantially completed and when the asset is ready for its intended use. Costs incurred during the preliminary project stage and ~~post implementation~~post-implementation stage, as well as maintenance and training costs, are expensed as incurred. We continue to focus our research and development efforts on adding new features and applications to increase the functionality and enhance the ease of use of our existing suite of software solutions.

We believe that continued investment in our software solutions is important for our future growth. We expect that our research and development expenses will fluctuate in the ~~near term~~short-term as we refocus on our core business but will decrease as a percentage of revenue in the ~~long term.~~long-term.

Sales and Marketing Expenses

Sales and marketing expenses consist principally of ~~salaries, commissions, bonuses, and~~employment costs, including stock-based compensation, ~~and employee benefits~~ for sales, marketing, and account management personnel, as well as travel costs related to sales, marketing, and account management activities. Marketing costs also include costs for communication and branding materials, conferences, trade shows, public relations, and allocated overhead.

~~Table of Contents~~

We expect our sales and marketing expenses to fluctuate in the ~~near term, in connection with the sale of the PrescribeWellness business and~~short-term as we ~~complete the sales of the SinfoníaRx and DoseMe businesses and~~ refocus on our core business but decrease as a percentage of revenue in the ~~long term.~~long-term.

General and Administrative Expenses

General and administrative expenses consist principally of ~~employee-related expenses,~~employment costs, including ~~salaries, benefits, and~~ stock-based compensation, for employees who are responsible for information systems, administration, human resources, finance, strategy, legal and executive management, as well as other corporate expenses associated with these functional areas. General and administrative expenses also include professional fees for legal, consulting, and accounting services and allocated overhead. General and administrative expenses are expensed when incurred.

We expect that our general and administrative expenses will fluctuate in the ~~near term, in connection with the sale of the PrescribeWellness business and~~short-term as we ~~complete the sales of the SinfoníaRx and DoseMe businesses and~~ refocus on our core business but decrease as a percentage of revenue in the ~~long term.~~long-term.

Change in Fair Value of Contingent Consideration Receivable

In connection with the sales of the PrescribeWellness Business on August 1, 2022 and the SinfoníaRx Business on March 2, 2023, we may be entitled to additional consideration based on the achievement of certain customer and revenue metrics and based upon potential regulatory changes affecting the business, respectively. The contingent consideration receivables are classified as a current or noncurrent asset based on their expected payment dates, and they are subject to remeasurement at each balance sheet date. Any change in the fair value of the contingent consideration receivables is reflected in our consolidated statements of operations as a change in fair value of the receivables. We adjust the carrying value of the contingent consideration receivables until the contingencies are finally determined or final payment is received.

Long-Lived Asset Impairment Charge

Long-lived assets consist of property and equipment, operating lease right-of-use assets, software development costs, and definite-lived intangible assets. Long-lived assets to be held and used are tested for recoverability whenever

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events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that we consider in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, we compare forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use and disposition of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows or a combination of income and market approaches.

Depreciation and Amortization Expenses

Depreciation and amortization expenses are primarily attributable to our capital investment in equipment, our capitalized software, and our acquisition-related intangibles.

Interest Expense, Net

Interest expense, net is primarily attributable to interest expense associated with our convertible senior subordinated notes (the “2026 Notes”), and interest expense associated with our Loan and Security Agreement with Western Alliance Bank (the “2020 Credit Facility”)~~, and the promissory notes related~~ prior to ~~the purchase consideration for the acquisition of Personica, LLC.~~its termination on August 1, 2022. Interest expense also includes the amortization of debt discount and debt issuance costs related to our various debt arrangements and imputed ~~interest.~~interest on our vendor financing arrangements. Interest expense, net includes interest income earned on our investments in money market funds and on divestiture-related notes receivable.

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Results of Operations

The following table summarizes our results of operations for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Three Months Ended

Six Months Ended

June 30,

Change

June 30,

Change


2022

2021

$

%

2022

2021

$

%

Revenue:

Product revenue

$
55,892

$
46,858

$
9,034

19
%

$
106,865

$
88,700

$
18,165

20
%

Service revenue

16,705

17,439

(734)

(4)

32,842

34,375

(1,533)

(4)

Total revenue

72,597

64,297

8,300

13

139,707

123,075

16,632

14

Cost of revenue, exclusive of depreciation and amortization shown below:

Product cost

43,384

35,064

8,320

24

82,936

66,421

16,515

25

Service cost

13,247

12,556

691

6

26,416

25,178

1,238

5

Total cost of revenue, exclusive of depreciation and amortization

56,631

47,620

9,011

19

109,352

91,599

17,753

19

Operating expenses:

Research and development

3,243

4,311

(1,068)

(25)

7,208

7,370

(162)

(2)

Sales and marketing

2,172

2,539

(367)

(14)

4,821

5,506

(685)

(12)

General and administrative

15,150

16,652

(1,502)

(9)

31,028

31,332

(304)

(1)

Long-lived asset impairment charge

—

—

—

—

4,062

—

4,062

nm

Depreciation and amortization

5,489

4,980

509

10

11,231

9,781

1,450

15

Total operating expenses

26,054

28,482

(2,428)

(9)

58,350

53,989

4,361

8

Loss from operations

(10,088)

(11,805)

1,717

15

(27,995)

(22,513)

(5,482)

(24)

Interest expense, net

2,444

2,182

262

12

4,713

4,729

(16)

—

Loss from continuing operations before income taxes

(12,532)

(13,987)

1,455

10

(32,708)

(27,242)

(5,466)

(20)

Income tax expense

159

81

78

96

375

202

173

86

Net loss from continuing operations

(12,691)

(14,068)

1,377

10

(33,083)

(27,444)

(5,639)

(21)

Net loss from discontinued operations, net of tax

(36,919)

(7,013)

(29,906)

(426)

(44,720)

(13,129)

(31,591)

(241)

Net loss

$
(49,610)

$
(21,081)

$
(28,529)

(135)

$
(77,803)

$
(40,573)

$
(37,230)

(92)

~~nm= not meaningful~~


	Three Months Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2023		2022		$		%		2023		2022		$		%
Revenue:
Medication revenue	$	69,626	$	55,892	$	13,734	25	%	$	138,376	$	106,865	$	31,511	29	%
Technology-enabled solutions revenue		20,410		16,705		3,705	22			39,937		32,842		7,095	22
Total revenue		90,036		72,597		17,439	24			178,313		139,707		38,606	28
Cost of revenue, exclusive of depreciation and amortization shown below:
Cost of medication revenue		53,554		43,384		10,170	23			106,636		82,936		23,700	29
Cost of technology-enabled solutions revenue		13,953		13,247		706	5			28,395		26,416		1,979	7
Total cost of revenue, exclusive of depreciation and amortization		67,507		56,631		10,876	19			135,031		109,352		25,679	23
Operating expenses:
Research and development		1,777		3,243		(1,466)	(45)			3,056		7,208		(4,152)	(58)
Sales and marketing		2,732		2,172		560	26			5,185		4,821		364	8
General and administrative		17,599		15,150		2,449	16			34,176		31,028		3,148	10
Change in fair value of contingent consideration receivable		3,350		—		3,350	100			3,750		—		3,750	100
Long-lived asset impairment charge		—		—		—	100			—		4,062		(4,062)	(100)
Depreciation and amortization		6,103		5,489		614	11			12,303		11,231		1,072	10
Total operating expenses		31,561		26,054		5,507	21			58,470		58,350		120	0
Loss from operations		(9,032)		(10,088)		1,056	10			(15,188)		(27,995)		12,807	46
Other income (expense):
Interest expense, net		(1,144)		(2,444)		(1,300)	(53)			(2,409)		(4,713)		(2,304)	(49)
Other income		566		—		566	100			1,018		—		1,018	100
Total other expense, net		(578)		(2,444)		1,866	76			(1,391)		(4,713)		3,322	70
Loss from continuing operations before income taxes		(9,610)		(12,532)		2,922	23			(16,579)		(32,708)		16,129	49
Income tax expense		133		159		(26)	(16)			238		375		(137)	(37)
Net loss from continuing operations		(9,743)		(12,691)		2,948	23			(16,817)		(33,083)		16,266	49
Net loss from discontinued operations, net of tax		(108)		(36,919)		36,811	100			(8,932)		(44,720)		35,788	80
Net loss	$	(9,851)	$	(49,610)	$	39,759	80	%	$	(25,749)	$	(77,803)	$	52,054	67	%

Comparison of the Three Months Ended June 30, ~~2022~~2023 and ~~2021~~2022 (Continuing Operations)

~~Product~~Medication Revenue

~~Product~~Medication revenue increased ~~$9.0~~$13.7 million, or ~~19%~~25%, to ~~$55.9~~$69.6 million for the three months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. Increased medication fulfillment volume from growth in the number of patients served by our existing clients, medication mix of prescriptions filled, and payer mix contributed ~~$6.3~~$10.7 million to the increase. Medications dispensed by our community pharmacy network on behalf of CareVention HealthCare contributed $1.7 million to the increase as a result of amended client agreements. New CareVention HealthCareIn addition, new clients that started services after the end of the second quarter ~~in 2021~~of 2022 contributed ~~$1.1~~$3.0 million to the ~~increase.~~increase in medication revenue during 2023.

~~Service~~Technology-Enabled Solutions Revenue

~~Service revenue decreased $0.7~~Revenue generated from technology-enabled solutions increased $3.7 million, or 4%22%, to ~~$16.7~~$20.4 million for the three months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~

Medication safety services revenue decreased $2.2 million, or 75%, during the three months ended June 30, 2022, as compared to the same period in 2021. The decrease is primarily due to the conclusion of the Enhanced Medication Therapy Management (“EMTM”) pilot program on December 31, 2021. As a result, no revenues related to the EMTM program were recognized after December 31, 2021.

The decrease in medication safety services was partially offset by an increase in CareVention HealthCare PACE solutions revenue of approximately $1.5 million, or 10%, to $15.9 million for the three months ended June 30, 2022, as compared to the same period in 2021.2022. The increase ~~was attributable to the addition~~included $2.7 million of ~~new clients and~~ growth ~~with~~within existing clients ~~since the second quarter of 2021,~~ primarily ~~within~~in our PBM solutions, third-party administration services, and risk adjustment ~~services.~~services, and $1.0 million related to new clients added after the end of the second quarter of 2022.

Cost of Medication Revenue

Cost of medication revenue increased $10.2 million, or 23%, to $53.6 million for the three months ended June 30, 2023, as compared to the same period in 2022. Medication costs increased $9.2 million primarily due to growth in the number of patients served, of which $1.8 million is attributable to new clients that started services after the end of the second quarter of 2022. Employee compensation costs also increased $0.8 million due to an increase in employee headcount to support revenue growth.

Cost of Technology-Enabled Solutions Revenue

Cost of technology-enabled solutions revenue increased $0.7 million, or 5%, to $14.0 million for the three months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily comprised of a $0.8 million increase in professional services related to our vendor arrangement for business process support and technology services for our third-party administration services and electronic health records solutions.

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~~Cost of Product Revenue~~

Cost of product revenue increased $8.3 million, or 24%, to $43.4 million for the three months ended June 30, 2022, as compared to the same period in 2021. Increased medication volume from growth in the number of patients served by our customers contributed approximately $4.9 million to the change, of which $0.6 million was attributable to new clients. Medications dispensed by our community pharmacy network on behalf of CareVention HealthCare contributed $1.7 million to the increase as a result of amended client agreements. The increase in cost of product revenue was also due to a $1.2 million increase in distribution charges related to higher shipping costs and volume for the medications we fulfilled. The remaining increase in cost of product revenue was primarily attributable to an increase in employee compensation costs, including stock-based compensation, due to an increase in employee headcount.

~~Cost of Service Revenue~~

Cost of service revenue increased $0.7 million, or 6%, to $13.2 million for the three months ended June 30, 2022, as compared to the same period in 2021. The increase is primarily comprised of $3.1 million of costs related to a new vendor arrangement for business process support and technology services and an increase in information technology expenses of $0.2 million. These increases were partially offset by a $2.1 million reduction in employee compensation costs, including stock-based compensation, for the employees hired by the third-party provider and a $0.7 million reduction in resources contracted to deliver medication safety services due to the conclusion of the EMTM program on December 31, 2021.

Research and Development Expenses

Research and development expenses decreased ~~$1.1~~by $1.5 million, or ~~25%~~45%, to ~~$3.2~~$1.8 million for the three months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. The decrease iswas primarily ~~related~~due to a ~~$1.3~~$0.7 million decrease in employee compensation costs, of which $0.6 million related to stock-based compensation expense, as a result of ~~fewer grants during 2022 compared to 2021. This~~decreased headcount. The decrease in research and development expenses was also driven by a $0.4 million decrease in rent and overhead costs as a result of a reduced real estate footprint in our development centers in New Jersey, South Carolina, and Florida. The remaining decrease was ~~partially offset by~~due to an aggregate ~~$0.2~~$0.3 million ~~increase~~decrease in professional ~~consulting fees~~services and ~~investment in~~ information ~~technology.~~technology spend.

Sales and Marketing Expenses

Sales and marketing expenses ~~decreased $0.4~~increased $0.6 million, or ~~14%~~26%, to ~~$2.2~~$2.7 million for the three months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. The ~~decrease is~~increase was primarily ~~attributable~~due to a ~~$0.3~~$0.7 million ~~decrease~~increase in employee compensation costs, including stock-based compensation expense and ~~a $0.1 million decrease in professional consulting services~~commissions expense related to ~~executing our branding and marketing strategies.~~new clients added since the second quarter of 2022.

General and Administrative Expenses

General and administrative expenses ~~decreased $1.5~~increased $2.4 million, or 9%16%, to ~~$15.2~~$17.6 million for the three months ended June 30, ~~2022,~~2023 as compared to the same period in ~~2021.~~2022. The decrease is primarily attributable to a $3.2 million decrease in employee compensation costs compared to 2021, of which $2.5 million relates to a decrease in stock-based compensation expense. The decrease was primarily due to a decrease in employee headcount as a result of the Company’s business optimization initiatives to outsource enterprise support services. The decreaseincrease in general and administrative expenses was ~~partially offset by $1.4 million of divestiture related costs and~~primarily due to a ~~$0.7~~$1.9 million increase in professional services ~~primarily related to~~and a ~~new provider~~$0.4 million increase in information technology spend.

Change in Fair Value of ~~enterprise support services we engaged during~~Contingent Consideration Receivable

In connection with the ~~fourth quarter of 2021 as part~~sale of the ~~business optimization initiative referenced above.~~PrescribeWellness Business on August 1, 2022, we may be entitled to receive additional consideration based on the achievement of certain customer and revenue metrics for the years ending December 31, 2023 and 2024. During the three months ended June 30, 2023, we recorded a $3.4 million charge to decrease the fair value of the contingent consideration receivable to zero due to updated estimates utilized in the contingent consideration valuation.

In connection with the sale of the SinfoníaRx Business on March 2, 2023, we may be entitled to receive additional consideration based upon the approval of potential regulatory changes affecting the SinfoníaRx Business. During the three months ended June 30, 2023, no change was recorded to the fair value of the contingent consideration receivable. The fair value of the contingent consideration receivable was $0.1 million as of June 30, 2023.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased ~~$0.5~~$0.6 million, or ~~10%~~11%, to ~~$5.5~~$6.1 million for the three months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. This increase was ~~primarily~~ due to a ~~$0.5~~$1.1 million increase in the amortization of capitalized software related to new software functionality placed into service after the end of the second quarter in ~~2021 to support our business.~~2022. The increase was partially offset by a $0.4 million decrease in depreciation of property and equipment, which have been fully depreciated since the end of the second quarter of 2022.

Interest Expense, Net

Interest expense for the three months ended June 30, ~~2022~~2023 was ~~$2.4~~$1.1 million, ~~an increase~~a decrease of ~~$0.3~~$1.3 million, or ~~12%~~53%, as compared to the same period in ~~2021.~~2022. The ~~increase is~~decrease in interest expense was primarily ~~attributable~~due to ~~a $0.4~~the repayment and termination of the 2020 Credit Facility on August 1, 2022. For the three months ended June 30, 2022, we incurred $0.6 million of interest expense related to the 2020 Credit Facility. The decrease in interest expense was also due to $0.7 million of interest income earned on our investments in money market funds. The decrease in interest expense was partially offset by an increase in imputed interest expense related to our vendor financing arrangements.

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~~expense on~~Other Income

In connection with the ~~2020 Credit Facility, partially offset by the full satisfaction~~sales of the ~~acquisition-related notes payable in October 2021~~PrescribeWellness Business, DoseMe Business, and SinfoníaRx Business, we entered into transition services agreements (“TSAs”), pursuant to which we provided or are providing business support services after their sales. We recognized $0.6 million of income related to the ~~October 2020 acquisition of Personica, LLC. Approximately $0.1 million of interest expense was recognized~~TSAs for the three months ended June 30, ~~2021 related to the acquisition-related notes payable.~~2023, which is reported in other income in our consolidated statement of operations.

Income Taxes

For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded income tax expense of ~~$0.2~~$0.1 million and ~~$0.1~~$0.2 million, respectively, which resulted in effective tax rates of ~~(1.3%)~~(1.4)% and ~~(0.6%)~~(1.3)%, respectively. Income tax expense iswas primarily related to indefinite-lived deferred tax liabilities for goodwill amortization. The effective tax rates differ from the U.S. statutory tax rate primarily due to the full valuation allowance recorded that ~~is currently limiting~~limited the realizability of our net deferred tax assets as of June 30, ~~2022~~2023 and ~~2021.~~2022. Accordingly, the tax benefit was limited due to unbenefited losses in the three months ended June 30, ~~2022~~2023 and ~~2021.~~2022. We calculate the provision for income taxes during interim periods by applying the estimated annual effective tax rate for the full year ordinary income or loss to the respective reporting period’s year-to-date income or loss, while also adding any income tax expense or benefit related to discrete items occurring within that interim period.

Net Loss from Discontinued Operations, Net of Tax

AsDuring the first quarter of ~~June 30,~~ 2022, we ~~determined that~~announced plans to evaluate non-core assets and commenced plans to sell the SinfoníaRx, PrescribeWellness, and DoseMe ~~businesses,~~Businesses, which were acquired in September 2017, March 2019, and January 2019, ~~respectively, continued~~respectively. We completed the sales of the PrescribeWellness, DoseMe,and SinfoníaRx Businesses on August 1, 2022, January 20, 2023 and March 2, 2023, respectively. Our sales of these businesses represented a strategic business shift having a significant effect on our operations and financial results. As a result, we determined that these businesses met such requirements to ~~meet the held-for-sale criteria~~be classified as held for sale and discontinued operations as ~~such, all~~of March 31, 2022 and through their respective sale dates. Accordingly, all related assets and liabilities and the results of operations for all periods presented are classified as discontinued operations in the consolidated financial statements.

Net loss from discontinued operations, net of tax, for the SinfoníaRx Businesswas ~~$36.9 million and $7.0~~$0.1 million for the three months ended June 30, ~~2022~~ 2023. Net loss from discontinued operations, net of tax, for the PrescribeWellness, DoseMe,and ~~2021, respectively.~~SinfoníaRx Businesses was $20.9 million, $4.1 million, and $12.0 million, respectively, for the three months ended June 30, 2022. See Note 3 in the notes to our consolidated financial statements as reported in this Quarterly Report on Form 10-Q for additional information.

Comparison of the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022 (Continuing Operations)

~~Product~~Medication Revenue

~~Product~~Medication revenue increased ~~$18.2~~$31.5 million, or ~~20%~~29%, to ~~$106.9~~$138.4 million for the six months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. Increased medication fulfillment volume from growth in the number of patients served by our existing clients, medication mix of prescriptions filled, and payer mix contributed ~~$12.0~~$26.0 million to the increase. ~~Medications dispensed on behalf of CareVention HealthCare by our community pharmacy network increased $4.7 million resulting from amended client agreements.~~ In addition, new ~~CareVention HealthCare~~ clients that started services after the end of the second quarter ~~in 2021~~of 2022 contributed ~~$1.5~~$5.5 million to the increase in ~~product~~medication revenue during ~~2022.~~2023.

~~Service~~Technology-Enabled Solutions Revenue

~~Service revenue decreased $1.5~~Technology-enabled solutions increased $7.1 million, or 4%22%, to ~~$32.8~~$39.9 million for the six months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~

~~Medication safety services revenue decreased $4.5 million, or 75%, during the six months ended June 30,~~ 2022, ~~as compared to the same period in 2021. The decrease is~~ primarily due to ~~the conclusion of the EMTM pilot program on December 31, 2021. As a result, no revenues related to the EMTM program were recognized after December 31, 2021.~~

~~The decrease~~$5.1 million in medication safety services was partially offset by a $2.9 million, or 10%, increase in CareVention HealthCare PACE solutions revenue to $31.2 million for the six months ended June 30, 2022, as compared to the same period in 2021. The increase was attributable to the addition of new clients and growth ~~with~~within existing clients ~~since the second quarter of 2021, primarily within~~in our PBM solutions, third-party administration services, and risk adjustment services. In addition, new clients that started services after the end of the second quarter of 2022 contributed $2.0 million to the increase in technology-enabled solutions revenue during 2023.

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Cost of ~~Product~~Medication Revenue

Cost of ~~product~~medication revenue increased ~~$16.5~~$23.7 million, or ~~25%~~29%, to ~~$82.9~~$106.6 million for the six months ended June 30, ~~2022,~~2023, as compared to the same period in ~~2021. Increased medication volume from~~2022. Medication costs increased $20.6 million primarily due to growth in the number of patients served, ~~by our customers contributed approximately $9.0 million to the change,~~ of which $3.4 million was attributable to new clients ~~contributed $0.8 million. Medications dispensed by our community pharmacy network on behalf~~that started services after the end of ~~CareVention HealthCare contributed $4.7 million to~~ the ~~increase as a result~~second quarter of amended client agreements. The increase in cost of product revenue was also due to a $2.0 million increase in distribution charges related to higher shipping costs and volume for the medications we fulfilled. The remaining increase in cost of product revenue was primarily attributable to an increase in employee2022. Employee compensation costs, including stock-based compensation expense, also increased $1.9 million due to an increase in employee headcount to support revenue growth. Additionally, shipping and ~~investments in information technology spend.~~distribution charges increased by $1.0 million due to the volume of medications fulfilled.

Cost of ~~Service~~Technology-Enabled Solutions Revenue

Cost of ~~service~~technology-enabled solutions revenue increased ~~$1.2~~$2.0 million, or 5%7%, to ~~$26.4~~$28.4 million for the six months ended June 30, ~~2022~~2023, as compared to the same period in ~~2021.~~2022. The increase was primarily comprised of ~~$4.4~~a $3.3 million ~~of costs~~increase in professional services primarily related to ~~a new~~our vendor arrangement for business process support and technology services for our third-party administration services and anelectronic health records solutions. This increase ~~in information technology expenses of $0.6 million. These increases were~~was partially offset by a ~~$2.9~~$1.5 million reduction in employee compensation costs, including stock-based compensation, primarily for the employees hired by the third-party ~~provider and a $1.1 million reduction in resources contracted to deliver medication safety services due to the conclusion of the EMTM program on December 31, 2021.~~provider.

Research and Development Expenses

Research and development expenses decreased ~~$0.2~~by $4.2 million, or 2%58%, to ~~$7.2~~$3.1 million for the six months ended June 30, ~~2022~~2023, as compared to the same period in ~~2021.~~2022. The decrease was primarily ~~attributable~~due to a ~~$1.3~~$2.3 million decrease in employee compensation costs, ~~compared to 2021,~~ of which ~~$1.0~~$1.9 million related to ~~a decrease in~~ stock-based compensation ~~expense.~~expense, due to decreased headcount. The decrease in research and development expenses was ~~partially offset~~also driven by ~~investments~~a $1.0 million decrease in ~~information technology spend~~rent and overhead costs as a result of ~~$0.4 million~~a reduced real estate footprint in our development centers in New Jersey, South Carolina, and Florida. The remaining decrease was due to $0.4 million of expenses related to non-recurring business optimization initiatives during 2022 ~~specifically efforts~~ associated with consolidating our electronic health records solutions ~~platforms. The remaining increase was primarily attributable to expenses incurred to terminate~~platforms, and a ~~long-term lease and~~$0.3 million decrease in professional ~~consulting~~ services.

Sales and Marketing Expenses

Sales and marketing expenses ~~decreased $0.7~~increased $0.4 million, or ~~12%~~8%, to ~~$4.8~~$5.2 million for the six months ended June 30, ~~2022~~2023, as compared to the same period in ~~2021.~~2022. The ~~decrease~~increase was primarily ~~attributable~~due to a ~~$1.0~~$0.8 million ~~decrease~~increase in employee compensation costs, ~~of which $0.7 million~~including commissions expense related to ~~a decrease in stock-based compensation expense, compared to 2021.~~new clients added since the end of the second quarter of 2022. This ~~decrease~~increase was partially offset by ~~an aggregate increase of $0.3~~a $0.4 million decrease in ~~conference related travel expenses and~~ professional consulting services related to executing our branding and marketing ~~strategies.~~strategies, public relations costs, and advertising costs.

General and Administrative Expenses

General and administrative expenses ~~decreased $0.3~~increased $3.1 million, or 1%10%, to ~~$31.0~~$34.2 million for the six months ended June 30, ~~2022~~2023 as compared to the same period in 2021. The decrease was primarily attributable to a $3.9 million decrease in employee compensation costs, of which $2.1 million related to a decrease in stock-based compensation expense compared to 2021. The decrease in employee costs was primarily due to a decrease in employee headcount as a result of the Company’s business optimization initiative to outsource enterprise support services. The decrease in general and administrative expenses were partially offset by a $1.8 million increase in professional services, primarily related to a new provider of enterprise support services we engaged during the fourth quarter of 2021 as part of the business optimization initiative previously referenced.2022. The increase in general and administrative expenses ~~also included $1.5~~was primarily due to a $2.4 million ofincrease in professional services, a $0.6 million increase in bad debt expense, and a $0.4 million increase in corporate insurance costs. These increases were partially offset by a $0.3 million decrease in divestiture-related costs and ~~an increase~~executive transition expenses.

Change in ~~severance expense~~Fair Value of ~~$0.5~~Contingent Consideration Receivable

In connection with the sale of the PrescribeWellness Business on August 1, 2022, we may be entitled to receive additional consideration based on the achievement of certain customer and revenue metrics for the years ending December 31, 2023 and 2024. During the six months ended June 30, 2023, we recorded a $3.4 million charge to decrease the fair value of the contingent consideration receivable to zero due to updated estimates utilized in ~~2022.~~the contingent consideration valuation.

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In connection with the sale of the SinfoníaRx Business on March 2, 2023, we may be entitled to receive additional consideration based upon the approval of potential regulatory changes affecting the SinfoníaRx Business. During the six months ended June 30, 2023, we recorded a $0.4 million charge to decrease the fair value of the contingent consideration receivable due to updated estimates utilized in the contingent consideration valuation. The fair value of the contingent consideration receivable was $0.1 million as of June 30, 2023.

Long-Lived Asset Impairment Charge

During the six months ended June 30, 2022, we recorded a $4.1 million long-lived asset impairment charge related to certain capitalized software development costs. During the first quarter of 2022, we became aware of changes in circumstances impacting the future application of certain capitalized software development costs and evaluated the recoverability of the related long-lived assets by comparing their carrying amount to the future net undiscounted cash flows expected to be generated by the assets to determine if the carrying value was not recoverable. The recoverability test indicated that certain capitalized software development costs were impaired. As a result, we recognized an impairment loss equal to $4.1 million for the six months ended June 30, 2022. We did not record any long-lived asset impairment charges ~~in 2021.~~for the six months ended June 30, 2023.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased ~~$1.4~~$1.1 million, or ~~15%~~10%, to ~~$11.2~~$12.3 million for the six months ended June 30, ~~2022 from $9.8 million for~~2023, as compared to the ~~six months ended June 30, 2021.~~same period in 2022. This increase was due to a ~~$1.7~~$1.6 million increase in the amortization of capitalized software related to new software functionality placed into service after the end of the second quarter ~~of 2021 to support our business. This~~in 2022. The increase was partially offset by a $0.5 million decrease ~~in amortization expense of $0.4 million~~ primarily due to property and equipment and definite-lived ~~intangible assets~~intangibles, which have been fully depreciated or amortized, respectively, since the end of the ~~first~~second quarter ~~in 2021.~~of 2022.

Interest Expense, Net

Interest expense ~~decreased slightly to approximately $4.7 million~~ for the six months ended June 30, ~~2022,~~2023 was $2.4 million, a decrease of $2.3 million, or 49%, as compared to the same period in ~~2021.~~2022. The decrease in interest expense was primarily ~~attributable~~due to the ~~full satisfaction~~repayment and termination of the ~~acquisition-related notes payable in October 2021 related to~~2020 Credit Facility on August 1, 2022. For the ~~October 2020 acquisition of Personica, LLC. Approximately $0.4~~six months ended June 30, 2022, we incurred $1.1 million of interest expense related to the 2020 Credit Facility and $0.3 million of amortization of associated deferred financing costs. The decrease in interest expense was also due to $1.2 million of interest income earned on our investments in money market funds. The decrease in interest expense was partially offset by an increase in imputed interest expense related to our vendor financing arrangements.

Other Income

In connection with the sales of the PrescribeWellness Business, DoseMe Business, and SinfoníaRx Business, we entered into transition services agreements (“TSAs”), pursuant to which we provided or are providing business support services after their sales. We recognized $1.0 million of income related to the TSAs for the six months ended June 30, ~~2021 related to the acquisition-related notes payable. This decrease was partially offset by a $0.5 million increase~~2023, which is reported in ~~interest expense on the 2020 Credit Facility.~~other income in our consolidated statement of operations.

Income Taxes

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded income tax expense of ~~$0.4~~$0.2 million and ~~$0.2~~$0.4 million, respectively, which resulted in effective tax rates of ~~(1.1%)~~(1.4)% and ~~(0.7%)~~(1.1)%, respectively. Income tax expense iswas primarily related to indefinite-lived deferred tax liabilities for goodwill amortization. The effective tax rates differ from the U.S. statutory tax rate primarily due to the full valuation allowance recorded that ~~is currently limiting~~limited the realizability of our net deferred tax assets as of June 30, ~~2022~~2023 and ~~2021.~~2022. Accordingly, the tax benefit was limited due to unbenefited losses in the six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. We calculate the provision for income taxes during interim periods by applying the estimated annual effective tax rate for the full year ordinary income or loss to the respective reporting period’s year-to-date income or loss, while also adding any income tax expense or benefit related to discrete items occurring within that interim period.

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Net Loss from Discontinued Operations, Net of Tax

AsDuring the first quarter of ~~June 30,~~ 2022, we ~~determined that~~announced plans to evaluate non-core assets and commenced plans to sell the SinfoníaRx, PrescribeWellness, and DoseMe ~~businesses,~~Businesses, which were acquired in September 2017, March 2019, and January 2019, ~~respectively,~~respectively. We completed the sales of the PrescribeWellness, DoseMe,and SinfoníaRx Businesses on August 1, 2022, January 20, 2023 and March 2, 2023, respectively. Our sales of these businesses represented a strategic business shift having a significant effect on our operations and financial results. As a result, we determined that these businesses met ~~the held-for-sale criteria~~such requirements to be classified as held for sale and discontinued operations as ~~such, all~~of March 31, 2022 and through their respective sale dates. Accordingly, all related assets and liabilities and the results of operations for all periods presented are classified as discontinued operations in the consolidated financial statements.

Net loss from discontinued operations, net of tax, for the DoseMeand SinfoníaRx Businesseswas ~~$44.7~~$0.2 million and ~~$13.1~~$8.8 million, respectively, for the six months ended June 30, ~~2022~~ 2023. Net loss from discontinued operations, net of tax, for the PrescribeWellness, DoseMe,and ~~2021, respectively.~~SinfoníaRx Businesses was $22.7 million, $6.0 million, and $16.0 million, respectively, for the six months ended June 30, 2022. See Note 3 in the notes to our consolidated financial statements as reported in this Quarterly Report on Form 10-Q for additional information.

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~~NON-GAAP FINANCIAL MEASURES~~

~~Adjusted EBITDA~~

To provide investors with additional information about our financial results, we disclose Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA consists of net loss plus certain other expenses, which include interest expense, income tax expense, depreciation and amortization, impairment charges, settlement costs, business optimization expenses, severance costs, executive transition costs, divestiture-related expense, acquisition-related expense, and stock-based compensation expense. We consider settlement costs to include amounts payable by us or reductions to amounts owed to us a result of a contractual settlement. We consider business optimization expenses to include contract termination payments, severance, retention payments, and other employee and non-recurring vendor costs incurred related to our business optimization initiatives during 2022. We consider severance costs to include severance payments related to the realignment of our resources. We consider executive transition costs to include nonrecurring costs related to hiring and onboarding of new named executive officers. We consider divestiture-related expense to include nonrecurring direct transaction costs. We consider acquisition-related expense to include nonrecurring direct transaction and integration costs. We present Adjusted EBITDA because it is one of the measures used by our management and Board of Directors to understand and evaluate our core operating performance, and we consider it an important supplemental measure of performance. We believe this metric is commonly used by the financial community, and we present it to enhance investors’ understanding of our operating performance and cash flows. We believe Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance.

~~Our management uses Adjusted EBITDA:~~

●

~~as a measure of operating performance to assist in comparing performance from period to period on a consistent basis;~~

●

~~to prepare and approve our annual budget; and~~

●

~~to develop short- and long-term operational plans.~~

Adjusted EBITDA is not in accordance with, or an alternative to, measures prepared in accordance with GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. As a non-GAAP measure, Adjusted EBITDA has limitations in that it does not reflect all the amounts associated with our results of operations as determined in accordance with GAAP. In particular:

●

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

●

~~Adjusted EBITDA does not reflect cash interest income or expense;~~

●

~~Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;~~

●

~~Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation and related employer taxes;~~

●

~~Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;~~

●

~~Adjusted EBITDA does not reflect costs incurred in connection with the Company’s business optimization initiatives during 2022;~~

●

~~Adjusted EBITDA does not reflect severance costs related to the realignment of our resources; and~~

●

~~other companies, including companies in our industry, may calculate Adjusted EBITDA, or similarly titled measures differently, which reduce its usefulness as a comparative measure.~~

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Because of these and other limitations, you should consider Adjusted EBITDA alongside GAAP-based financial performance measures, including various cash flow metrics, net loss and our other GAAP financial results and not in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. You should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in the presentation, and we do not intend to imply that our future results will be unaffected by unusual or non-recurring items.

~~The following is a reconciliation of Adjusted EBITDA to our net loss for the periods presented:~~

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021


Reconciliation of Net Loss to Adjusted EBITDA

Net loss

$
(49,610)

$
(21,081)

$
(77,803)

$
(40,573)

Add:

Interest expense, net

2,444

2,182

4,713

4,729

Income tax expense

(527)

133

(193)

332

Depreciation and amortization

5,489

11,619

18,562

23,244

Impairment charges

35,608

—

40,510

—

Settlement

1,448

500

1,448

500

Business optimization expenses

—

—

787

—

Severance costs

—

162

575

162

Executive transition

150

—

150

—

Divestiture-related expense

1,480

—

1,646

—

Acquisition-related expense

—

99

—

217

Stock-based compensation expense

6,692

12,349

15,301

20,951

Adjusted EBITDA ⁽¹⁾

$
3,174

$
5,963

$
5,696

$
9,562

~~(1)~~

The financial results and Adjusted EBITDA related to discontinued operations have not been segregated. The table above includes the results of continuing and discontinued operations. See Note 3 and Note 16 in the notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for discussion of discontinued operations and segment reporting for continuing operations, respectively.

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Liquidity and Capital Resources

We incurred a net loss of ~~$77.8~~$25.7 million and ~~$40.6~~$77.8 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Our primary liquidity and capital requirements are for software development, research and development, sales and marketing, general and administrative expenses, and debt service obligations. We have funded our operations, working capital needs, and investments with cash generated through operations, proceeds from the divestiture of non-core businesses, issuance of stock, and borrowings under ~~the 2020 Credit Facility. At~~our credit facilities. As of June 30, ~~2022,~~2023, we had unrestricted cash and cash equivalents of ~~$26.5~~$62.8 million.

Summary of Cash Flows

The following table shows a summary of our cash flows for the six months ended June ~~2022~~30, 2023 and ~~2021:~~2022:


	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2023		2022
Net cash provided by operating activities	$	8,840	$	900
Net cash (used in) provided by operating activities					$	(3,647)	$	8,840
Net cash used in investing activities		(18,341)		(14,981)		(5,113)		(18,341)
Net cash provided by financing activities		27,410		2,471
Net increase (decrease) in cash and restricted cash ⁽¹⁾	$	17,909	$	(11,610)
Net cash (used in) provided by financing activities						(436)		27,410
Net (decrease) increase in cash, cash equivalents and restricted cash ⁽¹⁾					$	(9,196)	$	17,909

(1)

The cash flows related to discontinued operations have not been segregated. Accordingly, the consolidated statements of cash flows and the following discussions include the results of continuing and discontinued operations. See Note 3 in the notes to the consolidated financial statements ~~as reported in~~of this Quarterly Report on Form 10-Q.

Operating Activities

Net cash used in operating activities was $3.6 million for the six months ended June 30, 2023 and consisted of our net loss of $25.7 million and changes in our operating assets and liabilities totaling $5.5 million, offset by the addition of noncash items of $27.6 million. The noncash items primarily included $12.3 million of depreciation and amortization expense, $5.2 million of stock-based compensation expense, a $4.9 million net loss related to the sales of the DoseMe and SinfoníaRx Businesses, a $3.8 million change in fair value of contingent consideration receivable, $0.7 million of amortization of deferred financing costs and debt discounts related to the 2026 Notes, and a $0.4 million impairment charge related to our operating lease right-of-use assets. The change in operating assets and liabilities was primarily due to an increase in prepaid expenses and other current assets, an increase in inventories, and a decrease in accounts payable. The increase in prepaid expenses and other current assets was primarily due to an increase in contract assets related torebate administration services under our PBM solutions. The increase in inventories was primarily due to growth in our fulfillment services, and the decrease in accounts payable was primarily due to the timing of vendor payments. The change in operating assets and liabilities was partially offset by a decrease in accounts receivables primarily due to improved collections, and an increase in other long-term liabilities due to the vendor financing

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arrangement entered into in February 2022 related to business process outsourcing and technology services for our third-party administration services and electronic health records solutions.

Net cash provided by operating activities was $8.8 million for the six months ended June 30, 2022 and consisted of our net loss of $77.8 million offset by changes in our operating assets and liabilities totaling $11.8 million and the addition of noncash items of $74.9 million. The noncash items primarily included $40.5 million of impairment charges primarily related to our long-lived assets and goodwill, $18.6 million of depreciation and amortization expense, $15.3 million of stock-based compensation expense, and $0.9 million of amortization of deferred financing costs and debt discounts primarily related to the 2026 Notes, partially offset by a $0.4 million change in net deferred taxes. The change in operating assets and liabilities was primarily due to an increase in accounts payable, an increase in accrued expenses and other liabilities, and other long-term liabilities, and a decrease in accounts receivable, which were partially offset by an increase in prepaid expenses and other current assets and client claims receivable. The increase in accounts payable and accrued expenses and other liabilities was primarily due to the timing of vendor payments and an increase in consideration payable to customers of our PBM solutions. The increase in prepaid expenses and other current assets was primarily due to an increase in contract assets related to rebate administration services under our PBM solutions.

Investing Activities

Net cash ~~provided by operating~~used in investing activities was ~~$0.9~~$5.1 million for the six months ended June 30, ~~2021~~2023 and consisted ~~primarily~~ of $7.2 million in software development costs for our ~~net loss~~technologies and $1.3 million in purchases of ~~$40.6 million~~property and ~~changes in~~equipment to support our ~~operating assets and liabilities totaling $4.1 million,~~medication fulfillment services, which were offset by ~~the addition of noncash items of $45.6 million. The noncash items primarily included $23.2~~$3.4 million of ~~depreciation~~cash received from the sales of the DoseMe and amortization expense, $21.0 million of stock-based compensation expense, $1.2 million of amortization of deferred financing costs and debt discounts primarily related to the 2026 Notes and acquisition-related notes payable, and a $0.3 million change in net deferred taxes, offset by acquisition-related contingent consideration paid of $0.1 million related to the acquisition of Cognify in 2018. The change in operating assets and liabilities was primarily due to an increase in prepaid expenses and other current assets, an increase in other assets, and an increase in accounts receivable. The increase in prepaid expenses and other current assets was primarily due to an increase in contract assets related to rebate administration services under our PBM solutions. The increase in other assets was primarily due to an increase in nontrade receivables, and the increase in accounts receivable was primarily due to revenue growth within our CareVention HealthCare segment The change in operating assets and liabilities was partially offset by an increase in accrued expenses and other liabilities.

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~~Investing Activities~~SinfoníaRx Businesses.

Net cash used in investing activities was $18.3 million for the six months ended June 30, 2022 and included $17.9 million in software development costs for our ~~CareVention HealthCare~~technologies and ~~MedWise HealthCare technologies. Net cash used in investing activities also included~~ $0.5 million in purchases of property and equipment to support our operations.

Financing Activities

Net cash used in ~~investing~~financing activities was ~~$15.0~~$0.4 million for the six months ended June 30, ~~2021, which included $14.0~~2023 and consisted primarily of $0.7 million ~~in software development costs~~of payments on employee taxes for ~~our CareVention HealthCare and MedWise HealthCare technologies. Net cash used in investing activities also included $1.0~~shares withheld, offset by $0.2 million ~~in purchases~~ of property and equipment primarily to support technology-related needs and infrastructure at our pharmacies, call center locations, and Moorestown, New Jersey headquarters, and improvements for our office space in Eden Prairie, Minnesota to support our health plan management services.proceeds received from the exercise of stock options.

~~Financing Activities~~

Net cash provided by financing activities was $27.4 million for the six months ended June 30, 2022 and consisted of $27.7 million of borrowings on our 2020 Credit Facility to support business operations and initiatives and $0.1 million of proceeds received from the exercise of stock options. Net cash provided by financing activities for the six months ended June 30, 2022 was partially offset by $0.4 million of payments of debt financing costs.

Net cash provided by financing activities was $2.5 million for the six months ended June 30, 2021 and included $12.5 million of borrowings on our 2020 Credit Facility to fund the repayment of the first and second promissory notes in connection with the October 2020 acquisition of Personica, LLC and $3.1 million of proceeds received from the exercise of stock options. Net cash provided by financing activities was partially offset by repayments of $13.0 million related to the first and second promissory notes in connection with the Personica, LLC acquisition and $0.1 million for the final payment of the contingent purchase price consideration in connection with the 2018 acquisition of the Cognify business.

Funding Requirements

On December 18, 2020, we entered into a Loan and Security Agreement (the “2020 Credit Facility”) with Western Alliance Bank (“WAB”), which provided for a $120.0 million secured revolving credit facility, with a $1.0 million sublimit for cash management services and letters of credit and foreign exchange transactions. The 2020 Credit Facility was scheduled to mature on May 16, 2025. We had $62.7 million of unused commitments under our 2020 Credit Facility as of June 30, 2022.

~~On August 1, 2022,~~ ~~the Company entered into an agreement with WAB with respect to the~~ 2020 Credit Facility (the “Payoff Letter”), pursuant to which the Company voluntarily elected to pay all amounts outstanding under the 2020 Credit Facility and related loan documents (the “Repayment”) using cash on hand and proceeds from the sale of PrescribeWellness Business. Accordingly, on August 1, 2022, the Company paid a total of $57.4 million to WAB for the Repayment, and terminated the 2020 Credit Facility and related loan documents.

We believe that our unrestricted cash and cash equivalents of ~~$26.5~~$62.8 million as of June 30, ~~2022, proceeds from the sale of the PrescribeWellness Business,~~2023 and expected cash flows from continuing operations will be sufficient to fund our planned operations through at least August ~~2023.~~2024. Our ability to maintain successful operations will depend on, among other things, new business, the retention of clients, and the effectiveness of sales and marketing initiatives.

We may seek additional funding through public or private debt or equity financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect our stockholders. If we are unable to obtain funding, we could be forced to delay, reduce, or eliminate our research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects. There is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

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Contractual Obligations and Commitments

During the ~~three and~~ six months ended June 30, ~~2022,~~2023, there were no material changes to our contractual obligations and commitments as compared to those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our ~~2021~~2022 Form 10-K.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Except as disclosed in Note 2 in the notes to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q, there have been no material changes in our critical accounting policies during the ~~three and~~ six months ended June 30, ~~2022~~2023 as compared to those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our ~~2021~~2022 Form 10-K.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There have been no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed in our ~~2021~~2022 Form 10-K ~~for~~in the ~~three~~“Quantitative and Qualitative Disclosures About Market Risk” section of Item 7A during the six months ended June 30, ~~2022.~~2023.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our principal executive officer and our principal financial officer, conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, ~~2022,~~2023, our disclosure controls and procedures are effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Inherent Limitations on Effectiveness of Controls and Procedures

Internal control over financial reporting may not prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met.

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Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the second quarter of fiscal ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently party to any material legal proceedings. From time to time, however, we may be a party to litigation and subject to claims in the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

Stockholders and potential investors in our securities should carefully consider the risk factors set forth in Part I, “Item 1A. Risk Factors” of our ~~2021~~2022 Form 10-K for the year ended December 31, ~~2021,~~2022, which was filed with the Securities and Exchange Commission on ~~February 25, 2022.~~March 10, 2023. We have identified these risk factors as important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf. Except as set forth below, there have been no material changes to such risk factors previously disclosed in our ~~2021~~2022 Form 10-K.

Risks Related to the Proposed Merger

~~Actions~~

The Merger may not be completed on the terms or timeline currently contemplated or at all, which could adversely affect our stock price, business, financial condition and results of ~~activist stockholders against us~~operations.

On August 5, 2023, we entered into the Merger Agreement, pursuant to which the Merger is subject to certain conditions, including (i) the approval of our stockholders; (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the receipt of certain other regulatory approvals or consents; (iv) the absence of legal restraints prohibiting the Merger and(v) other customary conditions specified in the Merger Agreement. While it is currently anticipated that the Merger will be consummated during the fourth quarter of 2023, there can be no assurance that the foregoing conditions will be satisfied in a timely manner or at all, or that an effect, event, development or change will not transpire that could delay or prevent these conditions from being satisfied.

If the Merger is not consummated for any reason, the trading price of our common stock may decline to the extent that the market price of the common stock reflects positive market assumptions that the Merger will be consummated and the related benefits will be realized. We may also be subject to additional risks if the Merger is not completed, including the requirement in the Merger Agreement that, under certain circumstances, we pay Parent a termination fee of $10.6 million or $5.3 million, as applicable, in cash; incurring substantial costs related to the Merger, such as legal, accounting and financial advisory that have already been incurred or will continue to be incurred until closing; limitations on our ability to retain and hire key personnel; reputational harm including relationships with investors, clients and business partners due to the adverse perception of any failure to successfully complete the Merger; and potential disruption to our business and distraction of our workforce and management team to pursue other opportunities that could be ~~disruptive~~beneficial to us, in each case without realizing any of the benefits of having the Merger completed.

Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, we are prohibited from entering into certain transactions and ~~costly. The possibility~~taking certain actions that ~~activist stockholders may wage proxy contests or seek representation on our Board could cause uncertainty about~~might otherwise be beneficial to the ~~strategic direction of our business.~~Company and its stockholders.

~~Stockholders may~~From and after the date of the Merger Agreement and prior to completion of the Merger, the Merger Agreement restricts us from ~~time to time engage in proxy solicitations, advance stockholder proposals or board nominations or otherwise attempt to effect changes, assert influence or acquire some level~~taking specified actions without the consent of ~~control over us.~~

~~On June 1, 2022, Indaba Capital Management, L.P., IC GP, LLC,~~Parent and ~~Derek C. Schrier (collectively, “Indaba”) jointly filed a statement on Schedule 13D to report~~requires that ~~Indaba had purchased 5,169,024 shares~~the business of our ~~common stock, representing approximately 19.99% of our issued~~Company and ~~outstanding shares. As of July 28, 2022, Indaba had reported through~~its subsidiaries be conducted in the filing of an amended Schedule 13D (the “Amended 13D”) that Indaba has acquired an aggregate amount of 6,521,578 shares of our common stock, representing approximately 25.23% of our issued and outstanding shares. The Amended 13D also reported that Indaba had delivered a letterordinary course in all material respects. These restrictions may prevent us from making appropriate changes to ~~our corporate secretary demanding the inspection of certain books and records pursuant to Section 220 of the Delaware General Corporation Law.~~

~~Activist stockholders such as Indaba may~~its business or organizational structure or from ~~time to time attempt to effect changes in our strategic~~pursuing attractive business opportunities

~~direction, and in furtherance thereof, may seek changes in how our company is governed.Our Board and management team strive to maintain constructive, ongoing communications with our stockholders, including Indaba, and welcomes~~

their views and opinions with the goal of enhancing value for all stockholders. However, an activist campaign that seeks to replace members of our Board or changes in our strategic direction could have an adverse effect on us because:

●

Responding to actions by activist stockholders can disrupt our operations, are costly and time-consuming, and divert the attention of our Board and senior management team from the pursuit of business strategies, which could adversely affect our results of operations and financial condition;

●

Perceived uncertainties as to our future direction as a result of changes to the composition of our Board or changes to our stockholder base may lead to the perception of a change in the direction of the business, instability or lack of continuity which may be exploited by our competitors, may result in the loss of potential business opportunities, cause concern for our client base, and make it more difficult to attract and retain qualified personnel and business partners;

●

These types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business; and

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that may arise prior to the completion of the Merger, and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from these restrictions during the pendency of the Merger could be exacerbated by any delays in consummation of the Merger or termination of the Merger Agreement.

●

~~If individuals are elected to our Board with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and to create additional value for our stockholders.~~

~~Our stockholder rights plan,~~The announcement of the Merger Agreement and pendency of the Merger could negatively impact our business, financial condition and results of operations.

The announcement or ~~“poison pill,” includes terms~~pendency of the Merger could adversely affect our business, financial condition and ~~conditions that~~results of operations and may result in our inability to hire or the departure of key personnel. In connection with the Merger, some of our clients and business partners may delay or defer decisions or may end their relationships with us, which could ~~discourage a takeover~~negatively affect our revenues, earnings and cash flows, regardless of whether the Merger is completed. In addition, we have undertaken certain covenants in the Merger restricting the conduct of our business prior to consummating the Merger even if such actions would prove beneficial to us. Similarly, our current and prospective employees may experience uncertainty about their future roles with us following the Merger, which may materially adversely affect our ability to attract and retain key personnel during the pendency of the Merger.

Litigation challenging the Merger Agreement may prevent the Merger from being consummated within the expected timeframe or at all.

Lawsuits may be filed against us, the Board or other ~~transaction that stockholders may consider favorable.~~

On July 25, 2022, our Board approved and adopted a Rights Agreement, dated as of July 25, 2022 (the “Rights Agreement”), by and between the Company and American Stock Transfer & Trust Company, LLC, as rights agent. Pursuantparties to the ~~Rights~~Merger Agreement, ~~the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of~~challenging our ~~common stock (the “Common Shares”). The Rights are distributable~~acquisition by Parent, or making other claims in connection therewith. Such lawsuits may be brought by our purported stockholders and may seek, among other things, to ~~stockholders of record as~~enjoin consummation of the ~~close of business on August 5, 2022 (the “Record Date”).~~Merger. One Right also will be issued together with each Common Share issued by the Company after the Record Date, but before the Distribution Date (as defined in the Rights Agreement) (or the earlier redemption or expiration of the ~~Rights) and, in certain circumstances, after~~conditions to the ~~Distribution Date.~~

~~Generally, the Rights Agreement works by causing substantial dilution to any person or group that acquires beneficial ownership of ten percent (10%) or more~~consummation of the ~~Common Shares without~~Merger is the ~~approval~~absence of legal restraints prohibiting the ~~Board.~~Merger. As ~~a result,~~such, if the ~~overall effect of~~plaintiffs in such potential lawsuits are successful in obtaining an injunction prohibiting the ~~Rights Agreement and~~defendants from completing the ~~issuance of~~Merger on the ~~Rights~~agreed upon terms, then such injunction may be to render more difficult or discourage a merger, tender, or exchange offer or other business combination involving the Company that is not approved by the Board. The Rights Agreement is not intended to interfere with any merger, tender, or exchange offer or other business combination approved by the Board. The Rights Agreement also does not prevent the ~~Board~~Merger from ~~considering any offer that it considers to be in~~becoming effective within the ~~best interest of its stockholders. The description and terms of the Rights are set forth in the Rights Agreement, which has previously been filed as an exhibit to our public reports.~~

As discussed above, the Rights have certain anti-takeover effects, including potentially discouraging a takeover that stockholders may consider favorable. The Rights will cause substantial dilution to a personexpected timeframe or ~~group that attempts to acquire us on terms not approved by the Board.~~at all.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the three months ended June 30, ~~2022.~~2023.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable. The Company does not currently have any plans or arrangements in place under Rule 10b5-1 that would require disclosure under Item 408 of Regulation S-K.

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Item 6. Exhibits

Incorporated by Reference

Filed Herewith
Exhibit
No.

Exhibit Description

Form

Filing Date

Exhibit Number












3.1

Amended and Restated Certificate of Incorporation of Tabula Rasa HealthCare, Inc.

8-K

10/4/2016

3.1


3.2

Certificate of Designation of Series A Junior Participating Preferred Stock of Tabula Rasa HealthCare, Inc.

8-K

7/26/2022

3.1

3.3

Amended and Restated Bylaws of Tabula Rasa HealthCare, Inc.

8-K

10/4/2016

3.2

4.1

Rights Agreement, dated as of July 25, 2022, by and between Tabula Rasa HealthCare, Inc. and American Stock Transfer & Trust Company, LLC, as rights agent

8-K

7/26/2022

4.1

10.1*

Sixth Amendment to Restricted Stock Agreement (Calvin Knowlton)

8-K

5/18/2022

10.1

10.2*

Sixth Amendment to Restricted Stock Agreement (Orsula Knowlton)

8-K

5/18/2022

10.2

10.3††

Asset Purchase Agreement, by and among Tabula Rasa HealthCare Group, Inc., Transaction Data Systems, Inc., and Tabula Rasa HealthCare, Inc., dated as of June 18, 2022

8-K

6/21/2022

2.1

10.4††

Asset Purchase Agreement, by and between Tabula Rasa HealthCare Group, Inc., and karmadata, Inc., dated as of June 18, 2022

8-K

6/21/2022

2.2

10.5

Form of Restricted Stock Agreement

X
31.1

Certification of Chief Executive Officer (Principal Executive Officer) required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X
31.2

Certification of Chief Financial Officer (Principal Financial Officer) required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1**

Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X
101.INS

Inline XBRL Instance Document







X
101.SCH

Inline XBRL Schema Document







X
101.CAL

Inline XBRL Calculation Linkbase







X
101.DEF

Inline XBRL Definition Linkbase







X
101.LAB

Inline XBRL Label Linkbase







X
101.PRE

Inline XBRL Presentation Linkbase







X
104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (contained in Exhibit 101)

X


		Incorporated by Reference			Filed Herewith
Exhibit No.	Exhibit Description	Form	Filing Date	Exhibit Number

2.1#	Agreement and Plan of Merger, dated as of August 5, 2023, by and among Tabula Rasa HealthCare, Inc., Locke Buyer, LLC and Locke Merger Sub, Inc.	8-K	8/7/2023	2.1
3.1	Amended and Restated Certificate of Incorporation of Tabula Rasa HealthCare, Inc.	8-K	10/4/2016	3.1
3.2	Certificate of Designation of Series A Junior Participating Preferred Stock of Tabula Rasa HealthCare, Inc.	8-K	7/26/2022	3.1
3.3	Amended and Restated Bylaws of Tabula Rasa HealthCare, Inc.	8-K	10/4/2016	3.2
4.1	Rights Agreement, dated as of July 25, 2022, by and between Tabula Rasa HealthCare, Inc. and American Stock Transfer & Trust Company, LLC, as rights agent	8-K	7/26/2022	4.1
10.1	Asset Purchase Agreement, by and among Tabula Rasa HealthCare Group, Inc., Transaction Data Systems, Inc., and Tabula Rasa HealthCare, Inc., dated as of June 18, 2022	8-K	6/21/2022	2.1
10.2	Asset Purchase Agreement, by and between Tabula Rasa HealthCare Group, Inc., and karmadata, Inc., dated as of June 18, 2022	8-K	6/21/2022	2.2
10.3#	Share and Asset Purchase Agreement, dated as of January 20, 2023, by and between Tabula Rasa HealthCare Group, Inc. and DoseMe Operations Inc.	10-K	3/10/2023	10.59
10.4#	Asset Purchase Agreement, dated as of March 2, 2023, by and between Tabula Rasa HealthCare Group, Inc. and Symphony Clinic, LLC	10-K	3/10/2023	10.60
10.5*	Form of Performance Stock Unit Award Agreement				X
10.6*	Form of Change in Control and Severance Agreement				X
10.7	Voting and Support Agreement, dated as of August 5, 2023, by and among Tabula Rasa HealthCare, Inc., Locke Buyer, LLC and the stockholders party thereto	8-K	8/7/2023	10.1
31.1	Certification of Chief Executive Officer (Principal Executive Officer) required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of Chief Financial Officer (Principal Financial Officer) required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

32.1**	Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101.INS	Inline XBRL Instance Document				X
101.SCH	Inline XBRL Schema Document				X
101.CAL	Inline XBRL Calculation Linkbase				X
101.DEF	Inline XBRL Definition Linkbase				X
101.LAB	Inline XBRL Label Linkbase				X
101.PRE	Inline XBRL Presentation Linkbase				X
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL (contained in Exhibit 101)				X

* Represents management contract or compensatory plan or arrangement.

** This certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Tabula Rasa HealthCare, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Form 10-Q), irrespective of any general incorporation language contained in such filing.

††# Certain ~~of the~~schedules and exhibits ~~and schedules~~ to this exhibit ~~are~~have been omitted pursuant to Item 601(a)(5) or 601(b)(2) of Regulation ~~S-K.~~S-K, as applicable. The Company ~~agrees to~~will furnish ~~supplementally~~the omitted schedules and exhibits to the ~~SEC,~~Securities and Exchange Commission upon ~~request, a copy of any omitted schedule or exhibit.~~request.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TABULA RASA HEALTHCARE, INC.

Date: August ~~5, 2022~~8, 2023	By:	/s/ ~~DR. CALVIN H. KNOWLTON~~BRIAN W. ADAMS
	Name:	~~Dr. Calvin H. Knowlton~~Brian W. Adams
	Title:	Chief Executive Officer (Principal Executive Officer)

Date: August ~~5, 2022~~8, 2023	By:	/s/ THOMAS J. CANCRO
	Name:	Thomas J. Cancro
	Title:	Chief Financial Officer
		(Principal Financial ~~and Accounting~~ Officer)

Date: August 8, 2023	By:	/s/ MICHAEL A. BRUNO
	Name:	Michael A. Bruno
	Title:	Chief Accounting Officer


		(Principal Accounting Officer)


	Stockholders' Equity
	Six Months Ended June 30, 2021
	Common Stock			Treasury Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
Balance, January 1, 2021	24,222,674	$	2	(217,778)	$	(4,018)	$	352,445	$	(179,900)	$	168,529
Cumulative effect of change in accounting policy	—		—	—		—		(74,850)		(1,392)		(76,242)
Issuance of common stock awards	1,416		—	—		—		—		—		—
Issuance of restricted stock	629,088		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(12,880)		—		—		—		—
Exercise of stock options, net of shares withheld	224,503		—	(6,218)		(274)		2,501		—		2,227
Stock-based compensation expense	—		—	—		—		8,602		—		8,602
Net loss	—		—	—		—		—		(19,492)		(19,492)
Balance, March 31, 2021	25,077,681		2	(236,876)		(4,292)		288,698		(200,784)		83,624
Issuance of restricted stock	120,598		—	—		—		—		—		—
Forfeitures of restricted shares	—		—	(22,913)		—		—		—		—
Exercise of stock options, net of shares withheld	84,396		—	—		—		885		—		885
Stock-based compensation expense	—		—	—		—		12,349		—		12,349
Net loss	—		—	—		—		—		(21,081)		(21,081)
Balance, June 30, 2021	25,282,675	$	2	(259,789)	$	(4,292)	$	301,932	$	(221,865)	$	75,777


Years Ending December 31,
2022 (July 1 – December 31)	$	3,363
2023		6,162
2024		4,684
2025		4,466
2026		4,338
2027		4,271
Thereafter		14,686
Total estimated amortization expense	$	41,970


	CareVention HealthCare		Shared Services and Other		Consolidated
Revenue:
Three Months Ended June 30, 2022
Product revenue	$	55,892	$	—	$	55,892
Service revenue
PACE solutions		15,853		—		15,853
Medication safety services		—		774		774
Software subscription and services		—		78		78
Total service revenue		15,853		852		16,705
Total revenue	$	71,745	$	852	$	72,597

Three Months Ended June 30, 2021
Product revenue	$	46,858	$	—	$	46,858
Service revenue
PACE solutions		14,347		—		14,347
Medication safety services		—		3,037		3,037
Software subscription and services		—		55		55
Total service revenue		14,347		3,092		17,439
Total revenue	$	61,205	$	3,092	$	64,297

Six Months Ended June 30, 2022
Product revenue	$	106,865	$	—	$	106,865
Service revenue
PACE solutions		31,188		—		31,188
Medication safety services		—		1,493		1,493
Software subscription and services		—		161		161
Total service revenue		31,188		1,654		32,842
Total revenue	$	138,053	$	1,654	$	139,707

Six Months Ended June 30, 2021
Product revenue	$	88,700	$	—	$	88,700
Service revenue
PACE solutions		28,266		—		28,266
Medication safety services		—		5,997		5,997
Software subscription and services		—		112		112
Total service revenue		28,266		6,109		34,375
Total revenue	$	116,966	$	6,109	$	123,075


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations
Net loss	$	(49,610)	$	(21,081)	$	(77,803)	$	(40,573)
Add:
Interest expense, net		2,444		2,182		4,713		4,729
Income tax expense		159		81		375		202
Depreciation and amortization		5,489		4,980		11,231		9,781
Impairment charges		—		—		4,062		—
Business optimization expenses		—		—		787		—
Severance costs		—		162		575		162
Executive transition		150		—		150		—
Divestiture-related expense		1,414		—		1,534		—
Acquisition-related expense		—		99		—		217
Stock-based compensation expense		5,092		9,827		12,795		17,199
Loss from discontinued operations		36,919		7,013		44,720		13,129
Adjusted EBITDA from continuing operations	$	2,057	$	3,263	$	3,139	$	4,846
Adjusted EBITDA from discontinued operations		1,117		2,700		2,557		4,716
Total Adjusted EBITDA	$	3,174	$	5,963	$	5,696	$	9,562