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 March 31, 2021June 30, 2022

OR

☐ 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: 001-40028
Signify Health, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
85-3481223
(I.R.S. Employer
Identification Number)
800 Connecticut Avenue, Norwalk, CT 06854
(Address of principal executive offices)
(203) 541-4600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Class A common stock, par value $0.01 per ShareSGFYNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 (§ 232.405 of this chapter) 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.Yes ☐ No ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒
The numberAs ofJuly 31, 2022, there were 176,809,527 outstanding shares of Class A common stock, $0.01 par value, asand 57,631,046 outstanding shares of April 30, 2021 was approximately 168,003,135.Class B common stock, $0.01 par value.





Signify Health, Inc.

Table of Contents

Page
PART I. FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION 
Item 1.
Condensed Consolidated Financial Statements
2
2
3
3
Condensed Consolidated Statements of Stockholders’ / Members’ Equity - Three months ended March 31, 2021 and 2020Operations
4
5
7
68
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2941
Item 3.
Quantitative and Qualitative Disclosures Aboutabout Market RisksRisks
4870
Item 4.4.
Controls and Procedures
4970
PART II.II. OTHER INFORMATION
Item 1.1.
5072
Item 1A.
Risk Factors
5072
Item 2.
Unregistered Sales of Securities and Use of Proceeds
5072
Item 3.
Defaults upon Senior Securities
5172
Item 4.
Mine Safety Disclosures
5172
Item 5.5.
Other Information
5172
Item 6.6.
Exhibits
5173
SIGNATURES
5274

1
2



Table of Contents
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets (unaudited, in millions, except shares)
March 31,December 31,
20212020
ASSETS
Current assets
Cash and cash equivalents$756.5 $72.6 
Accounts receivable, net169.4 270.6 
Contract assets61.3 27.8 
Restricted cash4.4 4.4 
Prepaid expenses and other current assets11.7 13.8 
Total current assets1,003.3 389.2 
Property and equipment, net24.1 25.4 
Goodwill596.7 596.7 
Intangible assets, net497.9 506.9 
Deferred tax assets45.0 0 
Other assets5.7 4.1 
Total assets$2,172.7 $1,522.3 
LIABILITIES AND STOCKHOLDERS' / MEMBERS' EQUITY
Current liabilities
Accounts payable and accrued expenses$133.1 $147.6 
Contract liabilities20.8 6.2 
Current maturities of long-term debt4.2 4.2 
Contingent consideration13.3 13.1 
Deferred tax liability1.9 1.9 
Other current liabilities18.2 16.6 
Total current liabilities191.5 189.6 
Long-term debt396.8 397.1 
Contingent consideration2.1 2.1 
Customer EAR liability83.3 21.6 
Tax receivable agreement liability51.3 0 
Other noncurrent liabilities16.7 17.9 
Total liabilities741.7 628.3 
Commitments and Contingencies (Note 16)00
Members' equity0 894.0 
Class A common stock, par value $0.01 (167,967,856 and 0 issued and outstanding at March 31, 2021 and December 31, 2020, respectively)1.7 0 
Class B common stock, par value $0.01 (57,622,302 and 0 issued and outstanding at March 31, 2021 and December 31, 2020, respectively)0.6 0 
Additional paid-in capital1,082.3 0 
Accumulated deficit(23.2)0 
Contingently redeemable noncontrolling interest369.6 0 
Total stockholders' / members' equity1,431.0 894.0 
Total liabilities and stockholders' / members' equity$2,172.7 $1,522.3 

See accompanying notes to the condensed consolidated financial statements.
June 30,December 31,
20222021
ASSETS
Current assets
Cash and cash equivalents$439.4 $678.5 
Accounts receivable, net217.9 217.2 
Contract assets172.6 84.3 
Restricted cash2.3 5.7 
Prepaid expenses and other current assets18.2 14.9 
Total current assets850.41000.6
Property and equipment, net23.423.7 
Goodwill369.7597.1 
Intangible assets, net436.6455.3 
Operating lease right-of-use assets24.8— 
Deferred tax assets52.738.8 
Other assets10.411.7 
Total assets$1,768.0 $2,127.2 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses$86.0 $136.7 
Contract liabilities52.5 32.9 
Current maturities of long-term debt3.5 3.5 
Current tax receivable agreement liability5.0 — 
Other current liabilities15.6 10.0 
Total current liabilities162.6183.1
Long-term debt334.0 334.9 
Contingent consideration35.4 — 
Customer EAR liability63.6 48.6 
Tax receivable agreement liability51.4 56.3 
Deferred tax liabilities20.5— 
Noncurrent operating lease liabilities28.4— 
Other noncurrent liabilities1.1 11.4 
Total liabilities697.0634.3
Commitments and Contingencies (Note 19)00
Class A common stock, par value $0.01 (176,606,816 and 170,987,365 issued and outstanding at June 30, 2022 and December 31, 2021, respectively)1.8 1.7 
Class B common stock, par value $0.01 (57,568,959 and 56,838,744 issued and outstanding at June 30, 2022 and December 31, 2021, respectively)0.6 0.6 
Additional paid-in capital1,165.9 1,101.3 
(Accumulated deficit) Retained earnings(362.1)19.7
Contingently redeemable noncontrolling interest264.8 369.6 
Total stockholders' equity1,071.0 1492.9
Total liabilities and stockholders' equity$1,768.0 $2,127.2 

2



———————————————————————————————————————
Condensed Consolidated Statements of Operations (unaudited, in millions, except shares and per share amounts)
Three months ended March 31,
 20212020
Revenue$180.0 $131.7 
Operating expenses:
Service expense (exclusive of depreciation and amortization shown below)98.5 67.3 
Selling, general and administrative expense (exclusive of depreciation and amortization shown below)57.3 51.1 
Transaction-related expenses5.6 2.4 
Depreciation and amortization16.7 14.5 
Total operating expenses178.1 135.3 
Income (loss) from operations1.9 (3.6)
Interest expense6.8 5.2 
Other expense (income), net56.7 0 
Other expense, net63.5 5.2 
Loss before income taxes(61.6)(8.8)
Income tax (benefit) expense(9.9)0.1 
Net loss$(51.7)$(8.9)
Net loss attributable to pre-Reorganization period(17.2)(8.9)
Net loss attributable to noncontrolling interest(11.3)— 
Net loss attributable to Signify Health, Inc.$(23.2)$— 
Loss per share of Class A common stock(1)
Basic$(0.14)NM
Diluted$(0.14)NM
Weighted average shares of Class A common stock outstanding(1)
Basic165,486,015 NM
Diluted165,486,015 NM
(1)Basic and diluted net loss per share of Class A common stock is applicable only for the period from February 12, 2021 through March 31, 2021, which is the period following the initial public offering ("IPO") and related Reorganization Transactions (as defined in Note 1 to the Unaudited Condensed Consolidated Financial Statements). See Note 14 for the basis for the computation of net loss per share.
See accompanying notes to the condensed consolidated financial statements.

3

Table of Contents


Condensed Consolidated Statements of Changes in Stockholders’ / Members’ Equity (unaudited,Operations
(unaudited, in millions, except shares)shares and per share amounts)


Members' Equity
Balance at January 1, 2020$957.6
Repurchase of member units0 
Equity-based compensation6.0 
Proceeds from exercises of stock options0.3 
Tax refunds received on behalf of New Remedy Corp0.2 
Repurchase of stock on behalf of New Remedy Corp(0.6)
Net loss(8.9)
Balance at March 31, 2020$954.6
Cure TopCo, LLC (Prior to Reorganization Transactions)Signify Health, Inc. Stockholders' Equity
Members' EquityClass A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at January 1, 2021$894.0 0 $0 0 $0 $0 $0 $0 $894.0 
Net loss prior to Reorganization Transactions(17.2)— — — — — — — (17.2)
Equity-based compensation prior to Reorganization Transactions0.9 — — — — — — — 0.9 
Impact of Reorganization Transactions and IPO
Initial effect of the Reorganization Transactions and IPO on noncontrolling interests(877.7)140,758,464 1.4 57,613,676 0.6 620.8 254.9 — 0 
Contribution of New Remedy Corp to Signify Health Inc.— — — — — (26.0)— — (26.0)
Issuance of Class A common stock in IPO, net of issuance costs— 27,025,000 0.3 — — 479.3 125.3 — 604.9 
Deferred tax adjustment related to Reorganization and tax receivable agreement— — — — — 6.3 — — 6.3 
Class B subscription fee receivable— — — — — 0.6 — — 0.6 
Post- IPO activity
Equity-based compensation subsequent to Reorganization Transactions— — — 8,626 — 0.9 0.7 — 1.6 
Proceeds from exercises of stock options— 184,392 — — — 0.4 — — 0.4 
Net loss subsequent to Reorganization Transactions— — — — — — (11.3)(23.2)(34.5)
Balance at March 31, 2021$0 167,967,856 $1.7 57,622,302 $0.6 $1,082.3 $369.6 $(23.2)$1,431.0 
Three months ended June 30,Six months ended June 30,
 2022202120222021
Revenue$246.2 $212.8 $462.7 $392.8 
Operating expenses
Service expense (exclusive of depreciation and amortization shown below)127.7 104.1 242.2 202.6 
Selling, general and administrative expense (exclusive of depreciation and amortization, shown below)84.4 64.9 154.7 122.2 
Transaction-related expenses1.7 1.0 4.9 6.6 
Loss on impairment519.9 — 519.9 — 
Depreciation and amortization20.1 17.3 38.1 34.0 
Total operating expenses753.8 187.3 959.8 365.4 
(Loss) income from operations(507.6)25.5 (497.1)27.4 
Interest expense4.6 6.5 8.6 13.3 
Loss on extinguishment of debt— 5.0 — 5.0 
Other (income) expense(27.4)14.3 1.4 71.0 
Other (income) expense, net(22.8)25.8 10.0 89.3 
Loss before income taxes(484.8)(0.3)(507.1)(61.9)
Income tax expense (benefit)5.2 (0.2)(0.8)(10.1)
Net loss$(490.0)$(0.1)$(506.3)$(51.8)
Net loss attributable to pre-Reorganization period— — — (17.2)
Net loss attributable to noncontrolling interest(119.5)(0.1)(124.9)(11.4)
Net loss attributable to Signify Health, Inc.$(370.5)$— $(381.4)$(23.2)
Loss per share of Class A common stock
Basic$(2.10)$— $(2.19)$(0.14)
Diluted$(2.10)$— $(2.19)$(0.14)
Weighted average shares of Class A common stock outstanding
Basic176,350,100 168,003,727 174,565,795 167,145,986 
Diluted176,350,100 168,003,727 174,565,795 167,145,986 
See accompanying notes to the condensed consolidated financial statements.

4
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Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited, in millions, except shares)


Condensed Consolidated Statements of Cash Flows (unaudited, in millions)
Three months ended March 31,
20212020
Operating activities
Net loss$(51.7)$(8.9)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization16.7 14.5 
Equity-based compensation2.5 6.0 
Customer equity appreciation rights4.9 1.2 
Remeasurement of customer equity appreciation rights56.8 0.1 
Amortization of deferred financing fees0.7 0.4 
Remeasurement of contingent consideration0.2 0.2 
Deferred income taxes(14.0)0 
Other0 0.3 
Changes in operating assets and liabilities:
Accounts receivable101.2 62.1 
Prepaid expenses and other current assets2.4 (0.5)
Contract assets(33.5)(34.4)
Other assets(1.0)0.3 
Accounts payable and accrued expenses(13.8)(49.3)
Contract liabilities14.6 9.1 
Other current liabilities1.9 0.5 
Other noncurrent liabilities(1.2)2.6 
Net cash provided by operating activities86.7 4.2 
Investing activities
Capital expenditures - property and equipment(0.7)(6.2)
Capital expenditures - internal-use software development(5.7)(5.0)
Net cash used in investing activities(6.4)(11.2)
Financing activities
Repayment of long-term debt(1.0)(0.7)
Repayment of borrowings under revolving credit facility0 (15.0)
Proceeds from borrowings under revolving credit facility0 92.0 
Repayments of borrowings under financing agreement(0.3)0 
Proceeds from IPO, net604.8 0 
Refunds of taxes on behalf of New Remedy Corp0 0.2 
Proceeds (payments) related to the issuance of common stock under stock plans0.1 (0.3)
Net cash provided by financing activities603.6 76.2 
Increase in cash, cash equivalents and restricted cash683.9 69.2 
Cash, cash equivalents and restricted cash - beginning of period77.0 50.2 
Cash, cash equivalents and restricted cash - end of period$760.9 $119.4 
Supplemental disclosures of cash flow information
Cash paid for interest$4.8 $4.8 
Cash payments, net of refunds, for taxes(0.1)0 
Noncash transactions
Assumption of liabilities from New Remedy Corp$26.0 0 
Capital expenditures not yet paid0.6 0.1 

Class A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at March 31, 2022176,232,513 $1.8 57,313,051 $0.6 $1,160.0 $375.1 $8.4 $1,545.9 
Equity-based compensation— — 281,668 — 5.8 9.3 — 15.1 
Vesting of restricted stock units26,120 — (0.1)(0.1)
Proceeds from exercises of stock options179,110 — — — 0.5 0.2 — 0.7 
Issuance of Class A common stock under stock purchase plan143,313 — 1.3 0.4 1.7 
Tax payments on behalf of non-controlling interest— — — — — (0.5)— (0.5)
Exchange of LLC units25,760 — (25,760)— 0.2 (0.2)— — 
Issuance of Class A common stock in connection with Caravan Health acquisition, net of tax— — — — (1.8)— — (1.8)
Net loss— — — — — (119.5)(370.5)(490.0)
Balance at June 30, 2022176,606,816 $1.8 57,568,959 $0.6 $1,165.9 $264.8 $(362.1)$1,071.0 



Class A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at March 31, 2021167,967,856 $1.7 57,622,302 $0.6 $1,082.3 $369.6 $(23.2)$1,431.0 
Equity-based compensation subsequent to Reorganization Transactions— — 288,920 — 1.8 1.5 — 3.3 
Proceeds from exercises of stock options55,299 — — — 0.1 — — 0.1 
Tax payments on behalf of non-controlling interest— — — — — (10.4)— (10.4)
Net loss subsequent to Reorganization Transactions— — — — — (0.1)— (0.1)
Balance at June 30, 2021168,023,155 $1.7 57,911,222 $0.6 $1,084.2 $360.6 $(23.2)$1,423.9 








See accompanying notes to the condensed consolidated financial statements.
5
Table of Contents

Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited, in millions, except shares)


Class A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at January 1, 2022170,987,365 $1.7 56,838,744 $0.6 $1,101.3 $369.6 $19.7 $1,492.9 
Adoption of new accounting standard— — — — — — (0.4)(0.4)
Equity-based compensation— — 774,051 — 8.7 13.0 — 21.7 
Vesting of restricted stock units83,771 — — — (0.1)— — (0.1)
Proceeds from exercises of stock options586,397 — — — 1.7 0.6 — 2.3 
Issuance of Class A common stock under stock purchase plan143,313 — — — 1.3 0.4 — 1.7 
Tax payments on behalf of non-controlling interest— — — — — (0.8)— (0.8)
Exchange of LLC units43,836 — (43,836)— 0.3 (0.3)— — 
Issuance of Class A common stock in connection with Caravan Health acquisition, net of tax4,762,134 0.1 — — 52.7 7.2 — 60.0 
Net loss— — — — — (124.9)(381.4)(506.3)
Balance at June 30, 2022176,606,816 $1.8 57,568,959 $0.6 $1,165.9 $264.8 $(362.1)$1,071.0 

Cure TopCo, LLC (Prior to Reorganization Transactions)Signify Health, Inc. Stockholders' Equity
Members' EquityClass A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at January 1, 2021$894.0 — $— — $— $— $— $— $894.0 
Net loss prior to Reorganization Transactions(17.2)— — — — — — �� (17.2)
Equity-based compensation prior to Reorganization Transactions0.9 — — — — — — — 0.9 
Impact of Reorganization Transactions and IPO
Initial effect of the Reorganization Transactions and IPO on noncontrolling interests(877.7)140,758,464 1.4 57,613,676 0.6 620.8 254.9 — — 
Contribution of New Remedy Corp to Signify Health Inc.— — — — — (26.0)— — (26.0)
Issuance of Class A common stock in IPO, net of issuance costs— 27,025,000 0.3 — — 479.3 125.3 — 604.9 
Deferred tax adjustment related to Reorganization and tax receivable agreement— — — — — 6.3 — — 6.3 
Class B subscription fee receivable— — — — — 0.6 — — 0.6 
Post- IPO activity
Equity-based compensation subsequent to Reorganization Transactions— — — 297,546 — 2.7 2.2 — 4.9 
Proceeds from exercises of stock options— 239,691 — — — 0.5 — — 0.5 
Tax payments on behalf of non-controlling interest— — — — — — (10.4)— (10.4)
Net loss subsequent to Reorganization Transactions— — — — — — (11.4)(23.2)(34.6)
Balance at June 30, 2021$— 168,023,155 $1.7 57,911,222 $0.6 $1,084.2 $360.6 $(23.2)$1,423.9 
See accompanying notes to the condensed consolidated financial statements.
6
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Condensed Consolidated Statements of Cash Flows (unaudited, in millions)

Six months ended June 30,
20222021
Operating activities
Net loss$(506.3)$(51.8)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization38.1 34.0 
Asset impairment519.9 — 
Equity-based compensation21.7 5.8 
Customer equity appreciation rights13.0 9.8 
Remeasurement of customer equity appreciation rights2.0 71.3 
Amortization of deferred financing fees1.1 1.4 
Amortization of right-of-use assets3.5 — 
Loss on extinguishment of debt— 5.0 
Remeasurement of contingent consideration4.9 2.2 
Payment of contingent consideration— (1.9)
Deferred income taxes(15.7)(14.3)
Changes in operating assets and liabilities:
Accounts receivable0.9 54.0 
Prepaid expenses and other current assets(1.3)(2.7)
Contract assets(79.2)(30.4)
Other assets1.3 (0.6)
Accounts payable and accrued expenses(51.8)(25.7)
Contract liabilities19.6 13.3 
Other current liabilities(3.4)(1.8)
Noncurrent operating lease liabilities(3.8)— 
Other noncurrent liabilities— (1.6)
Net cash (used in) provided by operating activities(35.5)66.0 
Investing activities
Capital expenditures - property and equipment(3.8)(1.9)
Capital expenditures - internal-use software development(14.3)(11.6)
Purchase of long-term investment(0.3)— 
Business combinations, net of cash acquired(189.6)(0.4)
Net cash used in investing activities(208.0)(13.9)
Financing activities
Repayment of long-term debt(1.8)(412.5)
Proceeds from issuance of long-term debt— 350.0 
Repayments of borrowings under financing agreement(0.3)(0.3)
Payment of contingent consideration— (13.1)
Payment of debt issuance costs— (9.2)
Distributions to/on behalf of non-controlling interest members(0.8)(10.4)
Proceeds from IPO, net— 604.8 
Refunds (payments) of taxes on behalf of New Remedy Corp— 0.1 
Proceeds related to the issuance of common stock under stock plans3.9 0.5 
Net cash provided by financing activities1.0 509.9 
(Decrease) increase in cash, cash equivalents and restricted cash(242.5)562.0 
Cash, cash equivalents and restricted cash - beginning of period684.2 77.0 
Cash, cash equivalents and restricted cash - end of period$441.7 $639.0 
Supplemental disclosures of cash flow information
Cash paid for interest$7.3 $12.6 
Cash payments, net of refunds, for taxes15.7 3.7 
Noncash transactions
Capital expenditures not yet paid2.6 0.8 
Assumption of liabilities from New Remedy Corp— 26.0 
Issuance of common stock related to acquisition60.0 — 
Items arising from LLC interest ownership exchanges:
   Establishment of liabilities under tax receivable agreement(0.1)— 
See accompanying notes to the condensed consolidated financial statements.
7

Table of Contents

Notes to the Condensed Consolidated Financial Statements (unaudited)


1.Nature of Operations

Signify Health, Inc. (referred to herein as “we”, “our”, “us”, “Signify Health” or the “Company”) was incorporated in the state of Delaware on October 1, 2020 and was formed for the purpose of completing an initial public offering (“IPO”) of its common stock and related reorganization transactions as described below. As a result of the reorganization transactions in February 2021, we control, and therefore consolidate the operations, of Cure TopCo, LLC (“Cure TopCo”) and its direct and indirect subsidiaries.

Cure TopCo is a Delaware limited liability company formed on November 3, 2017. Cure TopCo has adopted a holding company structure and is the indirect parent company of Signify Health, LLC (“Signify”), a Delaware limited liability company. Signify was formed on November 3, 2017. Operations are performed through our wholly-owned subsidiaries.

We are a healthcare platform that leverages advanced analytics, proprietary technology and datasets, and nationwide healthcare provider networks to create and power value-based payment programs. Our customers include health plans, governments, employers, health systems and physician groups. We operateTo date, we have operated in 2 segments of the value-based healthcare payment industry: in-home health evaluations (“IHE”), or the Home & Community Services segment, and payment models based on individual episodes of care, or the Episodes of Care Services segment, and in-homesegment. IHEs are health evaluations (“IHE”), orperformed by a clinician in the Home & Community Services segment.home to support payors’ participation in Medicare Advantage and other government-run managed care plans. Payment models based on individual episodes of care organize or bundle payments for all, or a substantial portion of, services received by a patient in connection with an episode of care, such as a surgical procedure, particular condition or other reason for a hospital stay. IHEs are health evaluations performed by a clinician in the home to support payors’ participation in Medicare Advantage and other government-run managed care plans. Our solutions support value-based payment programs by aligning financial incentives around andoutcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, care coordination and cost-savings. Through our platform, we coordinate what we believe is a holistic suite of clinical, social, and behavioral services to address an individual’s healthcare needs and prevent adverse events that drive excess cost, all while shifting services towards the home.

On March 1, 2022, we acquired Caravan Health, Inc. (“Caravan Health”), see Note 4 Business Combinations. With this combination, we now provide a broader range of value-based and shared savings models from advanced primary care to specialty care bundles to total cost of care programs. Caravan Health has allowed us to expand our total cost of care enablement services. Total cost of care enablement services include multiple services around the management of total cost of care payment models, such as Accountable Care Organizations (“ACOs”), where our clients take responsibility for the cost of a patient’s healthcare over the course of a year. These services include, but are not limited to, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings.

On July 7, 2022, we announced our plans to exit our Episodes of Care Services business, as described inNote 24 Subsequent Events.
Initial Public Offering
On February 16, 2021, Signify Healthwe closed an initial public offering (“IPO”) of 27,025,000 shares of itsour Class A common stock at a public offering price of $24 per share, which included 3,525,000 shares issued pursuant to the full exercise of the underwriters’ over-allotment option. Signify HealthWe received gross proceeds of $648.6 million, which resulted in net cash proceeds of $609.7 million after deducting underwriting discounts and commissions of $38.9 million and before fees and expenses incurred in connection with the IPO and paid for by Cure TopCo, LLC. Signify HealthTopCo. We used the proceeds to purchase newly-issued membership interests from Cure TopCo at a price per interest equal to the IPO price of itsour Class A common stock, net of the underwriting discount and commissions.

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Reorganization Transactions
In connection with the IPO, Signify Health and Cure TopCo completed a series of transactions (“Reorganization Transactions”) including, the following:effects of which included, among other things, Signify Health becoming the controlling shareholder of Cure TopCo.

•The limited liability company agreementAs of Cure TopCo was amended and restated to, among other things, convert all outstanding equity interests into 1 class of non-voting common units (the “LLC Units”) and appoint Signify Health as the sole managing member of Cure TopCo.
•The certificate of incorporation of Signify Health was amended and restated to authorize the issuance of 2 classes of common stock: Class A common stock and Class B common stock (collectively, the “common stock”). Each share of common stock will entitle its holder to 1 vote per share on all matters submitted to a vote of our stockholders. The Class B common stock is not entitled to economic interests in Signify Health.
•The acquisition of LLC Units through (i) the contribution of LLC Units in exchange for Class A common stock by New Mountain Partners V (AIV-C), LP (the “IPO Contribution”) and (ii) the “Mergers,” in which certain entities treated as corporations for U.S. tax purposes that held LLC Units (individually, a “Blocker Company” and together, the “Blocker Companies”), each simultaneously merged with a merger subsidiary created by us (and survived such merger as a wholly-owned subsidiary of Signify Health), after which each Blocker Company immediately merged into Signify Health.
•New Remedy Corp merged with and into Signify Health.
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Notes to the Condensed Consolidated Financial Statements (unaudited)
•Each Continuing Pre-IPO LLC Member (as defined below) was issued a number of shares of our Class B common stock in an amount equal to the number of LLC Units held by such Continuing Pre-IPO LLC Member at the time of the IPO, except in the case of Cure Aggregator (“Cure Aggregator”). Shares of Class B common stock were issued to the direct holders of common units in Cure Aggregator in proportion to their interests in Cure Aggregator. These shares will not be entitled to any voting rights until the common units of Cure Aggregator that correspond to the shares have vested.

Following the completion of the Reorganization Transactions, Signify HealthJune 30, 2022, we owned approximately 74.1%75.4% of the economic interest in Cure TopCo. The Pre-IPO Membersnon-controlling interest, consisting of certain pre-IPO members who retainretained their equity ownership in Cure TopCo subsequent to the Reorganization Transactions, (the “Continuing Pre-IPO LLC Members”) owned the remaining 25.9%24.6% economic interest in Cure TopCo.
2.Significant Accounting Policies
Basis of Presentation

These Condensed Consolidated Financial Statements are unaudited and have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and following the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements included in this report should be read in conjunction with the Company’s audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.2021. In our opinion, they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for future interim periods or the entire fiscal year. Our quarterly results of operations, including our revenue, income (loss) from operations, net loss and cash flows, have varied and may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, our interim results should not be relied upon as an indication of future performance.

For the periods subsequent to the Reorganization Transactions effective February 12, 2021, the Condensed Consolidated Financial Statements represent Signify Health and our consolidated subsidiaries, including Cure TopCo. For the periods prior to the Reorganization Transactions, the condensed consolidated financial statements represent Cure TopCo and its consolidated subsidiaries, see Note 1 Nature of Operations. Signify Health was formed for the purpose of the IPO, which was effective in February 2021 and had no activities of its own prior to such date. We are a holding company and our sole material asset is a controlling ownership interest in Cure TopCo.

The Condensed Consolidated Financial Statements include the accounts and financial statements of our wholly-owned subsidiaries and variable interest entities (VIEs)(“VIE”s) where we are the primary beneficiary. See Note 5 Variable Interest Entities. Results of operations of VIEs are included from the dates we became the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.

We have 2 operating segments, Home & Community Services and Episodes of Care Services as described in Note 1 Nature of Operations. On July 7, 2022, we announced our plans to exit our Episodes of Care business, as described inNote 24. Subsequent Events.

Use of Estimates
The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions affecting the reported amounts in our Condensed Consolidated Financial Statements and accompanying notes. These estimates are based on information available as of the date of the Condensed Consolidated Financial Statements; therefore, actual results could differ from those estimates. The significant estimates underlying our Condensed Consolidated Financial Statements include revenue recognition; allowance for doubtful accounts; recoverability of long-lived assets, intangible assets and goodwill; loss contingencies; accounting for business combinations, including amounts assigned to definite and indefinite lived intangible assets and contingent consideration; customer equity appreciation rights; and equity-based compensation.

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NotesAs of June 30, 2022, the COVID-19 pandemic continues to evolve and impact our Episodes of Care Services segment due to the Condensed Consolidated Financial Statements (unaudited)
Aspassage of March 31, 2021,time between episode initiation and the impactperformance and subsequent recognition of the outbreak of COVID-19 continues to unfold; revenue for our services; sSeeee Note 3 The COVID-19 Pandemic. As a result, many of our estimates and assumptions
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have required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in the future.

See Note 6 Revenue Recognition for changes in estimates related to revenue recognition for the BPCI-A program in the second quarter of 2022.

Comprehensive Income (Loss)
We have not identified any incremental items that would be considered a component of comprehensive income (loss) and accordingly a statement of comprehensive lossincome (loss) is not reflected in the Condensed Consolidated Financial Statements because net loss and comprehensive loss are the same.

Restricted Cash
Under our Master Agreement with the Centers for Medicare and Medicaid Services (“CMS”), we were required to place certain funds in escrow for the benefit of CMS. These amounts, known as a Secondary Repayment Source (“SRS”), were primarily based on the size of our participation in the legacy CMS Bundled Payments for Care Improvement (“BPCI”) program, the predecessor program of the Bundled Payments for Care Improvement - Advanced initiative (“BPCI-A”). These funds were available to CMS as a supplemental payment source if we failed to pay amounts owed to CMS. Under the agreement, the funds are returned to us 18 months after the conclusion of the effective period of the CMS Master Agreement, or when all financial obligations to CMS are fulfilled. As of MarchDecember 31, 2021, and December 31, 2020, there werewas $0.5 million in the SRS account included in restricted cash on the Condensed Consolidated Balance Sheets related to BPCI-A. During 2020, $15.8 millionBPCI-A, all of SRS funds werewhich was released to us from escrow asin the original BPCI program had ended.first quarter of 2022.

We also withhold a portion of shared savings to customers in a “holding pool” to cover any potential subsequent negative adjustments through CMS’s subsequent reconciliation true-up process. These funds are distributed to customers following the final true-up if there is no negative adjustment. These amounts represent consideration payable to the customer and therefore have reduced revenue in the period earned. The funds have been received by us from CMS and are held in a separate cash account, included as restricted cash on the Condensed Consolidated Balance Sheets. Since the funds are payable to the customer at the point the final CMS true-up is made or a negative adjustment is due to us, the amounts are also included in accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets. As of March 31, 2021June 30, 2022 and December 31, 2020,2021, there was $3.5$1.8 million and $5.2 million of restricted cash in the holding pool.pool, respectively.

In addition, as of June 30, 2022 we held $0.4$0.5 million ofin a separate cash account, included as restricted cash on the Condensed Consolidated Balance Sheets, in relation to an ACO owned by our subsidiary Caravan Health. This ACO is part of a risk model under the CMS Medicare Shared Savings Program (“MSSP”) where it shares in both the savings and losses. The ACO has a master letter of credit with CMS as the recipient where the letter of March 31, 2021 acquiredcredit is used as protection against unpaid losses, should the ACO fail to remit payment in the event that losses occur. The letter of credit is collateralized by the ACO members, by either cash remitted or subordinated letters of credit. This restricted cash will only be used if an ACO member fails to remit payment in connection with the PatientBlox acquisition. In accordance with the acquisition agreement, the usea subordinated letter of the funds held in a PatientBlox bank account is restricted until the first defined milestone period expires, which is expected to occur during the second quarter of 2021.credit.

The following table reconciles cash, cash equivalents, and restricted cash per the Condensed Consolidated Statements of Cash Flows to the Condensed Consolidated Balance Sheets:
March 31,December 31,
20212020June 30, 2022December 31, 2021
(in millions)(in millions)
Cash and cash equivalentsCash and cash equivalents$756.5 $72.6 Cash and cash equivalents$439.4 $678.5 
Restricted cashRestricted cash4.4 4.4 Restricted cash2.3 5.7 
Total cash, cash equivalents, and restricted cashTotal cash, cash equivalents, and restricted cash$760.9 $77.0 Total cash, cash equivalents, and restricted cash$441.7 $684.2 

Accounts Receivable
Accounts receivable primarily consist of amounts due from customers and CMS and are stated at their net realizable value. Management evaluates all accounts periodically and an allowance is established based on the best factslatest information available to management. Management considers historical realization data, accounts receivable aging trends and other operational trends to estimate the collectability of receivables. After all reasonable attempts to collect a receivable have been exhausted, the receivable is written off against the allowance for doubtful accounts. As of March 31, 2021 and December 31, 2020, we had an allowance for doubtful accounts of $5.2 million and $5.1 million, respectively.
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As of June 30, 2022 and December 31, 2021, we had an allowance for doubtful accounts of $10.1 million and $7.9 million, respectively.

Advertising and Marketing Costs
Advertising and marketing costs are included in selling, general and administrative expenses (“SG&A expenses&A”) and are expensed as incurred. Advertising and marketing costs totaled $0.3$0.2 million and $0.4$0.2 million for the three months ended March 31,June 30, 2022 and 2021, respectively, and 2020,$0.4 million and $0.6 million for the six months ended June 30, 2022 and 2021, respectively.

Income TaxesAccounting for Leases
We lease various property and equipment, with the majority of our leases consisting of real estate leases. Effective January 1, 2022, we adopted ASC Topic 842 Leases (“ASC 842”). Under ASC 842, a lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Our contracts determined to be or contain a lease include explicitly or implicitly identified assets where we have the right to substantially all of the economic benefits of the assets and we have the ability to direct how and for what purpose the assets are organizedused during the lease term. Leases are classified as either operating or financing. All of our leases meet the criteria to be classified as operating leases. For operating leases, we recognize a C Corporationlease liability equal to the present value of the remaining lease payments, and own a controllingright of use asset equal to the lease liability, subject to certain adjustments, such as prepaid rents, initial direct costs and lease incentives received from the lessor. We use the incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in Cure TopCo which is organized as a partnership for tax purposes.similar economic environment.

For partnershipCertain of our leases include variable lease costs to reimburse the lessor for real estate tax and disregarded entities, taxable incomeinsurance expenses and certain non-lease components that transfer a distinct service to us, such as common area maintenance services. We have elected not to separate the resulting liabilities are allocated among the owners of the entitiesaccounting for lease components and reported on the tax filingsnon-lease components for those owners. We record income tax (benefit) expense, deferred tax assets, and deferred tax liabilities only for the items for which we are responsible for making payments directly to the relevant tax authority.

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws expected to be in effect when such differences are expected to reverse. Such temporary differences are reflected as deferred tax assets and deferred tax liabilities on the Condensed Consolidated Balance Sheets. A deferred tax asset is recognized if it is more likely than not that a tax benefit will be realized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible.leased assets.

We may recognize tax liabilities when, despitesublease portions of our belief thatoffice space where we do not use the entire space for our tax return positions are supportable, we believe that certain positions may not be fully sustained upon review by the tax authorities. Benefits from tax positions are measured at the largest amount of benefit thatoperations. Sublease income is greater than fifty percent likely of being realized upon settlement. To the extent that the final tax outcome of these matters is different than the amounts recorded such differences impact income tax expense in the period such determination is made.

We recognize interest and penalties related to income taxes as a componentreduction of income taxlease expense.

Recent Accounting Pronouncements

Recently Adopted

In June 2018,February 2016, the FASB issued Accounting Standards Update No. 2018-07, ASU 2016-02,Compensation—Stock Compensation (Topic 718): Improvements Leases (“ASC 842”) which requires lessees to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”)recognize leases on the balance sheet by recording a right-of-use asset and lease liability. This guidance was effective for non-public entities for annual reporting periods beginning after December 15, 2021. We adopted this new guidance as of January 1, 2022 and applied the transition option, whereby prior comparative periods are not retrospectively presented in the consolidated financial statements. We elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for all asset classes. We made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes.See Note 8 Leases. The amendments

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2018-07 expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-072021-08 is effective for public entities for fiscal years beginning after December 15, 2019, and2022, including interim periods within those fiscal years, beginningand should be applied prospectively to business combinations occurring on or after December 15, 2020.the effective date of the amendments. We elected to early adopt this new guidance for interim periods in 20202022 beginning with no significant impact to our financial statements.the Caravan Health acquisition on March 1, 2022. We measured the acquired contract assets and liabilities in accordance with Topic 606. See Note 4 Business Combinations.

In November 2019,2021, the FASB issued ASU 2019-08,2021-10, Compensation – Stock CompensationGovernment Assistance (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements – Share-Based Consideration Payable to a Customer (“832) Disclosures by Business Entities about Government Assistance (“ASU 2019-08”2021-10”). ASU 2019-08 which requires annual disclosures that an entity measure and classify share-based payment awards granted to a customer by applyingincrease the guidance in Topic 718. The amount recorded as a reduction of the transaction price is required to be measured on the basis of the grant-date fair value of the share-based payment award in accordance with Topic 718. The grant date is the date at which a grantor (supplier) and a grantee (customer) reach a mutual understanding of the key terms and conditions of a share-based payment award. ASU 2019-08 is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. We elected to early adopt this new guidance for interim periods in 2020, which had an impact on the customer Equity Appreciation Rights (“EAR”) agreements. The initial grant date fair value of the EAR agreements
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is being recordedtransparency of transactions with a government accounted for by applying a grant or contribution accounting model, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. ASU 2021-10 was effective for all entities for fiscal years beginning after December 31, 2021. We adopted this new guidance as a reduction of the transaction price beginning in 2020. See Note 16 Commitments and Contingencies.January 1, 2022. There was no material impact on our condensed consolidated financial statements upon adoption.

Pending Adoption

We are an “emerging growth company” under the Jumpstart Our Business Startups Act (“JOBS Act”). Pursuant to the JOBS Act, an emerging growth company is providedhas the option to adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We intend to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. The effective dates below are the effective dates we expect to adopt the new accounting pronouncements, which are those permitted for a company that is not an issuer.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which requires lessees to recognize leases on the balance sheet by recording a right-of-use asset and lease liability. This guidance is effective for non-public entities for annual reporting periods beginning after December 15, 2021. Early adoption is permitted. We plan to adopt the standard as of the effective date. We are currently evaluating the provisions of the standard, including optional practical expedients. We are assessing the impact to our accounting policies, processes, disclosures, and internal control over financial reporting. We expect to record a right of use asset and corresponding lease liability for all outstanding leases. It is likely that the adoption will have a material impact to our Condensed Consolidated Balance Sheet given the number of facility leases we currently have. We continue to evaluate the expected impact to our Condensed Consolidated Statements of Operations and Cash Flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) which introduced the current expected credit losses methodology for estimating allowances for credit losses. ASU 2016-13 applies to all financial instruments carried at amortized cost and off-balance-sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credit, and financial guarantees. The new accounting standard does not apply to trading assets, loans held for sale, financial assets for which the fair value option has been elected, or loans and receivables between entities under common control. ASU 2016-13 is effective for non-public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of this new guidance on our condensed consolidated financial statements.
3.The COVID-19 Pandemic

Our operations in our Home & Community Services segment were significantly affected by the COVID-19 pandemic early in 2020. As a precautionary measure in response toHowever, as the COVID-19 pandemic has evolved, we temporarily paused IHEs in March 2020. Shortly following the suspension of in-person visits, we werehave been able to expand our business model to performpivot and flex the volume of virtual IHEs (“vIHEs”) if needed, in particular when there are spikes in COVID-19 case rates as new variants emerge, and made up for some of the lost IHE volume through vIHEs. We resumed in-person visits beginning in July 2020.

Asas a result of the pandemic, many ofwe have not experienced a material impact to our customers postponed IHEs to the second half of 2020. Although we continued to see some increase in IHE member cancellation rates, overall we saw significant incremental IHE volume in the second half of 2020, particularly in the fourth quarter, as certain customers increased the volumes they placed with us and in-person IHEs represented the majority of those IHEs. In order to meet this volume growth, we onboarded additional providers into our network which resulted in proportionally higher expenses. Additionally, in 2020, the COVID-19 pandemic and particularly the resulting shift to virtual evaluations (which was most evident in the second quarter), had an impact on the quarterly volume and results of operations for the Home & Community Services segment. The shift to virtual evaluations was due to a combination of the pause in in-person IHEs between March and July 2020, the decline in the acceptance rates for in-person IHEs and an increase in the member cancellation rates as individuals were less willing to receive IHEs in-person since the start of the pandemic. We also experienced some provider unwillingness to perform IHEs in-person during the pandemic.

In the first quarter of 2021, the vast majority of our evaluations were in-person IHEs, although we continued to perform vIHEs. Overall, IHE volume was more in line with historical trends and therefore, during the remainder of 2021, we expect seasonality trendsoperation in our Home & Community Services segment to be more consistent withas a result of the ongoing pandemic since the second quarter of 2020.
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Notes to the Condensed Consolidated Financial Statements (unaudited)
historical trends. We and our customers continue to monitor the changing situation with COVID-19 cases on a state-by-state basis, the ongoing federal vaccine roll out and changes in recommendations made by the Centers for Disease Control (“CDC”).

Our Episodes of Care Services segment has also been affected byexperienced a prolonged negative impact related to the pandemic. At certain times during the pandemic, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, including certain acute and post-acute care services, be suspended or canceled to avoid non-essential patient exposure to medical environments and potential infection with the virus that causes COVID-19.COVID-19 virus. In addition, the temporary suspension or cancellation of services was put in place to focus limited resources and personnel capacity toward the prevention of, and care for patients with COVID-19. This resulted in fewer elective procedures and a general reduction in individuals seeking medical care starting at the end of the firstthird quarter of 2020, CMS announced that all episodes with a COVID-19 diagnosis, irrespective of the impact on the outcome of the episode, would be excluded from reconciliations, and this exclusion has extended into 2022, resulting in a negative impact to our program size. Further, beginning with the reconciliation results received from CMS during the second quarter of 2021, we saw a negative impact on our savings rate, primarily related to the under-diagnosis of co-morbidities and the use of higher cost next site of care facilities, both of which contributed to a substantially lower number of episodes being manageddrove costs higher and, in 2020. turn, lowered our savings rates. Due to the nature of the BPCI-A program, however, there is a significant lag between when we perform our servicesthe episodes are initiated and when CMS reconciles those services. As such, there was no immediate impact to our revenuesservices and we recognize revenue over a 13 month period encompassing both of those points in 2020.time. The specific impact of thosethe lower volumes and higher costs on our program size and revenues was more evident laterhas resulted in 2020 as evidenced by our 2020 annuala decline in weighted average program size. We expect this will continue in 2021 as discussed below.

In the third quarter of 2020size and in response tosavings rates since the COVID-19 pandemic CMS announced that healthcare providers could either (i) continuebegan in the BPCI-A program with no change or (ii) as an exception to the previous rules of the program, healthcare providers could choose between the following two options for 2020:

•eliminate upside and downside risk by excluding all episodes from reconciliation; or
•exclude from reconciliation those episodes with a COVID-19 diagnosis during the episode.

Healthcare providers made their elections by September 25, 2020.The results of these elections made by the providers reduced the total number of episodes we managed during 2020 and will reduce the number of episodes we manage during 2021 and, therefore, reduce program size. While these provider elections have temporarily reduced program size in the near term, this impact is partially offset by a higher savings rate achieved due to a combination of improved performance by some of our partners as well as certain partners that were underperforming choosing to exclude some or all of their episodes from reconciliation in 2020. Subsequently, CMS announced that all episodes in 2021 with a COVID-19 diagnosis would be automatically excluded from reconciliation, which will further reduce program size for all of 2021.

Due to the passage of time between when we perform our services and the confirmation of results and subsequent cash settlement by CMS, COVID-19 did notand the aforementioned negative impacts have an impact on thealso negatively impacted our semiannual cash we received from CMS during 2020 as payments we receivedflows related to pre-COVID19 performance. The cash received from CMS in the first quarter of 2021 reflected the initial impact of COVID-19 on our business as described above and we expect the cash receipt in the third quarter of 2021 to further reflect the impact of COVID-19.BPCI-A program.

While we believe that the negative impact of COVID-19 on our Episodes of Care Services segment have mostly subsided, weWe continue to monitor trends related to COVID-19, including the ongoing federal vaccine rollout,dynamic created by new variants, changes in CDC recommendations and their impact on our business, results of operations and financial condition.condition on both of our operating segments.
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4.Business Combinations

Caravan Health Acquisition

On February 9, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Caravan Health, pursuant to which we acquired Caravan Health on March 1, 2022. Caravan Health is a leader in assisting ACOs to excel in population health management and value-based payment programs. The initial purchase price was approximately $250.0 million, subject to certain customary adjustments, and included approximately $190.0 million in cash and approximately $60.0 million in our Class A common stock, comprised of 4,726,134 shares at $12.5993 per share, which represents the volume-weighted average price per share of our common stock for the five trading days ending three business days prior to March 1, 2022. In connection and concurrently with entry into the Merger Agreement, we entered into support agreements with certain shareholders of Caravan Health, pursuant to which such shareholders agreed that, other than according to the terms of its respective support agreement, it will not, subject to certain limited exceptions, transfer, sell or otherwise dispose of any of the Signify shares acquired for a period of up to five years following closing of the merger.

In addition to the initial purchase price, the transaction included contingent additional payments of up to $50.0 million based on certain future performance criteria of Caravan Health, which if conditions are met, may be paid in the second half of 2023. The preliminary fair value of the contingent consideration as of the acquisition date was estimated to be approximately $30.5 million, which was estimated using a Black-Scholes option pricing model. We will remeasure the fair value of the contingent consideration at each reporting date until it is ultimately forfeited or settled. Changes in the estimated fair value compared to the initial estimated fair value at the acquisition date are included in SG&A expense on our Condensed Consolidated Statement of Operations. See Note 13 Fair Value Measurements. Therefore, the total purchase consideration of the transaction was determined to be $287.4 million, which consisted of cash consideration, stock consideration, and potential contingent consideration.

We allocated the purchase price to the identifiable net assets acquired, based on the estimated fair values at the date of acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities was recorded as goodwill. Goodwill represents the value of the acquired assembled workforce and specialized processes and procedures and operating synergies, none of which qualified as separate intangible assets. All of the goodwill was assigned to our Episodes of Care Services segment. None of the goodwill is expected to be deductible for tax purposes.

We estimated the fair value of intangible assets acquired using estimates of future discounted cash flows to be generated by the business over the expected duration of those cash flows. We based the estimated cash flows on projections of future revenue, operating expenses, capital expenditures, working capital needs and tax rates. We estimated the duration of the cash flows based on the projected useful lives of the assets acquired. The discount rate was determined based on specific business risk, cost of capital and other factors.

The purchase price allocation is preliminary, primarily due to final tax information being pending, and subject to change up to one year after the date of acquisition and could result in changes to the amounts recorded below. The
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preliminary allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of the acquisition was as follows:

Cash$6.8 
Restricted cash0.5 
Accounts receivable1.6 
Contract assets9.1 
Prepaid expenses and other current assets1.7 
Property and equipment0.3 
Intangible assets93.9 
Other assets0.1 
Total identifiable assets acquired114.0 
Accounts payable and accrued liabilities2.9 
Other current liabilities0.6 
Deferred tax liabilities22.4 
Total liabilities assumed25.9 
Net identifiable assets acquired88.1 
Goodwill199.3 
Total of assets acquired and liabilities assumed$287.4 

The $93.9 million of acquired intangible assets consists of customer relationships of $69.8 million (10-year useful life), acquired technology of $23.4 million (5-year useful life) and a tradename of $0.7 million (3-year useful life).

The acquisition was not material to our Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. The financial results of Caravan Health have been included in our Condensed Consolidated Financial Statements since the date of the acquisition.
4.5.Variable Interest Entities

We consolidate our affiliates when we are the primary beneficiary. The primary beneficiary of a Variable Interest Entity (“VIE”)VIE is the party that has both the decision-making authority to direct the activities that most significantly impact the VIE’s economic performance and the right to absorb losses or receive benefits that could potentially be significant to the VIE.

Consolidated VIEs at March 31, 2021June 30, 2022 and December 31, 20202021 include 8 and 17 physician practices respectively, that require an individual physician to legally own the equity interests as certain state laws and regulations prohibit non-physician owned business entities from practicing medicine or employing licensed healthcare providers. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the losses from and direct activities of these operations. As a result, these VIEs are consolidated and any non-controlling interest is not presented. Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which totaltotaled $13.131.9 million and $1.8$25.2 million at March 31, 2021June 30, 2022 and December 31, 2020,2021, respectively.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

The carrying amount and classification of the VIEs’ assets and liabilities included in the Condensed Consolidated Balance Sheets, as of March 31, 2021 and December 31, 2020, net of intercompany amounts, are as follows:

March 31,December 31,
20212020June 30, 2022December 31, 2021
(in millions)(in millions)
ASSETSASSETSASSETS
Current assetsCurrent assetsCurrent assets
Cash and cash equivalentsCash and cash equivalents$3.3 $1.8 Cash and cash equivalents$6.7 $10.6 
Accounts receivable, netAccounts receivable, net9.8 0 Accounts receivable, net25.2 14.6 
Total current assetsTotal current assets13.1 1.8 Total current assets31.9 25.2 
Total assetsTotal assets$13.1 $1.8 Total assets$31.9 $25.2 
LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
Current liabilitiesCurrent liabilitiesCurrent liabilities
Accounts payable and accrued expensesAccounts payable and accrued expenses0 0.1 Accounts payable and accrued expenses$— $3.4 
Contract liabilitiesContract liabilities0.6 — 
Total current liabilitiesTotal current liabilities0 0.1 Total current liabilities0.6 3.4 
Total liabilitiesTotal liabilities0 0.1 Total liabilities0.6 3.4 
Company capitalCompany capital12.1 (0.7)Company capital40.2 29.3 
Retained earnings1.0 2.4 
Accumulated deficitAccumulated deficit(8.9)(7.5)
Total equityTotal equity13.1 1.7 Total equity31.3 21.8 
Total liabilities and equityTotal liabilities and equity$13.1 $1.8 Total liabilities and equity$31.9 $25.2 

As of June 30, 2022, Caravan Health is the sole member of 4 ACOs, which we have determined are VIEs. CMS offers an MSSP to ACOs, where the goal of the program is to reward the ACO participants when specific quality metrics are met and expenditures are lowered. The MSSPs have different risk models where the ACOs can either share in both savings and losses or share in only the savings. The governance structure of the VIEs does not provide Caravan Health with the ultimate decision-making authority to direct the activities that most significantly impact the VIEs’ economic performance. Based on these ACOs’ operating agreements, the power to direct the VIEs’ operations is shared among the entities that make up the ACO Board of Directors, which is required to consist of at least 75% ACO participants (hospitals, clinics, etc.). As such, we have determined we are not the primary beneficiary of these VIEs, and therefore we do not consolidate the results of these entities.

Caravan Health is ultimately liable for losses incurred by 1 out of the 4 ACOs owned by them. As of June 30, 2022, there was $0.5 million included in restricted cash on our Condensed Consolidated Balance Sheets which relates to this VIE. The ACO has a master letter of credit with CMS as the recipient where the letter of credit is used as protection against unpaid losses, should the ACO fail to remit payment in the event that losses occur. The letter of credit is collateralized by the ACO members, by either cash remitted or subordinated letters of credit. This restricted cash will only be used if an ACO member fails to remit payment in connection with a subordinated letter of credit.

NaN of the 4 VIEs are ACOs that are not part of an MSSP risk model where the losses are shared and the remaining VIE has a guarantor that has taken full responsibility of indebtedness of the ACO, and therefore, Caravan Health is not liable for its losses.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

During the three and six months ended June 30, 2022, we did not make any contributions to the unconsolidated VIEs for losses incurred. Our maximum exposure to loss as a result of our involvement in these unconsolidated VIEs cannot be reasonably estimated as of June 30, 2022, as the shared losses are dependent on a number of variable factors, including estimates of patient attribution, expenditure data, benchmark data, inflation factors and CMS quality reporting. Losses incurred, if any, are determined each year once updated CMS reporting is provided, which is expected to be available in the third quarter of each year. Under the provisions of the MSSP program, once a minimum shared loss rate of 2% is exceeded, losses are calculated at a rate of 1 minus the final sharing rate, with a minimum shared loss rate of 40% and a maximum shared loss rate of 75%, not to exceed 15% of the updated benchmark. Our current ACO contracts indicate that we will bear the risk beyond the first 1% of potential losses not to exceed the MSSP maximum of 15%.
5.6.Revenue Recognition

Disaggregation of Revenue
We earn revenue from our 2 operating segments, Home & Community Services and Episodes of Care Services, under contracts that contain various fee structures. Through our Home & Community Services segment, we offer health evaluations performed either within the patient’s home, virtually or at a healthcare provider facility, primarily to Medicare Advantage health plans (and to some extent, Medicaid). Additionally, we offer certain diagnostic screening and other ancillary services, and through our Signify Community solution, we offer access to services to address healthcare concerns related to social determinants of health. Through our Episodes of Care Services segment, we primarily provide services designed to improve the quality and efficiency of healthcare delivery by developing and managing episodic payment programs in partnership with healthcare providers, primarily under the BPCI-A program with CMS. We also provide ACO services through our Caravan Health subsidiary, acquired in March 2022. Additionally, we provide certain complex care management services. All of our revenue is generated in the United States. In July 2022, we announced our plans to exit our Episodes of Care Services business, see Note 24 Subsequent Events.

We are dependent on a concentrated number of payors and provider partners with whom we contract to provide our services, Ssee Note 1922 Concentrations.

12


Notes to the Condensed Consolidated Financial Statements (unaudited)
The following table summarizes disaggregated revenue from contracts with customers for the three months ended March 31, 2021 and 2020 by source of revenue, which we believe best presents the nature, amount and timing of revenue.
Three months ended March 31,Three months ended June 30,Six months ended June 30,
202120202022202120222021
(in millions)(in millions)
EvaluationsEvaluations$150.3 $101.1 Evaluations$207.0 $173.2 $393.2 $323.5 
OtherOther2.1 2.0 Other0.6 2.2 1.3 4.3 
Home & Community Services Total RevenueHome & Community Services Total Revenue152.4 103.1 Home & Community Services Total Revenue207.6 175.4 394.5 327.8 
EpisodesEpisodes25.4 25.7 Episodes19.8 35.3 43.9 60.7 
Caravan HealthCaravan Health16.6 — 19.8 — 
OtherOther2.2 2.9 Other2.2 2.1 4.5 4.3 
Episodes of Care Services Total RevenueEpisodes of Care Services Total Revenue27.6 28.6 Episodes of Care Services Total Revenue38.6 37.4 68.2 65.0 
Consolidated Revenue TotalConsolidated Revenue Total$180.0 $131.7 Consolidated Revenue Total$246.2 $212.8 $462.7 $392.8 

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Notes to the Condensed Consolidated Financial Statements (unaudited)

Performance Obligations

Episodes of Care Services

There have been no material changes to our revenue recognition and estimates, other than as described below related to the semiannual BPCI-A reconciliation and the acquisition of Caravan Health.

During the second quarter of 2022, we received a semiannual BPCI-A reconciliation from CMS. Within that reconciliation, CMS applied a negative retrospective price adjustment to the benchmark prices against which savings are measured for specific episodes under the BPCI-A program. Several BPCI-A participants, including us, disputed the price adjustment. Our dispute is based on price trend data independently collected that indicates a positive price adjustment should be applied and corresponds with inflation in the medical services industry. CMS subsequently recommended participants provide formal evidence of the pricing errors. We responded to the request in July 2022, and upon receipt of our submission, CMS deemed the reconciliation period to remain open. As a result of the open reconciliation period and our view that the information presented in the reconciliation was not accurate, we did not change our current revenue estimates and do not plan to update them until there is further resolution or clarity of this matter. As of June 30, 2022, we recorded $48.9 million, $24.8 million and $8.9 million in revenue related to performance periods beginning in April 2021, October 2021 and April 2022, respectively, that may be impacted in the event a negative price adjustment prevails. Changes in management’s estimates of prior period performance could result in the reversal of revenue and a further loss may be recorded. CMS has indicated it will respond to error notices in the third quarter of 2022.

The determination that the semiannual reconciliation is not deemed final has delayed the recognition of accounts receivable for our Episodes of Care Services segment as of June 30, 2022. Estimated revenue amounts related to this reconciliation period continue to be included in contract assets on our Condensed Consolidated Balance Sheets. Historically, we received a final reconciliation in the second quarter of each year, thereby reducing the associated contract assets and recording accounts receivable for the amounts to be collected. Accordingly, the cash collections from the delayed reconciliation will also deviate from historical cash collection seasonality trends.

Caravan Health enters into contracts with customers to provide multiple services around the management of the ACO model. These include, but are not limited to, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings from CMS. Caravan Health enters into arrangements with customers wherein we receive a contracted percentage of each customer’s portion of shared savings if earned. We recognize shared savings revenue as performance obligations are satisfied over time, commensurate with the recurring ACO services provided to the customer over a 12-month calendar year period. The shared savings transaction price is variable, and therefore, we estimate an amount we expect to receive for each 12-month calendar year performance obligation period.

In order to estimate this variable consideration, management initially uses estimates of historical performance of the ACOs. We consider inputs such as attributed patients, expenditures, benchmarks and inflation factors. We adjust our estimates at the end of each reporting period to the extent new information indicates a change is needed. We apply a constraint to the variable consideration estimate in circumstances where we believe the data received is incomplete or inconsistent, so as not to have the estimates result in a significant revenue reversal in future periods. Although our estimates are based on the information available to us at each reporting date, new and material information may cause actual revenue earned to differ from the estimates recorded each period. These include, among others, Hierarchical Conditional Category (“HCC”) coding information,quarterly reports from CMS, unexpected changes in attributed patients and other limitations of the program beyond our control. We receive final reconciliations from CMS and collect the cash related to shared savings earned annually in the third or fourth quarter of each year for the preceding calendar year.

The remaining sources of Caravan Health revenue in our Episodes of Care Services segment are recognized over time when, or as, the performance obligations are satisfied and are primarily based on a fixed fee or per member per month fee. Therefore, they do not require significant estimates and assumptions by management.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

Related Balance Sheet Accounts

The following table provides information about accounts included on the Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020.Sheets.

March 31, 2021December 31, 2020June 30, 2022December 31, 2021
Episodes of Care ServicesHome & Community ServicesTotalEpisodes of Care ServicesHome & Community ServicesTotalEpisodes of Care ServicesHome & Community ServicesTotalEpisodes of Care ServicesHome & Community ServicesTotal
(in millions)(in millions)
AssetsAssetsAssets
Accounts receivable, net (1)Accounts receivable, net (1)$68.4 $101.0 $169.4 $183.3 $87.3 $270.6 Accounts receivable, net (1)$38.5 $179.4 $217.9 $100.1 $117.1 $217.2 
Contract assets (2)Contract assets (2)$61.3 $0 $61.3 $27.8 $0 $27.8 Contract assets (2)$164.9 $7.7 $172.6 $82.8 $1.5 $84.3 
LiabilitiesLiabilitiesLiabilities
Shared savings payable (3)Shared savings payable (3)$74.4 $0 $74.4 $80.8 $0 $80.8 Shared savings payable (3)$20.5 $— $20.5 $63.4 $— $63.4 
Contract liabilities (4)Contract liabilities (4)$18.9 $1.9 $20.8 $4.8 $1.4 $6.2 Contract liabilities (4)$48.3 $4.2 $52.5 $27.8 $5.1 $32.9 
Deferred revenue (5)Deferred revenue (5)$6.2 $0.8 $7.0 $2.4 $1.4 $3.8 Deferred revenue (5)$0.8 $0.2 $1.0 $0.1 $3.5 $3.6 

(1)Accounts receivable, net for Episodes of Care Services included $41.0$1.3 million due from CMS as of March 31, 2021June 30, 2022 primarily related to amounts not yet collected for the thirdfifth reconciliation period of the BPCI-A program. As of December 31, 2021, accounts receivable, net for Episodes of Care Services included $56.2 million due from CMS primarily related to the fifth reconciliation period of the BPCI-A program. Accounts receivable, net for Home & Community Services included $13.8 million and $3.7 million in amounts not yet billed to customers, as of June 30, 2022 and December 31, 2021, respectively. The remaining amount of accounts receivable for both Episodes of Care Services and Home & Community Services represent amounts to be received from customers. Home & Community Services accounts receivable as of March 31, 2021 reflectsJune 30, 2022 reflected strong IHE volume in the first quarter and a return to a higher mix of in-home IHEs compared to vIHE.second quarter.
(2)Contract assets representsprimarily represent management’s estimate of amounts we expect to receive under the BPCI-A program related to the next two reconciliation periods. Due to the dispute of the most recent reconciliation, as of June 30, 2022, contract assets include amounts related to three reconciliation periods. As of March 31, 2021,June 30, 2022, contract assets covercovered episodes of care forcommencing in the period from April 20202021 through March 2021.June 2022. Estimates for program size and savings rate are based on information available as of the date of the financial statements. We record an estimate of revenue related to these performance obligations over the 13-month period starting in the period the related episodes of care commence and through the estimated receipt of the semi-annualsemiannual CMS reconciliation file. Any changes to these estimates based on new information will be recorded in the period such information is received. Total savings generated and revenue earned for the episodes of care in which a component of the contract asset recorded as of March 31, 2021June 30, 2022 relates to, will be included in the semi-annualnext semiannual reconciliation expectedreceived from CMSCMS. Historically, a final reconciliation would have been received during the second quarter of 2021.2022, and shared savings amounts included in the reconciliation would have decreased estimated amounts in contract assets. Due to our dispute with CMS regarding the price adjustment included in the most recent reconciliation, as of June 30, 2022, contract assets include estimated amounts related to three reconciliation periods. Contract assets for Episodes of Care Services segment also included $21.0 million related to estimated shared savings under the Caravan Health ACO services programs. Contract assets in the Home & Community Services segment of $7.7 million as of June 30, 2022 represent management’s estimate of amounts to be received from clients as a result of certain variable consideration discounts over extended contract term and service levels being achieved during the contractual period.
(3)Total shared savings payable is included in accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets. Shared savings payable for Episodes of Care Services included $0.7 million
13


Notes to the Condensed Consolidated Financial Statements (unaudited)
due to CMS as of March 31, 2021, which we expect to settle this amount with CMS during the next semi-annual reconciliation period in the second quarter of 2021. Shared savings payable for Episodes of Care Services included $6.8$23.9 million due to CMS as of December 31, 2020, the majority2021, all of which was settled with CMS in the first quarter of 2021.2022. Shared savings payable includes $70.2included $18.7 million as of March 31, 2021June 30, 2022 primarily related to the thirdfifth reconciliation received in December 2021, which is expected to be paid to customers related to their portion of savings earned under the BPCI-A program. Additionally, there is $3.5$1.8 million included in shared savings payable at March 31, 2021,June 30, 2022, which represents amounts withheld from customers under the BPCI-A program
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Notes to the Condensed Consolidated Financial Statements (unaudited)

based on contractual withholding percentages. This amount has been received by us from CMS and is held as restricted cash. We expect to remit these amounts to customers at the conclusion of the program, at which time both restricted cash and the liability will be reduced.
(4)Contract liabilities in our Episodes of Care Services segment represent management’s estimate of savings amounts we expect to share with our customers based on contractual shared savings percentages related to the amounts we expect to be entitled to receive under the BPCI-A program for the next two reconciliation periods and service level agreementsperiods. Due to our dispute with certain customers.CMS regarding the price adjustment included in the most recent reconciliation, as of June 30, 2022, contract liabilities include estimated amounts related to three reconciliation periods. As of March 31, 2021,June 30, 2022, contract liabilities of $18.9$48.3 million cover episodes of care forcommencing in the period from April 20202021 through March 2021.June 2022. These amounts offset the gross amount we expect to receive for the same period included in contract assets as of March 31, 2021.June 30, 2022. Contract liabilities in the Home & Community Services segment of $1.9$4.2 million as of March 31, 2021June 30, 2022 represent management’s estimate of potential refund liabilities due to certain clients as a result of certain service levels not being achieved during the contractual periods primarily due to COVID-19.periods.
(5)Deferred revenue is included in other current liabilities on the Condensed Consolidated Balance Sheets and primarily relates to advance payments received from certain customers.

The table below summarizes the activity recorded in the contract asset and liability accounts for the three months ended March 31, 2021 and 2020.periods presented.

Three months ended June 30,Six months ended June 30,
Contract AssetsContract Assets20212020Contract Assets2022202120222021
(in millions)(in millions)(in millions)
Balance at January 1,$27.8 $38.3 
Balance at beginning of periodBalance at beginning of period$132.5 $61.3 $84.3 $27.8 
Acquired in Caravan Health AcquisitionAcquired in Caravan Health Acquisition— — 9.1 — 
Performance obligation completed, converted to accounts receivablePerformance obligation completed, converted to accounts receivable— (27.4)— (27.4)
Estimated revenue recognized related to performance obligations satisfied at a point-in-timeEstimated revenue recognized related to performance obligations satisfied at a point-in-time3.4 — 6.3 — 
Estimated revenue recognized related to performance obligations satisfied over timeEstimated revenue recognized related to performance obligations satisfied over time33.5 34.4 Estimated revenue recognized related to performance obligations satisfied over time36.7 24.3 72.9 57.8 
Balance at March 31,$61.3 $72.7 
Balance at end of periodBalance at end of period$172.6 $58.2 $172.6 $58.2 

Contract Liabilities20212020
(in millions)
Balance at January 1,$6.2 $3.1 
Payments made to customer(0.6)0 
Estimated amounts due to customer related performance obligations satisfied at a point-in-time1.1 0 
Estimated amounts due to customer related to performance obligations satisfied over time14.1 9.1 
Balance at March 31,$20.8 $12.2 

Deferred Revenue20212020
(in millions)
Balance at January 1,$3.8 $1.2 
Payments received from customers7.5 1.3 
Revenue recognized upon completion of performance obligation(4.3)(0.9)
Balance at March 31,$7.0 $1.6 
Three months ended June 30,Six months ended June 30,
Contract Liabilities2022202120222021
(in millions)(in millions)
Balance at beginning of period$44.0 $20.8 $32.9 $6.2 
Performance obligation completed, converted to shared savings payable(0.2)(4.4)(0.2)(4.4)
Payments made to customer(0.5)— (0.5)(0.6)
Estimated amounts due to customer related to performance obligations satisfied at a point-in-time— 1.1 (0.3)2.2 
Estimated amounts due to customer related to performance obligations satisfied over time9.2 2.0 20.6 16.1 
Balance at end of period$52.5 $19.5 $52.5 $19.5 

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Notes to the Condensed Consolidated Financial Statements (unaudited)

Shared Savings Payable20212020
(in millions)
Balance at January 1,$80.8 $58.2 
Amounts paid to customer and/or CMS(22.0)(39.0)
Amounts due to customer upon completion of performance obligation15.6 5.3 
Balance at March 31,$74.4 $24.5 
Three months ended June 30,Six months ended June 30,
Deferred Revenue2022202120222021
(in millions)(in millions)
Balance at beginning of period$2.6 $7.0 $3.6 $3.8 
Acquired in Caravan Health Acquisition— — 0.5 — 
Payments received from customers0.1 0.7 0.7 8.2 
Revenue recognized upon completion of performance obligation(1.7)(3.3)(3.8)(7.6)
Balance at end of period$1.0 $4.4 $1.0 $4.4 

Three months ended June 30,Six months ended June 30,
Shared Savings Payable2022202120222021
(in millions)(in millions)
Balance at beginning of period$37.4 $74.4 $63.4 $80.8 
Amounts paid to customer and/or CMS(16.9)(108.5)(84.7)(115.0)
Amounts due to customer upon completion of performance obligation— 88.3 41.8 88.4 
Balance at end of period$20.5 $54.2 $20.5 $54.2 
6.7.Property and Equipment

As of March 31, 2021 and December 31, 2020, propertyProperty and equipment, net were as follows:follows as of each of the dates presented:
March 31, 2021December 31, 2020
(in millions)
Leasehold Improvements$18.5 $18.5 
Computer equipment17.2 16.6 
Furniture and fixtures6.0 5.8 
Software2.4 2.4 
Projects in progress0.2 0.3 
Property and equipment, gross44.3 43.6 
Less: Accumulated depreciation and amortization(20.2)(18.2)
Property and equipment, net$24.1 $25.4 

June 30, 2022December 31, 2021
(in millions)
Computer equipment$25.3 $22.0 
Leasehold improvements18.6 18.5 
Furniture and fixtures7.1 6.5 
Software2.4 2.5 
Projects in progress0.7 0.7 
Property and equipment, gross54.1 50.2 
Less: Accumulated depreciation and amortization(30.7)(26.5)
Property and equipment, net$23.4 $23.7 

Depreciation and amortization expense for property and equipment, inclusive of amounts subsequently written off or disposed from accumulated depreciation, was $2.0$2.2 million and $1.5$2.1 million for the three months ended March 31,June 30, 2022 and 2021, respectively, and 2020,$4.4 million and $4.1 million for the six months ended June 30, 2022 and 2021, respectively. There was 0no impairment of property and equipment during the three or six months ended March 31, 2021June 30, 2022 or 2020.2021.
7.8.Leases

New Lease Guidance Adoption and Practical Expedients

We adopted ASC 842 as of January 1, 2022 using the optional transition method. Therefore, we did not restate comparative periods. Under this transition provision, we applied the legacy leases guidance, including its disclosure requirements, for the comparative periods presented.

ASC 842 includes practical expedient and policy election choices. We have elected the practical expedient transition package available in ASC Topic 842 and, as a result, did not reassess the lease classification of existing contracts or
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Notes to the Condensed Consolidated Financial Statements (unaudited)

leases or the initial direct costs associated with existing leases. We made an accounting policy election not to recognize right of use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease expense on a straight-line basis over the lease term. We did not elect the hindsight practical expedient, and therefore we did not reassess our historical conclusions with regards to whether renewal option periods should be included in the terms of our leases.

Upon adoption on January 1, 2022, we recognized right-of-use assets and lease liabilities for operating leases of $23.0 million and $35.6 million, respectively. The difference between the right-of-use asset and lease liability primarily represents the net book value of deferred rent and tenant improvement allowances recognized as of December 31, 2021, which was adjusted against the right-of-use asset upon adoption.

In addition, there was $0.4 million recorded as a reduction of retained earnings upon adoption. This primarily related to an asset that we ceased using prior to the adoption of ASC 842 and do not have the intent and ability to sublease since the remaining lease term is less than one year. We recognized a lease liability equal to the present value of the remaining lease payments under the contract; however, we did not recognize a corresponding right-of-use asset. The previously recognized cease-use liability as of December 31, 2021 was recognized as a reduction to the carrying amount of the right-of-use asset. As the cease-use liability balance was less than the carrying amount of the right-of-use asset, the remaining portion of the right-of-use asset not offset by the cease-use liability was written off as an adjustment to retained earnings since the cease-use date of the asset occurred prior to adoption.

The following is a summary of the impact of ASC 842 adoption on our Condensed Consolidated Balance Sheet:
December 31, 2021ASC 842 AdjustmentsJanuary 1, 2022
(in millions)
Assets
Operating lease right-of-use assets$— $23.0 $23.0 
Liabilities
Current portion of operating lease liabilities— 8.5 8.5 
Operating lease liability, net of current portion— 27.1 27.1 
Deferred rent and tenant improvement allowances12.2 (12.2)— 
Retained Earnings19.7 (0.4)19.3 

Right-of-use Assets and Lease Liabilities

The following table presents our operating lease right-of-use assets and lease liabilities as of June 30, 2022. Current lease liabilities are included in other current liabilities on the Condensed Consolidated Balance Sheets.

June 30, 2022
(in millions)
Operating lease right-of-use assets$24.8 
Current portion of operating lease liabilities7.9 
Non-current operating lease liabilities28.4 
Total Lease Liabilities$36.3 

For the three and six months ended June 30, 2022, cash paid for amounts included in the measurement of operating lease liabilities was $2.6 million and $5.3 million, respectively.
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Notes to the Condensed Consolidated Financial Statements (unaudited)


Our operating lease expense is recorded as a component of SG&A in our Condensed Consolidated Statements of Operations. The components of lease expense were as follows as of each of the dates presented:

Three months ended June 30, 2022Six months ended June 30, 2022
(in millions)
Operating lease cost$2.1 $4.2 
Variable lease cost0.7 1.4 
Sublease income(0.6)(1.3)
Total Lease Cost(1)
$2.2 $4.3 
(1) Excludes short-term lease expense, which is not material

The following table presents the weighted average remaining lease term and discount rate of our operating leases as of June 30, 2022:

Weighted Average Lease Term (Years)6.3
Weighted Average Discount Rate4.7 %

We enter into contracts to lease office space and equipment with terms that expire at various dates through 2032. The lease term at the lease commencement date is determined based on the non-cancellable period for which we have the right to use the underlying asset, together with any periods covered by an option to extend the lease if we are reasonably certain to exercise that option, periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. We considered a number of factors when evaluating whether the options in our lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties.

As of June 30, 2022, maturities of our operating lease liabilities are as follows:

Remainder of 2022$4.6 
20238.8
20245.5
20254.8
20264.1
Thereafter14.6
Total lease payments42.4
Less: imputed interest(6.1)
Present value of operating lease liabilities$36.3 

Effective April 1, 2022, we entered into a new lease agreement for a facility in Galway, Ireland. The lease term is 15 years with an option to terminate after 10 years. It is not reasonably certain that we will not exercise the option to terminate after 10 years; therefore, the total lease payments are expected to be approximately $7.0 million over 10 years.

Effective October 1, 2021, we entered into a lease agreement for a facility in Oklahoma City, OK. The lease term is 7.25 years, with 2 5-year options to renew, and total lease payments are expected to be approximately $4.1 million. The lessor and its agents have completed building this retail space and the lease commenced July 1,
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Notes to the Condensed Consolidated Financial Statements (unaudited)

2022. As the lease had not yet commenced as of June 30, 2022, it is not included in the right-of-use asset or lease liabilities recorded as of June 30, 2022. In addition, we entered into a lease agreement for a facility in New York, NY which is expected to commence February 1, 2024, once our current lease for this facility expires on January 31, 2024. The lease term is 5.75 years, with 1 5-year option to renew, and total lease payments are expected to be approximately $22.7 million.

Disclosures Related to Periods Prior to Adoption of ASC 842

As of December 31, 2021, future minimum lease payments under non-cancellable operating leases were as follows:

2022$10.2 
20238.7 
20246.1 
20259.3 
20268.6 
Thereafter21.5 
$64.4 
9.Intangible Assets

Intangible assets were as follows foras of each of the periodsdates presented:

March 31, 2021December 31, 2020June 30, 2022December 31, 2021
Estimated Useful Life (years)Gross Carrying AmountAccumulated amortizationNet Carrying ValueGross Carrying AmountAccumulated amortizationNet Carrying ValueEstimated Useful Life (years)Gross Carrying AmountAccumulated amortizationNet Carrying ValueGross Carrying AmountAccumulated amortizationNet Carrying Value
(in millions)(in millions)
Customer relationshipsCustomer relationships3 - 20$530.5 $(101.9)$428.6 $530.5 $(92.9)$437.6 Customer relationships3 - 20$482.3 $(95.9)$386.4 $530.5 $(129.1)$401.4 
Acquired and capitalized softwareAcquired and capitalized software3 - 6129.3 (60.0)69.3 123.6 (54.3)69.3 Acquired and capitalized software3 - 6107.4 (57.8)49.6 134.3 (80.4)53.9 
TradenameTradename30.7 (0.1)0.6 — — — 
TotalTotal$659.8 $(161.9)$497.9 $654.1 $(147.2)$506.9 Total$590.4 $(153.8)$436.6 $664.8 $(209.5)$455.3 

We capitalized $5.7$7.5 million and $5.0$5.9 million of internally-developed software costs for the three months ended March 31,June 30, 2022 and 2021, respectively, and 2020, respectively.$14.3 million and $11.6 million for the six months ended June 30, 2022 and 2021, respectively, of internally-developed software costs. During the six months ended June 30, 2022, we acquired $93.9 million of intangible assets in connection with the acquisition of Caravan Health (see Note 4 Business Combinations), which included preliminary values for customer relationships of $69.8 million (10-year useful life), acquired technology of $23.4 million (5-year useful life) and a tradename of $0.7 million (3-year useful life).

We recorded a $66.7 million impairment of customer relationships and $26.5 million impairment of acquired and capitalized software for the three and six months ended June 30, 2022, included in Loss on Impairment on our Condensed Consolidated Statements of Operations. During the three months ended June 30, 2022, we received the semiannual reconciliation from CMS, which included a negative retrospective price adjustment to the benchmark prices against which savings are measured for specific episodes under the BPCI-A program, and which we believe have made the program unsustainable. As a result, we subsequently made the decision to wind down our Episodes of Care Services business. The receipt of this semiannual reconciliation was determined to be a triggering event which indicated that the carrying amount of the relevant asset group may not be recoverable. We assessed the recoverability of the asset group by determining whether the carrying value exceeded the sum of the projected undiscounted cash flows expected to result from the eventual disposition of the assets over the remaining economic lives. This assessment indicated that the carrying value of the asset group is not recoverable; therefore, we estimated the fair value of the asset group using a discounted cash flow methodology and implied market values which were
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concluded to be zero as the underlying customer contracts cannot be sold or transferred. The fair value was deemed to be de minimis due to the decision to abandon the asset group, resulting in a full impairment of the related intangible assets.

There was 0no impairment of intangible assets for the three and six months ended March 31, 2021 or 2020.June 30, 2021.

Amortization expense for intangible assets, inclusive of amounts subsequently written off from accumulated amortization, was $14.7$17.9 million and $13.0$15.2 million for the three months ended March 31,June 30, 2022 and 2021, respectively, and 2020,
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Notes to$33.7 million and $29.9 million for the Condensed Consolidated Financial Statements (unaudited)
six months ended June 30, 2022 and 2021, respectively. Expected amortization expense as of March 31, 2021June 30, 2022 related to intangible assets, including internal-use software development costs, was as follows:

(in millions)(in millions)
Remainder of 2021$47.1 
202252.3 
Remainder of 2022Remainder of 2022$23.8 
2023202347.4 202344.3 
2024202435.3 202439.9 
2025202533.8 202533.6 
thereafter282.0 
2026202632.3 
ThereafterThereafter262.7 
$497.9 $436.6 
8.10.Goodwill
The change in the carrying amount of goodwill for each reporting unit is as follows:

Home & Community ServicesEpisodes of Care ServicesTotal
(in millions)
Balance at December 31, 2021$170.4 $426.7 $597.1 
Business combinations— 199.3 199.3 
Impairment$— $(426.7)$(426.7)
Balance at June 30, 2022$170.4 $199.3 $369.7 

We recorded a $426.7 million goodwill impairment during the three and six months ended June 30, 2022, included in Loss on Impairment in our Condensed Consolidated Statements of Operations. During the three months ended June 30, 2022, we received the semiannual reconciliation from CMS, which included a negative retrospective price adjustment to the benchmark prices against which savings are measured for specific episodes under the BPCI-A program, and which we believe have made the program unsustainable. As a result, we subsequently made the decision to wind down our Episodes of Care Services business. The receipt of this semiannual reconciliation was determined to be a triggering event and we therefore completed an assessment of the goodwill of the Episodes of Care Services reporting unit. We performed a quantitative impairment test by comparing the carrying amount of the Episodes of Care Services reporting unit to its fair value. We estimated the fair value of the reporting unit using a discounted cash flow model and net tangible carrying value, excluding Caravan Health. We determined the fair value of Caravan Health has not changed since the acquisition date was so recent and Caravan Health’s earnings to date have slightly exceeded the original forecast. The carrying amount of the Episodes of Care Services reporting unit exceeded its estimated fair value; therefore, we recognized an impairment loss equal to the excess of the reporting unit’s carrying amount over its fair value.

There was no impairment related to goodwill during the three and six months ended June 30, 2021.
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11.Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

March 31,December 31,June 30,December 31,
2021202020222021
(in millions)(in millions)
Shared savings payable$74.4 $80.8 
Accrued payroll and payroll-related expensesAccrued payroll and payroll-related expenses25.2 47.1 Accrued payroll and payroll-related expenses$31.3 $46.5 
Other accrued expensesOther accrued expenses20.6 19.0 Other accrued expenses28.1 19.6 
Shared savings payableShared savings payable20.5 63.4 
Accounts payableAccounts payable9.4 0.7 Accounts payable5.6 5.6 
Accrued income taxesAccrued income taxes3.5 0 Accrued income taxes0.5 1.6 
Total accounts payable and accrued liabilitiesTotal accounts payable and accrued liabilities$133.1 $147.6 Total accounts payable and accrued liabilities$86.0 $136.7 
9.12.Long-Term Debt

Long-term debt was as follows at March 31, 2021 and December 31, 2020:follows:
March 31,December 31,June 30,December 31,
2021202020222021
(in millions)(in millions)
Revolving FacilityRevolving Facility$0 $0 Revolving Facility$— $— 
Term Loan271.7 272.5 
2020 Incremental Term Loans139.7 140.0 
2021 Term Loan2021 Term Loan347.3 349.1 
Total debtTotal debt411.4 412.5 Total debt347.3 349.1 
Unamortized debt issuance costsUnamortized debt issuance costs(5.1)(5.5)Unamortized debt issuance costs(5.5)(6.0)
Unamortized discount on debtUnamortized discount on debt(5.3)(5.7)Unamortized discount on debt(4.3)(4.7)
Total debt, netTotal debt, net401.0 401.3 Total debt, net337.5 338.4 
Less current maturitiesLess current maturities(4.2)(4.2)Less current maturities(3.5)(3.5)
Total long-term debtTotal long-term debt$396.8 $397.1 Total long-term debt$334.0 $334.9 

As of March 31, 2021June 30, 2022 and December 31, 2020, the effective interest rate on Term Loan borrowings was 5.50%. As of March 31, 2021, and December 31, 2020, the effective interest rate on the 2020 Incremental2021 Term LoansLoan borrowings was 6.25%.6.13% and 3.75%, respectively. In July 2022, our corporate credit rating was upgraded by S&P to B+, which per the terms of the 2021 Credit Agreement, will reduce the applicable rate for the 2021 Term Loan by 25 basis points effective July 2022.

The 2021 Credit Agreement is secured by substantially all of the assets of Signify and its subsidiaries. The 2021 Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants and events of default. Negative covenants include, among others (and in each case subject to certain exceptions), limitations on incurrence of liens by Signify and its restricted subsidiaries, limitations on incurrence of indebtedness by Signify and its restricted subsidiaries, limitations on making dividends and other distributions, limitations on engaging in asset sales, limitation on making investments, limitations on engaging in transactions with affiliates. As a result of these restrictions, substantially all of the subsidiary net assets are deemed restricted as of December 31, 2021. Additionally, the 2021 Credit Agreement includes a requirement that the consolidated first lien net leverage ratio (as defined in the 2021 Credit Agreement) as of the end of any fiscal quarter is not greater than 4.50 to 1.00 if on the last day of such fiscal quarter the Revolving Facility and letters of credit outstanding exceeds 35% of the total amount of Revolving Facility commitments at such time.As of June 30, 2022, we were in compliance with all financial and nonfinancial covenants, including a defined Consolidated First Lien Net Leverage Ratio applicable solely tocovenants.

We currently have no borrowings outstanding under the Revolving Facility. The term loan requires an excess cash flow (“ECF”) payment commencing with and includingAs of June 30, 2022, we had $172.8 million available borrowing capacity under the period ended December 31, 2018. The prior year’s ECFRevolving Facility, as the borrowing capacity is reduced by outstanding letters of credit.
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payment is due within 10 business days after financial statements have been delivered. As our Consolidated First Lien Net Leverage Ratio was below the threshold requiring an ECF payment, there was no ECF payment due in 2021 or 2020. In addition, the Credit Agreement includes negative covenants which restrict Signify and its subsidiaries’ ability, among other things, to incur indebtedness, grant liens, make investments, sell or otherwise dispose of assets or enter into a merger, pay dividends or repurchase stock. As of March 31, 2021, substantially all of Signify Health, LLC and its subsidiaries’ net assets were deemed restricted from transfer to the Company. We have no stand-alone operations, including no significant cash or assets; our primary activities relate to owning a controlling interest in our subsidiaries and the issuances of equity as described in Note 11 Shareholders’ Equity. Signify Health, LLC did not make any distributions to the parent during the three months ended March 31, 2021 or 2020. As of March 31, 2021, we were in compliance with all financial covenants.

In March 2020, we borrowed $77.0 million under the Revolving Facility as a precautionary measure to ensure appropriate liquidity as a result of the potential risks associated with COVID-19. We repaid this amount in November 2020 and currently have no borrowings outstanding under the Revolving Facility. As of March 31, 2021, we had $77.0 million available borrowing capacity under the Revolving Facility.
The aggregate principal maturities of long-term debt due subsequent to March 31, 2021June 30, 2022 are as follows:

(in millions)(in millions)
Remainder of 2021$3.1 
20224.2 
Remainder of 2022Remainder of 2022$1.7 
202320234.2 20233.5 
20242024399.9 20243.5 
202520253.5 
202620263.5 
ThereafterThereafter331.6 
$411.4 $347.3 
10.13.Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis were as follows as of March 31, 2021 and December 31, 2020:follows:

March 31, 2021June 30, 2022
Balance Sheet ClassificationBalance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3TotalBalance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3Total
(in millions)(in millions)
Cash equivalentsCash equivalentsMoney market funds$460.0 $0 $0 $460.0 Cash equivalentsMoney market funds$331.3 $— $— $331.3 
Customer EAR liabilityCustomer EAR liabilityCustomer equity appreciation rights0 0 83.3 83.3 Customer EAR liabilityCustomer equity appreciation rights— — 61.0 61.0 
Customer EAR liabilityCustomer EAR liabilityEAR letter agreement— — 2.6 2.6 
Contingent considerationContingent considerationConsideration due to sellers0 0 15.4 15.4 Contingent considerationConsideration due to sellers— — 35.4 35.4 
December 31, 2020December 31, 2021
Balance Sheet ClassificationBalance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3TotalBalance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3Total
(in millions)(in millions)
Cash equivalentsCash equivalentsMoney market funds$20.0 $0 $0 $20.0 Cash equivalentsMoney market funds$400.1 $— $— $400.1 
Customer EAR liabilityCustomer EAR liabilityCustomer equity appreciation rights0 0 21.6 21.6 Customer EAR liabilityCustomer equity appreciation rights— — 48.6 48.6 
Contingent considerationContingent considerationConsideration due to sellers0 0 15.2 15.2 Contingent considerationConsideration due to sellers— — — — 

There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three or six months ended March 31, 2021June 30, 2022 or 2020.2021.

Fair value of assets measured on a non-recurring basis include intangible assets when there is an impairment triggering event. See Note 9 Intangible Assets and Note 10 Goodwill.
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The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2021 and 2020 were as follows:

Contingent Consideration
20212020
(in millions)
Balance at January 1,$15.2 $39.8 
Remeasurement of contingent consideration included in selling, general and administrative expense0.2 0.2 
Balance at March 31,$15.4 $40.0 
Three months ended June 30,Six months ended June 30,
2022202120222021
(in millions)(in millions)
Beginning of period$30.6 $15.4 $— $15.2 
Payment of contingent consideration— (15.0)— (15.0)
Initial measurement of contingent consideration due to sellers— — 30.5 — 
Remeasurement of contingent consideration included in selling, general and administrative expense4.8 2.0 4.9 2.2 
Balance at end of period$35.4 $2.4 $35.4 $2.4 

Customer equity appreciation rights
20212020
(in millions)
Balance at January 1,$21.6 $0 
Grant date fair value estimate recorded as reduction to revenue4.9 1.2 
Remeasurement of fair value included in other expense (income), net56.8 0.1 
Balance at March 31,$83.3 $1.3 
Three months ended June 30,Six months ended June 30,
2022202120222021
(in millions)(in millions)
Beginning of period$84.0 $83.3 $48.6 $21.6 
Grant date fair value estimate recorded as reduction to revenue4.9 4.9 9.8 9.8 
Grant date fair value estimate of EAR letter agreement recorded as reduction to revenue1.6 — 3.2 — 
Remeasurement of fair value of customer EAR agreements included in other expense (income), net(26.6)14.5 2.6 71.3 
Remeasurement of fair value of EAR letter agreement, included in other expense (income), net(0.3)— (0.6)— 
Balance at end of period$63.6 $102.7 $63.6 $102.7 
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Notes to the Condensed Consolidated Financial Statements (unaudited)


The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows as of March 31, 2021:June 30, 2022:

Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsAssumption
Customer equity appreciation rights$83.3 Monte CarloVolatility50.0%
Dividend yield0%
Risk-free rate0.50%
Expected term (years)3.5
Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsAssumption
Customer equity appreciation rights$61.0 Monte CarloVolatility60.0%
Dividend yield0%
Risk-free rate2.98%
Expected term (years)3
EAR Letter Agreement$2.6 Monte CarloVolatility60.0%
Dividend yield0%
Risk-free rate2.98%
Expected term (years)3
Consideration due to sellers$35.4 Black-ScholesVolatility18.5%
Discount Rate4.10%
Risk Free Rate1.71%
Credit Spread5.80%
Expected term (years)1.25

Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsDiscount Rate
Consideration due to sellers$15.4 Discounted approachDiscount Rate5.0 %
Fair value of the contingent consideration related to the Caravan Health acquisition (see Note 4 Business Combinations) is measured using the Black-Scholes option pricing model, which uses certain assumptions to estimate the fair value, including long-term financial forecasts, expected term until payout, volatility, discount rate, credit spread, and risk-free rate. The expected volatility and discount rate are calculated using comparable peer companies, adjusted for Caravan Health’s operational leverage. The risk-free interest rate is based on the U.S. Treasury rates that are commensurate with the term of the contingent consideration.Changes in the estimated fair value compared to the initial estimated fair value at the acquisition date are included in SG&A expense on our Condensed Consolidated Statement of Operations, and are impacted by the passage of time and Caravan Health’s progress in meeting the future performance criteria.
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The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows as of December 31, 2020:2021:

Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsAssumption
Customer equity appreciation rights$21.6 Monte CarloVolatility55.0%
Dividend yield0%
Risk-free rate0.11%
Expected term (years)1.35
Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsAssumption
Customer equity appreciation rights$48.6 Monte CarloVolatility50.0%
Dividend yield0%
Risk-free rate1.05%
Expected term (years)3.5

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Notes to the Condensed Consolidated Financial Statements (unaudited)
Fair Value (in millions)Valuation TechniqueSignificant Unobservable InputsDiscount Rate
Consideration due to sellers$15.2 Discounted approachDiscount Rate5.0 %
Fair Value
(in millions)		Valuation TechniqueSignificant Unobservable InputsDiscount Rate
Consideration due to sellers$— Discounted approachDiscount Rate5.0%

The fair value of our debt is measured at Level 3 and is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value as it is variable-rate debt.

The carrying amounts of accounts receivable and accounts payable approximate their fair value because of the relatively short-term maturity of these instruments.
11.14.Shareholders’ Equity

See Note 1 Nature of Operations for details of the Reorganization Transactions effective in February 2021 in connection with our IPO.

Initial Public Offering
On February 16, 2021, Signify Health closed anwe completed our IPO of 27,025,000 shares of itsour Class A common stock at a public offering price of $24 per share, which included 3,525,000 shares issued pursuant to the full exercise of the underwriters’ over-allotment option. Signify Health received gross proceeds of $648.6 million, which resulted in net cash proceeds of $609.7 million after deducting underwriting discounts and commissions of $38.9 million and before fees and expenses incurred in connection with the IPO incurred and paid for by Cure TopCo. Signify HealthWe used the proceeds to purchase newly-issued membership interests from Cure TopCo at a price per interest equal to the IPO price of itsour Class A common stock, net of the underwriting discountdiscounts and commissions.

Amendment and Restatement of Certificate of Incorporation
In connection with the Reorganization Transactions and IPO, our certificate of incorporation was amended and restated to, among other things, authorize the issuance of 2 classes of common stock: Class A common stock and Class B common stock. The Amended and Restated Certificate of Incorporation authorizes 1,000,000,000 shares of Class A common stock, par value $0.01 per share and 75,000,000 shares of Class B common stock, par value $0.01 per share. The Amended and Restated Certificate of Incorporation also authorizes up to 50,000,000 shares of preferred stock, par value of $0.01 per shares, none of which have been issued.

Class A Common Stock
Holders of shares of Class A common stock are entitled to 1 vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. The holders of Class A common stock do not have cumulative voting rights in the election of directors.

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Holders of shares of Class A common stock are entitled to receive dividends when and if declared by the board of directors out of funds legally available, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

Upon liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A common stock will be entitled to receive pro rata our remaining assets available for distribution.

All shares of Class A common stock outstanding are fully paid and non-assessable. The Class A common stock are not subject to further calls or assessments. The rights, powers and privileges of Class A common stock are subject to those of the holders of any shares of preferred stock.

Class B Common Stock
Each share of Class B common stock entitles its holder to 1 vote per share on all matters submitted to a vote of the stockholders. If at any time the ratio at which LLC Units are redeemable or exchangeable for shares of Class A common stock changes from one-for-one,1-for-one, the number of votes to which Class B common stockholders are entitled
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Notes to the Condensed Consolidated Financial Statements (unaudited)
will be adjusted accordingly. The holders of Class B common stock do not have cumulative voting rights in the election of directors.

Except for transfers to Signify Health Inc. pursuant to the Cure TopCo Amended LLC Agreement or to certain permitted transferees, the LLC Units and corresponding shares of Class B common stock may not be sold, transferred or otherwise disposed of. Holders of shares of Class B common stock will vote together with holders of Class A common stock as a single class on all matters on which stockholders are entitled to vote, except as otherwise required by law.

The Class B common stock is not entitled to economic interests in Signify Health. Holders of Class B common stock do not have any right to receive dividends or to receive a distribution upon a liquidation or winding up of Signify Health. However, if Cure TopCo makes distributions to Signify Health, the other holders of LLC Units, including the Continuing Pre-IPO LLC Members, will be entitled to receive distributions pro rata in accordance with the percentages of their respective LLC Units. The Class B common stock is not subject to further calls or assessment.

Cure TopCo, LLC Recapitalization
As noted above, in connection with our IPO, the limited liability company agreement of Cure TopCo was amended and restated (the “Cure TopCo LLCA”) to, among other things, convert all outstanding equity interests into LLC Units and appoint us as the sole managing member of Cure TopCo.

Under the Cure TopCo LLCA, holders of LLC Units have the right to require Cure TopCo to redeem all or a portion of their LLC Units for newly issued shares of our Class A common stock on a one-for-one1-for-one basis or a cash payment equal to the volume-weighted average market price of one share of our Class A common stock for each LLC Unit redeemed. This will result in the recognition of a contingently redeemable noncontrolling interest in Cure TopCo held by the Continuing Pre-IPO LLC Members, which will be redeemable, at the election of Signify Health, for shares of Class A common stock on a one-for-one1-for-one basis or a cash payment in accordance with the terms of the Cure TopCo LLCA and which, if the redeeming member is an affiliate, the decision to redeem in cash or shares will be approved by the disinterested members of the Audit Committee.

Cure TopCo Membership Units
The LLC Units of Cure TopCo do not have voting interests in Cure TopCo. The LLC Units do have rights with respect to the profits and losses and distributions of Cure TopCo as set forth in the Cure TopCo LLCA.
12.15.Noncontrolling Interest
In connection with the Reorganization Transactions, we became
We are the sole manager of Cure TopCo and, as a result of this control, and because we have a substantial financial interest in Cure TopCo, we consolidate the financial results of Cure TopCo into our Condensed Consolidated Financial Statements. The contingently redeemable noncontrolling interest represents the economic interests of Cure TopCo held by the holders of LLC Units other than the membership units held by us. Income or loss is attributed to
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the noncontrolling interests based on the relative percentages of LLC Units held by us and the other holders of LLC Units during the period. As such, future redemptions or direct exchanges of LLC Units will result in a change in ownership and reduce or increase the amount recorded as noncontrolling interests and increase or decrease additional paid-in capital in the Condensed Consolidated Balance Sheets.

The following table summarizes the ownership interests in Cure TopCo as of March 31, 2021:June 30, 2022:
March 31, 2021
LLC UnitsOwnership Percentage
Number of LLC Units held by Signify Health, Inc.167,967,85674.5%
Number of LLC Units held by noncontrolling interests57,622,30225.5%
Total LLC Units outstanding225,590,158100.0%
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LLC UnitsOwnership Percentage
Number of LLC Units held by Signify Health, Inc.176,606,81675.4%
Number of LLC Units held by noncontrolling interests57,568,95924.6%
Total LLC Units outstanding234,175,775100.0%

Notes to the Condensed Consolidated Financial Statements (unaudited)
LLC Units held by the Continuing Pre-IPO LLC Members are redeemable or exchangeable for, at our election and with appropriate approvals, newly issued shares of Class A common stock on a one-for-one1-for-one basis or a cash payment in accordance with the terms of the AmendedCure TopCo LLCA.

During the three and six months ended June 30, 2022, 25,760 and 43,836 LLC Agreement.units, respectively, were exchanged by Continuing Pre-IPO LLC Members, and shares of Class A common stock were issued on a 1-for-one basis.
13.16.Equity-Based Compensation
On March 1, 2022, our Board of Directors approved amendments to certain outstanding equity award agreements subject to performance-based vesting criteria. The equity awards were amended with an effective date of March 7, 2022, and include 3,572,469 outstanding LLC Incentive Units and 817,081 outstanding stock options. The amendments added an alternative two-year service-vesting condition to the performance-vesting criteria, which, through the effective date of the amendment, were considered not probable of occurring and therefore we had not previously recorded any expense related to these awards. The amended equity awards will now vest based on the satisfaction of the earlier to occur of 1) a two year service condition, with 50% vesting in each of March 2023 and March 2024 or 2) the achievement of the original performance vesting criteria. As a result of this amendment, which results in vesting that is considered probable of occurring, we began to record equity-based compensation expense for these amended equity awards in March 2022. The equity-based compensation expense related to these amended awards is based on the fair value as of the effective date of the amended equity awards and will be recorded over the two year service period.
2021 Long-Term Incentive Plan

In January 2021, our Board of Directors adopted the 2021 Long-Term Incentive Plan (the “2021 LTIP”) which became effective in connection with the IPO and provides for the grant of equity-based awards to employees, consultants, service providers and non-employee directors. At inception, there were 16,556,298 shares of Class A common stock available for issuance under the 2021 LTIP. The share pool will be increased on the first day of each year by the least of (i) 14,191,113 shares of Class A common stock, (ii) 3% of the aggregate number of shares of Class A common stock and shares of Class B common stock outstanding (on a fully diluted basis) on the last day of the immediately preceding fiscal year and (iii) an amount determined by the Board of Directors. Any shares underlying substitute awards, shares remaining available for grant under a plan of an acquired company and awards (including pre-IPO awards (as defined in the 2021 LTIP)) that are forfeited, cancelled, expired, terminated or are otherwise lapsed, in whole or in part, or are settled in cash or withheld in respect of taxes, will become available for future grants under the 2021 LTIP.

During the three months ended March As of December 31, 2021 we issuedthe total number of shares available for future issuance under the 2021 LTIP 881,450 stock options at a weighted average exercise price of $24.07 to certain members of management of Cure TopCo that are subject to time-based vesting and vest ratably over either three or four years. The total grant date fair value of these stock options, as measured using a Black-Scholes model, was $10.8 million and will be recognized as stock-based compensation expense over15,246,831. On January 1, 2022, the vesting period. In addition, during the three months ended March 31, 2021, we issued under the 2021 LTIP, 66,328 restricted stock units to members of our Board of Directors that vest on the one-year anniversary of the grant date and to certain members of management of Cure TopCo that vest ratably over four years. The grant date fair value of these restricted stock units was $1.6 million and will be recognized as stock-based compensation expense over the vesting period.

Employee Stock Purchase Plan

In January 2021, our Board of Directors also approved the 2021 Employee Stock Purchase Plan (“ESPP”), which will become effective on a date to be specified by the Compensation Committee in 2021. The ESPP will provide employees and employees of participating subsidiaries with an opportunity to acquire a proprietary interest in the Company through the purchase of shares of Class A common stock. Initially, the ESPP will not be intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). From and after such date as the Compensation Committee, in its discretion, determines that the ESPP is able to satisfy the requirements under Section 423 of the Code and that it will operate the ESPP in accordance with such requirements, the ESPP will be intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and the ESPP will be interpreted in a manner that is consistent with that intent.

There are 4,730,371 shares of Class A common stock available for issuance under the ESPP. The share pool will bewas increased on the first day of each fiscal year in an amount equal to the lesser of (i) 4,730,371 shares of Class A common stock and (ii) 1%by 3% of the aggregate number of shares of Class A common stock and Class B common stock outstanding, (on a fully diluted basis) onor 7,255,410 shares of Class A common stock pursuant to the last day of the immediately preceding fiscal year.automatic increase provision described herein.

Incentive Units
In connection with the Reorganization Transactions and pursuant to the Cure TopCo LLCA and the Fourth Amended and Restated Limited Liability Company Agreement of Cure Aggregator, LLC (the “Aggregator LLCA”) adopted in connection with the IPO, all units of membership interest in Cure TopCo existing immediately prior to the Reorganization Transactions were reclassified and converted into LLC units of Cure TopCo and all outstanding Class B units and Class C units in Cure Aggregator, which correspond to Class B units and Class C units issued by Cure TopCo to Cure Aggregator and were intended to be treated as profits interests for U.S. federal income tax
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purposes, were reclassifiedStock Options
The total fair value on March 7, 2022, the amendment effective date, based on a Black-Scholes value of $8.49, for the March 2022 amended stock options as described above, was $6.9 million, of which we recorded $0.9 million and converted into common units$1.1 million during the three and six months ended June 30, 2022, respectively. Subsequent to these amendments, there are no longer any stock options outstanding that are subject only to performance-based vesting conditions that are not probable of Cure Aggregator (the “Incentive Units”occurring.
The following is a summary of stock option activity for awards subject to time-based vesting for the six months ended June 30, 2022:

Outstanding OptionsWeighted average exercise price per share
Outstanding at December 31, 20214,926,357 $9.98 
Granted4,753,215 $14.66 
Converted to time-based vesting817,081 $8.46 
Forfeited(529,642)$16.38 
Exercised(586,397)$3.88 
Expired(4,117)$14.41 
Outstanding at June 30, 20229,376,497 $12.24 

Restricted Stock Units (“RSUs”)

A summary of restricted stock unit activity for the period presented is as follows:
Restricted Stock UnitsWeighted Avg. Grant Date FMV
Outstanding at December 31, 2021602,745 $18.37 
Granted3,426,967 $14.09 
Vested(87,724)$24.10 
Forfeited(326,454)$15.20 
Outstanding at June 30, 20223,615,534 $14.46 

Stock-based compensation expense

During the three months ended June 30, 2022, we recognized $6.0 million and $0.5 million, of equity-based compensation expense included in SG&A expense and Service expense, respectively, on the Condensed Consolidated Statements of Operations related to stock options and RSUs. During the three months ended June 30, 2021, we recognized $1.9 million of equity-based compensation expense included in SG&A expense on the Condensed Consolidated Statements of Operations related to stock options and RSUs.

During the six months ended June 30, 2022, we recognized $9.1 million and $0.7 million, of equity-based compensation expense included in SG&A expense and Service expense, respectively, on the Condensed Consolidated Statements of Operations related to stock options and RSUs. During the six months ended June 30,
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Notes to the Condensed Consolidated Financial Statements (unaudited)

2021, we recognized $2.9 million of equity-based compensation expense included in SG&A expense on the Condensed Consolidated Statements of Operations related to stock options and RSUs.

As of June 30, 2022, we had total unrecognized compensation expense of $92.7 million related to 10,301,937 unvested time-based stock options and RSUs which we expect to recognize over a weighted average period of 1.7 years.

Employee Stock Purchase Plan

A summary of ESPP share reserve activity for the six months ended June 30, 2022 is as follows:

SharesWeighted average price
Available for future purchases, beginning of year4,567,246 0
Shares issued (a)
2,418,470 0
Common stock purchased(143,313)$11.73 
Available for future purchases, end of period6,842,403 0
(a) On January 1, 2022, the number of shares reserved for issuance was increased by 2,418,470.

During the three and six months ended June 30, 2022, we recognized $0.2 million and $0.3 million, respectively, of equity-based compensation expense included in SG&A expense on the Condensed Consolidated Statements of Operations related to the ESPP.

LLC Incentive Units
The total fair value on the amendment date for the March 2022 amended LLC Incentive Units as described above was based on the closing stock price on the amendment date of $14.19, resulting in total fair value of $50.7 million, of which we recorded $6.1 million and terms$0.2 million in equity-based compensation expense included in SG&A expense and service expense, respectively, on the Condensed Consolidated Statements of Operations during the underlying Cure TopCo LLCAthree months ended June 30, 2022. During the six months ended June 30, 2022, we recorded $7.8 million and Aggregator LLCA. The incentive units will remain outstanding$0.2 million in equity-based compensation expense included in SG&A expense and subject to their original vesting schedules. No further Incentive Units will be granted.service expense, respectively, on the Condensed Consolidated Statements of Operations.
As of March 31, 2021, there were 14,505,258 Incentive UnitsJune 30, 2022, 6,072,405 of the outstanding of which 9,443,460LLC units are unvested. This includes 6,444,8711,700,259 that were not amended and remain subject to performance-based vesting criteria which were not probable of occurring as of March 31, 2021.June 30, 2022.
The conversion of the outstanding profits interests as a result of the Reorganization Transactions did not result in any incremental expense as the fair value at the time of modification did not exceed the fair value of the previous award immediately prior
In addition to the modification. Accordingly, we continueexpense noted above related to recognize the original grant date fair value of the Incentive Units. Duringthose awards amended in March 2022, during the three months ended March 31,June 30, 2022 and 2021, and 2020, we recognized $1.4$1.2 million and $5.5$1.5 million, respectively, of equity-based compensation expense related to IncentiveLLC Units included in SG&A expense on the Condensed Consolidated Statements of Operations. Operations, respectively. During the six months ended June 30, 2022 and 2021, we recognized $2.5 million and $2.9 million, respectively, of equity-based compensation expense related to LLC Units included in SG&A expense on the Condensed Consolidated Statements of Operations, respectively.

As of March 31, 2021,June 30, 2022, there was $10.1$45.4 million of total unrecognized compensation expense related to unvested time-based Incentive Units expected to be recognized over a weighted average period of 1.0 year.0.9 years. Additionally, there was approximately $13.9$2.9 million of unrecognized compensation expense related to Incentive Units with performance-based vesting, in which the vesting conditions were not probable of occurring as of March 31, 2020.June 30, 2022.
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Amended and Restated 2012 and 2019 Equity Incentive PlansNotes to the Condensed Consolidated Financial Statements (unaudited)

In connection with the Reorganization Transactions, all New Remedy Corp stock options outstanding, were converted into stock options to purchase shares of our Class A common stock. The conversion was based on the values and terms of the Signify Health, Inc. Amended and Restated 2012 and 2019 Equity Incentive Plans and agreements entered into in connection with the Reorganization Transactions. The conversion of the outstanding stock options did not result in any incremental expense as the number of stock options outstanding and the exercise price were both adjusted on a proportionate basis, and therefore, the fair value of the new award did not exceed the fair value of the previous award immediately prior to the modification. The outstanding stock options remain subject to their original vesting schedules. Accordingly, we continue to recognize the original grant date fair value of these converted stock options now outstanding under the Signify Health, Inc. Amended and Restated 2012 and 2019 Equity Incentive Plans. No future grants will be made under these plans.
As of March 31, 2021, there were 6,022,134 stock options outstanding at a weighted average exercise price of $5.96. This includes 1,190,803 subject to performance-based vesting criteria which were not probable of occurring as of March 31, 2021.
During the three months ended March 31, 2021 and 2020, we recognized $0.5 million and $0.4 million, respectively, of equity-based compensation expense related to outstanding stock options included in SG&A expense on the Condensed Consolidated Statements of Operations. As of March 31, 2021, there was $3.3 million of total unrecognized compensation expense related to unvested time-based stock options expected to be recognized over a weighted average period of 1.2 years. Additionally, there was approximately $2.6 million of unrecognized compensation expense related to stock options with performance-based vesting, in which the vesting conditions are not probable of occurring as of March 31, 2020.
14.17.Loss Per Share

Basic loss per share of Class A common stock is computed by dividing net loss attributable to Signify Health Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted loss per share of Class A common stock is computed by dividing net loss availableattributable to Signify Health Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

We analyzed the calculation of loss per unit for the period prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these unaudited Condensed Consolidated Financial Statements due to
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Notes to the Condensed Consolidated Financial Statements (unaudited)
the significant nature of the Reorganization Transactions on the capital structure. Therefore, loss per unit information has not been presented for the three months ended March 31, 2020.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A common stock for the three and six months ended March 31,June 30, 2022 and 2021. The basic and diluted loss per share for the threesix months ended March 31,June 30, 2021 represents only includes the period from February 12, 2021 to March 31,June 30, 2021, which represents the period wherein we had outstanding Class A common stock.

Three months ended March 31, 2021
(in millions)
Net (loss) income$(51.7)
Less: Net (loss) income attributable to pre-Reorganization Transactions(17.2)
Less: Net (loss) income attributable to the noncontrolling interest(11.3)
Net (loss) income attributable to Signify Health, Inc.(23.2)
Weighted average shares of Class A common stock outstanding165,486,015 
Earnings (loss) per share of Class A common stock - Basic$(0.14)
Earnings (loss) per share of Class A common stock - Diluted$(0.14)

LLC Units of Cure TopCo participate in the earnings of Cure TopCo and therefore, our portion of Cure TopCo’s loss per share has been included in the net loss attributable to Signify Health, Inc. in the calculation above.
Three months ended June 30,Six months ended June 30,
2022202120222021
(in millions)
Net loss$(490.0)$(0.1)$(506.3)$(51.8)
Less: Net loss attributable to pre-Reorganization Transactions— — — (17.2)
Less: Net loss attributable to the noncontrolling interest(119.5)(0.1)(124.9)(11.4)
Net loss attributable to Signify Health, Inc.$(370.5)$— $(381.4)$(23.2)
Weighted average shares of Class A common stock outstanding - Basic176,350,100 168,003,727 174,565,795 167,145,986 
Earnings (loss) per share of Class A common stock - Basic$(2.10)$— $(2.19)$(0.14)
Earnings (loss) per share of Class A common stock - Diluted$(2.10)$— $(2.19)$(0.14)

Shares of Class B common stock do not participate in our earnings or losses and are therefore not participating securities. As such, separate presentation of basic and diluted loss per share of Class B common stock under the two-class method has not been presented. Shares of our Class B common stock and the corresponding LLC Units are, however, considered potentially dilutive shares of Class A common stock. The 67,065,763 total sharesLLC Units of Class B common stock outstanding asCure TopCo participate in the earnings of March 31, 2021 (which includes 9,443,460 unvested LLC units) were determined to be anti-dilutive as we recorded aCure TopCo and therefore, our portion of Cure TopCo’s earnings (loss) per share has been included in the net loss attributable to Signify Health in the calculation above. LLC Units held by the Continuing Pre-IPO LLC Members are redeemable in accordance with the Cure TopCo LLCA, at the election of Signify Health, for the period, and have therefore been excluded from the computation of diluted earnings per share of Class A common stock.

In addition, 6,903,584 stock options and 66,328 restricted stock units were excluded from the computation of diluted earnings per shareshares of Class A common stock becauseon a 1-for-one basis or a cash payment.

The potential dilutive effect of LLC Units are evaluated under the if-converted method. The potential dilutive effect of stock options and RSUs are evaluated under the treasury stock method.

The following table summarizes the stock options, RSUs and LLC Units that were anti-dilutive for the periods indicated. The effects of each would have been anti-dilutive as we recorded a net loss forin each of the period.periods. As a
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Notes to the Condensed Consolidated Financial Statements (unaudited)
15.
result, these shares, which were outstanding, were excluded from the computation of diluted loss per share for the periods indicated.
Three months ended June 30,Six months ended June 30,
2022202120222021
Antidilutive Shares:
Stock Options9,376,497 5,951,435 9,376,497 6,832,885 
RSUs3,615,534 85,552 3,615,534 151,880 
LLC Units57,568,959 67,049,882 57,568,959 67,049,882 
18.Transaction-related Expenses

During the three and six months ended June 30, 2022, we incurred $1.7 million and $4.9 million, respectively, of transaction-related expenses primarily in connection with the acquisition of Caravan Health as well as other corporate development activities, such as potential mergers and acquisitions, strategic investments and other similar activities. These transaction-related expenses primarily related to consulting and other professional services expenses, as well as certain integration-related expenses following the acquisition of Caravan Health including employee compensation costs and professional services fees.

For the three and six months ended March 31,June 30, 2021, we incurred $0.9$1.0 million and $1.9 million, respectively, of transaction-related expenses related to expenses incurred in connection with corporate development activities, such as potential mergers and acquisitions, strategic investments and other similar activities. These transaction-related expenses related to consulting, compensation, and integration-type expenses. Additionally, for the threesix months ended March 31,June 30, 2021, we incurred $4.7 million of costs in connection with our IPO.

For the three months ended March 31, 2020, we incurred $2.4 million of transaction-related expenses related to the integration of Remedy Partners as well as expenses incurred in connection with acquisitions and other corporate development activities, such as potential mergers and acquisitions, strategic investments and similar activities. These transaction-related expenses related to consulting, compensation, and integration-type expenses.
16.19.Commitments and Contingencies

Letters of Credit
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Notes to the Condensed Consolidated Financial Statements (unaudited)

As of March 31, 2021,June 30, 2022, we havehad outstanding letters of credit totaling $12.2 million, including $3.0 million related to leased properties and $9.2 million in favor of CMS, which are required in the event of a negative outcome on certain episodes of care within the BPCI-A program and we do not settle the related amounts owed to CMS. This amount reduces the borrowing amount available to us under our Revolving Facility as ofJune 30, 2022. See Note 12 Long-Term Debt for the total value of letters of credit under this facility. However, the terms of BPCI-A also require that certain partners provide a related reciprocal letter of credit for the majority of this amount. AsIn February 2022, the entire $8.8 million of March 31, 2021, there are 3 relatedthe reciprocal letters of credit totaling $8.8 million.were released as a result of collateral being available under the new credit agreement.

Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated. We are involved in various lawsuits, claims and administrative proceedings arising in the normal course of business. In management’s opinion, the ultimate resolution of these matters will not materially adversely affect our financial position, results of operations or cash flows.

Sales Tax Reserve

During the year ended December 31, 2019, it was determined that certain Episodes of Care Services may be subject to sales tax in certain jurisdictions. Historically, we havehad not collected sales tax from our Episodes of Care Services customers as we believed the services were not taxable. As of March 31, 2021June 30, 2022 and December 31, 2020,2021, we havehad a liability of $6.4$1.9 million and $8.0$1.6 million, respectively, for potential sales tax exposure related to services performed in 2016 through the second quarter of 2020, included in other current liabilities on the Condensed Consolidated
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Notes to the Condensed Consolidated Financial Statements (unaudited)

Balance Sheets. During the three and six months ended June 30, 2022, we received final audit settlement with certain states that resulted in $0.1 million and $0.3 million, respectively, in SG&A expense on the Condensed Consolidated Statement of Operations. We expect to startare in the process of settling the remaining potential exposure with the various states and we began collecting sales tax from customers in the second quarter of 2021 for 2020 services.

Customer Equity Appreciation Rights

In December 2019, we entered into an EAR agreement with a customer, which contains the following provisions: (i) committed the customer to purchase a minimum amount of services from one of our wholly-owned indirect operating subsidiaries for three years in accordance with specific terms and conditions and (ii) granted the customer a contingent EAR. The EAR agreement allows for the customer to participate in the future growth in the fair market value of our equity and can only be settled in cash (or, under certain circumstances, in whole or in part with a replacement agreement that mimics the economics of the original EAR agreement) upon a change in control, other liquidity event, or upon approval of our Board of Directors with consent by New Mountain Capital with certain terms and conditions. The EAR will expire in 20 years from the date of grant, if not previously settled. As of December 31, 2019, the EAR was accounted for as a contingent contract liability instrument. We did not recognize an expense associated with the EAR for the year ended December 31, 2019 as cash settlement was not considered probable, due to the change in control and liquidity provisions of the EAR. We adopted new accounting guidance in early 2020, which resulted in the initial fair value of the EAR being recorded as a reduction of revenue as this is consideration payable to a customer, and subsequent changes in fair value being recorded as other income (expense), net. Although the initial EAR agreement was executed in December 2019, the service period did not begin until 2020 and, therefore, there was no impact on our results of operations until 2020. The grant date fair value of this EAR was estimated to be $15.2 million and is being recorded as a reduction of revenue through December 31, 2022, coinciding with the three year performance period.

Effective September 2020, we entered into a second EAR agreement with the same customer, containing similar provisions to the EAR agreement entered into in December 2019. We concurrently entered into an amended customer contract which included incremental evaluations volume from the customer beginning in 2020. The grant date fair value of this EAR was estimated to be $36.6 million and is being recorded as a reduction of revenue through December 31, 2022, coinciding with the 2.5 year performance period.

As of March 31, 2021,June 30, 2022, there was approximately $34.5$9.9 million of original grant date fair value unrecognized related to the original customer EAR agreements, which we expect to record as a reduction of revenue overthrough the next 1.75 years.end of 2022. We remeasure the fair value of the outstanding EAR agreements at the end of each reporting period and record any changes in fair value to other expense (income), net in our Condensed Consolidated Statement of Operations. See Note 1013 Fair Value Measurements for changes in estimated fair value and valuation techniques used to estimate the EAR.

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In December 2021, we and our customer agreed to extend our existing commercial arrangements through the middle of 2026 and established targets for the minimum number of IHEs to be performed on behalf of the customer each year (the “Volume Targets”). We also entered into a letter agreement (the “EAR Letter Agreement”) with the customer that provides that, in the event of a change in control of the Company or certain other corporate transactions, and subject to achievement of the Volume Targets, if the aggregate amount paid under the EARs prior to and in connection with such event (the “Aggregate EAR Value”) is less than $118.5 million, then the customer will be paid the difference between $118.5 million and the Aggregate EAR Value. The EAR Letter Agreement is a separate equity value-linked instrument, independent from the original EARs. The grant date fair value is determined based on an option pricing model. Similar to the original EARs, we will record the initial grant date fair value as a reduction to revenue over the performance period, beginning in 2022. Estimated changes in fair market value will be recorded each accounting period based on management’s current assumptions related to the underlying valuation approaches as other (income) expense, net on the Condensed Consolidated Statement of Operations. The grant date fair value of the EAR Letter Agreement was estimated to be $76.2 million and will be recorded as a reduction of revenue through June 30, 2026, coinciding with the service period. As of June 30, 2022, there was approximately $73.1 million of original grant date fair value unrecognized related to the EAR Letter Agreement, which we expect to record as a reduction of revenue as follows:

Notes
Remainder of 2022$3.1 
202320.0 
202420.0 
202520.0 
202610.0 
Total$73.1 

We remeasure the fair value of the outstanding EAR Letter Agreement at the end of each reporting period and record any changes in fair value to theother expense (income), net in our Condensed Consolidated Financial Statements (unaudited)Statement of Operations. See Note 13 Fair Value Measurements for changes in estimated fair value and valuation techniques used to estimate the fair value of the EAR Letter Agreement.

Synthetic Equity Plan

OnIn connection with our IPO in February 14, 2020, our Board of Directors adopted a2021, the Synthetic Equity Plan (“SEP”) that provides for cash payments upon the satisfaction of certain criteria. The synthetic equity units granted under the SEP were subject to time and performance vesting and were to be paid upon a change in control (as defined in the SEP) based upon the difference in the value of the Company at the time of the change in control event and a "floor amount". Since the vesting criteria were not probable of occurring as of March 31, 2020, we had not recognized any compensation expense related to these awards for the three months ended March 31, 2020.

In February 2021, the SEP was amended to, among other things, remove the change in control payment condition and provide for cash settlement upon each vesting event based on a 30 trading day volume weighted average price of our Class A common shares. As a resultPrior to this amendment, the vesting criteria were not probable of thisoccurring and we had not recognized any compensation expense related to these awards. Concurrent with the February 2021 amendment, we began to record compensation expense and a current liability beginning in the first quarter of 2021 related to outstanding synthetic equity awards (“SEUs”) subject to time-based vesting. The liability and expense will beare adjusted each reporting period based upon actual cash settlements and the underlying value of theour Class A common stock. The SEU liability is included in accounts
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Notes to the Condensed Consolidated Financial Statements (unaudited)

payable and accrued expenses on our Condensed Consolidated Balance Sheet. We have not recorded any expense related to the outstanding synthetic equity awardsSEUs subject to performance-based vesting as the vesting criteria were not considered probable of occurring as of June 30, 2022. Most of the outstanding SEUs subject to performance-based vesting were amended in March 31, 2021.2022, to add a time-based vesting component and therefore, we began recognizing compensation expense related to these outstanding SEUs over the amended service period.

As of March 31, 2021, 495,303 synthetic equity units outstanding areJune 30, 2022, 118,072 SEUs were subject to time-based vesting and 130,504 synthetic equity units outstanding are subject to performance-based vesting.

The following table summarizes the change in the SEU liability for the three months ended March 31, 2021:liability:

(in millions)
Balance at January 1, 2021$0 
SEU expense included in service expense0.5 
SEU expense included in SG&A expense1.0 
Cash payments(0.8)
Balance at March 31, 20210.7 
Three months ended June 30,Six months ended June 30,
2022202120222021
(in millions)
Balance at beginning of period$0.3 $0.7 $0.2 $— 
SEU expense included in service expense— — 0.1 0.6 
SEU expense included in SG&A expense0.1 0.3 0.2 1.2 
Cash payments(0.1)(0.3)(0.2)(1.1)
Balance at end of period$0.3 $0.7 $0.3 $0.7 

Contingent Consideration

As of March 31, 2021,June 30, 2022, we have recorded $13.3 million in current contingent consideration and $2.1$35.4 million in long-term contingent consideration on our Condensed Consolidated Balance Sheets related to potential payments due upon the completion of certain milestone eventsperformance targets in connection with our acquisition of PatientBloxCaravan Health in November 2020.March 2022. See Note 4 Business Combinations. If contingent milestones are achieved under the terms of the Merger Agreement, we expect to make any payments due during the second half of 2023.
17.20.Income Taxes

Income tax (benefit) expense for the three months ended March 31,June 30, 2022 and 2021, and 2020, was $(9.9)$5.2 million and $0.1$(0.2) million, respectively, and for the six months ended June 30, 2022 and 2021, was $(0.8) million and $(10.1) million, respectively. The Company’s estimatedOur effective tax rate for the three and six months ended June 30, 2022 was (1.1)% and 0.2%, respectively, compared to 52.7% and 16.3% for the three and six months ended June 30, 2021. Our effective tax rates for the three and six months ended June 30, 2022 are lower than the U.S. Federal statutory rate of 21% primarily due to nondeductible goodwill impairment, impact of non-controlling interest, and changes in valuation allowance. Our effective tax rate for the three months ended March 31,June 30, 2021 was 16.1%. The Company’s estimated annual effective tax rate is lesshigher than the U.S. Federal statutory rate of 21% primarily becausedue to stock option exercises. Our effective tax rate for the Company issix months ended June 30, 2021 was lower than the U.S. Federal statutory rate of 21% due to not liable forbeing subject to income taxes on the portion of earnings that are attributable to the non-controlling interest.

As a result of the IPO, the Company recorded a changeinterest and loss in the net deferred tax asset position, net of valuation allowance, of $29.0 million, which primarily consisted of the Company’s outside basis differences in its partnership subsidiaries.

In assessing the realizability of deferred tax assets, including the deferred tax assets recorded as a result of the IPO and current year operations, management determined that it was more likely than not that the deferred tax assets will be realized.

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Notes to the Condensed Consolidated Financial Statements (unaudited)
As of December 31, 2020, PatientBlox had U.S. federal net operating loss carryforwards for tax purposes aggregating approximately $6.2 million which have an indefinite carryforward period; however, these can only reduce taxable income in a futurepre-reorganization period partially offset by a maximum of 80%. All of these net operating loss carryforwards are subject to certain rules under Internal Revenue Code (“IRC”) Section 382. We believe these IRC Section 382 limitations will not ultimately affect our ability to use substantially all of the net operating loss carryforwards for income tax purposes. We have not offset any of the net deferred tax assets, including net operating loss carryforwards, with a valuation allowance for the tax periods ended December 31, 2020 due to existing taxable temporary differences that are a source of income supporting realization of the deferred tax assets.state taxes.

Uncertain Tax Provisions

The Company evaluatesWe evaluate and accountsaccount for uncertain tax positions taken or expected to be taken on an income tax return using a two-step approach. Step one, recognition, occurs when the Company concludeswe conclude that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Step two, measurement, determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Companywe subsequently determinesdetermine that a tax position no longer meets the more likely-than-not threshold of being sustained. The Company recordsWe record interest (and penalties where applicable), net of any applicable related income tax benefit, on potential income tax contingencies as a component of the income tax provision.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

We have evaluated our tax positions and have not identified any material uncertain tax positions for which a reserve should be recorded. Accordingly, noa provision for uncertainties in income taxes of $0.3 million has been maderecorded and is included in the accompanyingother noncurrent liabilities on our Condensed Consolidated Financial Statements at MarchBalance Sheet as of June 30, 2022. As of December 31, 2021.2021, there was 0 provision for uncertainties in income taxes.

Tax Receivable Agreement

In February 2021, in connection with the Reorganization Transactions and IPO, Signify Healthwe entered into the Tax Receivable Agreement (the “TRA”), which obligates Signify Healthus to make payments to the Continuing Pre-IPO LLC Members, the Reorganization Parties, Optionholders (as defined in the TRA) of the Blocker Companies at the time of the Mergers, holders of synthetic equity units and any future party to the TRA (collectively, the “TRA Parties”) in the aggregate generally equal to 85% of the applicable cash savings that itwe actually realizesrealize as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in the Mergers (including net operating losses, the Blocker Companies’ allocable share of existing tax basis and refunds of Blocker Company taxes attributable to pre-Merger tax periods), (ii) increases in itsour allocable share of existing tax basis and tax basis adjustments that may result from (x) future redemptions or exchanges of LLC Units by Continuing Pre-IPO LLC Members for cash or Class A common stock, (y) the IPO Contribution and (z) certain payments made under the TRA and (iii) deductions in respect of interest and certain compensatory payments made under the TRA. We will retain the benefit of the remaining 15% of these tax savings.

As of March 31, 2021,June 30, 2022, we had a liability of $51.3$56.4 million related to the projected obligations under the TRA. TRA related liabilities are classified as current or noncurrent based on the expected date of payment. During the six months ended June 30, 2022, we recorded an immaterial increase in the TRA liability. As of March 31, 2021,June 30, 2022, there are no amountswas $5.0 million due within 12 months and therefore the entire liability is included in Tax receivable agreement liability within noncurrentcurrent liabilities on our Condensed Consolidated Balance Sheet.
18.21.Segment Reporting

Operating segments are components of an enterprise for which separate financial information is available and evaluated regularly by our Chief Operating Decision Maker in deciding how to allocate resources and in assessing financial performance. Management views our operating performance in 2 reportable segments: Home & Community Services and Episodes of Care Services. On July 7, 2022, we announced our plans to exit our Episodes of Care Services business, as described inNote 24. Subsequent Events.

We evaluate the performance of each segment based on segment revenue and adjusted EBITDA. The operating results of the reportable segment are based on segment adjusted EBITDA, which includes revenue and expenses incurred by the segment, as well as an allocation of shared expenses. Shared expenses are generally allocated to each
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Notes to the Condensed Consolidated Financial Statements (unaudited)
segment based on the segments’ proportionate employee headcount. Certain costs are not allocated to the segments, as described below, as these items are not considered in evaluating the segment’s overall performance.

See Note 56 Revenue Recognition for a summary of segment revenue by product type for the three and six months ended March 31, 2021June 30, 2022 and 2020.2021. Our operating segment results for the periods presented were as follows:

Three months ended March 31,
 20212020
(in millions)
Revenue
Home & Community Services$152.4 $103.1 
Episodes of Care Services27.6 28.6 
Segment Adjusted EBITDA
Home & Community Services41.1 24.6 
Episodes of Care Services(6.7)(2.7)
Less: reconciling items to net loss:
Unallocated costs (1)
72.5 11.0 
Depreciation and amortization16.7 14.5 
Interest expense6.8 5.2 
Loss before income taxes$(61.6)$(8.8)
(1) Unallocated costs as follows:
       Other (income) expense, net (2)
56.7 0 
       Equity-based compensation2.5 6.0 
       SEU Expense1.5 0 
       Customer equity appreciation rights4.9 1.2 
       Transaction-related expenses5.6 2.4 
       Non-allocated costs (3)
1.3 1.4 
          Total unallocated costs$72.5 $11.0 
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Notes to the Condensed Consolidated Financial Statements (unaudited)

Three months ended June 30,Six months ended June 30,
 2022202120222021
(in millions)(in millions)
Revenue
Home & Community Services$207.6 $175.4 $394.5 $327.8 
Episodes of Care Services38.6 37.4 68.2 65.0 
Segment Adjusted EBITDA
Home & Community Services65.2 55.8 121.1 96.9 
Episodes of Care Services(2.6)(1.2)(13.5)(7.9)
Less: reconciling items to loss before income taxes:
Unallocated costs (1)
2.8 31.1 48.1 103.6 
Depreciation and amortization20.1 17.3 38.1 34.0 
Asset impairment519.9 — 519.9 — 
Interest expense4.6 6.5 8.6 13.3 
Loss before income taxes$(484.8)$(0.3)$(507.1)$(61.9)
(1) Unallocated costs as follows:
Other (income) expense, net (2)
(27.4)14.3 1.4 71.0 
Loss on Debt Extinguishment— 5.0 — 5.0 
Equity-based compensation14.9 3.3 21.4 5.8 
SEU Expense0.2 0.3 0.3 1.8 
Customer equity appreciation rights6.5 4.9 13.0 9.8 
Transaction-related expenses1.7 1.0 4.9 6.6 
       Non-allocated costs (3)
6.9 2.3 7.1 3.6 
Total unallocated costs$2.8 $31.1 $48.1 $103.6 
(2) Other (income) expense, net includes the remeasurement of the fair value of the outstanding customer EAR.EARs and EAR Letter Agreement as well as interest and dividends earned on cash and cash equivalents.

(3) Non-allocated costs included remeasurement of contingent consideration management fees paid to our capital partner and certain non-recurring expenses, including those associated with the closure of certain facilities, the sale of certain assets, one-time expenses related to the COVID-19 pandemic and the early termination of certain contracts. These costs are not considered by our Chief Operating Decision Maker in making resource allocation decisions.

Our Chief Operating Decision Maker does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset-related information has not been presented.
19. 22.Concentrations

During the normal course of operations, we maintain cash in bank accounts which exceed federally insured amounts. We have not experienced any losses in such accounts and do not believe we are exposed to any significant credit risk related to cash.

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Notes to the Condensed Consolidated Financial Statements (unaudited)
Accounts receivable potentially subject us to concentrations of credit risk. Management believes that its contract acceptance, billing and collection policies are adequate to minimize potential credit risk. We continuously evaluate the credit worthiness of our customers’ financial condition and generally do not require collateral.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

We are dependent on a concentrated number of payors and provider partners with whom we contract to provide IHEs and other services. A significant portion of our revenues are generated from a small number of customers. For the three months ended March 31, 2021, we had threeOur largest customers which accounted for approximately 30%, 26% and 10%, respectively,the following percentages of total revenues. net revenue:

Three months ended June 30,Six months ended June 30,
2022202120222021
Customer A30 %22 %33 %24 %
Customer B23 %26 %26 %28 %
Customer C*14 %*12 %
*Revenue from this customer was less than 10% of total net revenue during the period noted.

In addition, the revenue from our top ten customers accounted for approximately 82%81% of our total revenue for both the three and six months ended March 31, 2021.June 30, 2022.

As of March 31, 2021,June 30, 2022, we had threefour customers which accounted for approximately 18%21%, 12%14%, 11%, and 10%, respectively, of accounts receivable.

While CMS is not our customer, a majority of the revenue generated by Episodes of Care Services is under the CMS administered BPCI-A program and payments are received under this program in certain cases from CMS rather than directly from the customer. During the three and six months ended March 31, 2021,June 30, 2022, approximately 15%7% and 8%, respectively, of total consolidated revenue was generated from the BPCI-A program. As of March 31, 2021, approximately 24% of the total accounts receivable was due from CMS related to payments expected to be received by us under the BPCI-A program.
20. 23.Related Party Transactions

In connection with the Reorganization Transactions, we entered into several agreements with various parties including CureTopCo, LLC,Cure TopCo, New Mountain Capital and its affiliates, certain members of management and other shareholders. These include the Reorganization Agreement, the Amended and Restated Cure TopCo, LLC Agreement, the Tax Receivable Agreement,TRA, the Registration Rights Agreement and the Stockholders' Agreement, all of which are fully described in our 20202021 Annual Report on Form 10-K. See Note 1 Nature of Operations for further details on the Reorganization Transactions. See Note 1114 Shareholders' Equity for additional information on the Cure TopCo, LLC Recapitalization. See Note 1720 Income Taxes for additional information on the Tax Receivable Agreement.TRA.
24.Subsequent Events

On MarchJuly 7, 2019, we entered into2022, the Board of Directors approved a consulting agreement with Bret Carlson, a former director, which providedrestructuring plan to wind down our Episodes of Care Services segment. The Caravan Health business will not be impacted. This decision was made in light of recent retrospective trend calculations released by the Center for $0.3 million annually (payable monthly)Medicare & Medicaid Innovation that lowered target prices for episodes in compensation for consulting services provided to us. In the event that we complete a corporate transaction inBPCI-A program, and which we acquire allbelieve have made the program unsustainable. We currently expect to incur restructuring charges comprising severance and related employee costs. We may also incur additional restructuring costs comprising contract termination and facility closure costs. We expect the majority of the equity interests or all, or substantially all, ofrestructuring plan and the assets of a companycash expenditures associated with these actions to be completed in our industry referred to and introduced to us by Mr. Carlson, Mr. Carlson will be eligible to receive a cash transaction fee of 3% of any deal consideration up to $10 million, plus an additional 1.5% on any incremental deal consideration above $10 million.2022.

On November 23, 2020, we entered into a letter agreement with Kevin McNamara, a director, which provided for payment of $0.1 million for the three months ended March 31, 2020 (payable in accordance with the Company’s payroll practices) in compensation for non-director related services provided to us. In addition, Mr. McNamara was entitled to reimbursement for annual premiums on life, accidental death and dismemberment, short-term disability and medical insurance. This agreement terminated effective March 1, 2021, as Mr. McNamara is now paid in accordance with our Director compensation policy.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q, including matters discussed under Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1. Legal Proceedings, Part II, Item 1A. Risk Factors, and in other sections of this Quarterly Report on Form 10-Q, that are forward-looking statements. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projectionsstatements regarding the Company’s business operations, assets, valuations, financial conditions, results of operations, future plans, strategies, and expectations, including statements regarding our future financial performance, our Episodes of Care Services segment restructuring, our anticipated growth strategies and anticipated trends in our business, our planability to drive better patient outcomesrealize synergies in our businesses and our plan to utilize the proceeds from our initial public offering (“IPO”)plans to expand our investment in value-based payment programs and in our product portfolio. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under Part II, Item 1A. Risk Factors and Part I, Item 1A. Risk Factors of our 20202021 Annual Report on Form 10-K.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

•our ability to implement our plan to wind down our Episodes of Care Services segment and realize the anticipated cost savings and positive impact on 2023 earnings;
•the estimated costs associated with the plan;
•the impact the plan will have on our operations;
•the risk that our current revenue estimates under the BPCI-A program will be significantly reduced due to the semiannual BPCI-A reconciliation from CMS;
•the COVID-19 pandemic;pandemic and whether the pandemic will continue to subside in 2022;
•our dependence upon a limited number of key customers;
•our dependence on certain key government programs;
•our failure to maintain and grow our network of high-quality providers;
•our failure to continue to innovate and provide services that are useful to customers and achieve and maintain market acceptance;
•our limited operating history with certain of our solutions;
•our failure to compete effectively;
•the length and unpredictability of our sales cycle;
•failure of our existing customers to continue or renew their contracts with us;
•failure of service providers to meet their obligations to us;
•seasonality that may cause fluctuations in our sales, cash flows and results of operations;
•our failure to achieve or maintain profitability;
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•our revenue not growing at the rates they historically have, or at all;
•our failure to successfully execute on our growth initiatives, business strategies, or operating plans, including growth in our Commercial episodes business;plans;
•our failure to successfully launch new products;
•our failure to diversify sources of revenues and earnings;
•inaccurate estimates and assumptions used to determine the size of our total addressable market;
•changes in accounting principles applicable to us;
•incorrect estimates or judgments relating to our critical accounting policies;
•increases in our level of indebtedness;
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•our failure to effectively adapt to changes in the healthcare industry, including changes in the rules governing Medicare or other federal healthcare programs;programs, or a potential shift toward total cost of care payment models;
•our failure to adhere to complex and evolving governmental laws and regulations;
•our failure to comply with current and future federal and state privacy, security and data protection laws, regulations or standards;
•our employment of and contractual relationships with our providers subjecting us to licensing or other regulatory risks, including recharacterization of our contracted providers as employees;
•adverse findings from inspections, reviews, audits and investigations from health plans;plans or government agencies;
•inadequate investment in or maintenance of our operating platform and other information technology and business systems;
•our ability to develop and/or enhance information technology systems and platforms to meet our changing customer needs;
•higher than expected investments in our business, including, but not limited to, investments in our technology and operating platform, which could reduce our profitability;
•security breaches or incidents, loss or misuse of data, a failure in or breach of our operational or security systems or other disruptions;
•disruptions in our disaster recovery systems or management continuity planning;
•our ability to comply with, and changes to, laws, regulations and standards relating to privacy or data protection;
•our ability to obtain, maintain, protect and enforce our intellectual property;
•our dependence on distributions from Cure TopCo, LLC, our operating subsidiary, to fund dividend payments, if any, and to pay our taxes and expenses, including payments under the TRA;Tax Receivable Agreement (“TRA”);
•the control certain equityholders have over us and our status as a controlled company;
•our ability to realize any benefit from our organizational structure;
•risk associated with acquiring other businesses including our ability to effectively integrate the operations and technologies of the acquired business;businesses, including Caravan Health;
•risks associated with an increase in our indebtedness;indebtedness or interest rates; and
•the other risk factors described under Part II, Item 1A. Risk Factors and in Part I, Item 1A. Risk Factors of our 20202021 Annual Report on Form 10-K.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the
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date of this Quarterly Report on Form 10-Q. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

Overview

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ourthe Condensed Consolidated Financial Statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.beliefs and that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth underin “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20202021 and Note Regarding Forward-Looking Statements included in this Quarterly Report on Form 10-Q.

The following discussion contains references to the three months ended March 31, 2020, which wasperiods prior to the Reorganization Transactions that Signify Health, Inc. (referred to herein as “we”, “our”, “us”, “Signify Health” or
30

the “Company”) and Cure TopCo, LLC (“Cure TopCo”) entered into in connection with the IPOits initial public offering (the “Reorganization Transactions”), which were effective February 12, 2021. Therefore, the financial results referenced for that period relates to Cure TopCo and its consolidated subsidiaries for the three months ended March 31, 2020. Any information related to periods prior to the Reorganization Transactions refer to Cure TopCo and its consolidated subsidiaries and any information related to periods subsequent to the Reorganization Transactions refer to Signify Health and its consolidated subsidiaries, including Cure TopCo.

Signify Health is a leading healthcare platform that leverages advanced analytics, proprietary technology and datasets, and nationwide healthcare provider networks to create and power value-based payment programs. Our mission is to transform how care is paid for and delivered so thatbuild trusted relationships to make people can enjoy more healthy, happy days at home.healthier. Our customers include health plans, governments, employers, health systems and physician groups. We believe that we are a market leader in two fast-growing segments of the value-based healthcare payment industry: payment models based on individual episodes of care and(1) in-home health evaluations (“IHEs”). Payment models based on individual episodes and (2) total cost of care organize or bundle payments for all, or a substantial portion of, services received by a patient in connection with an episode of care, such as a surgical procedure, particular condition or other reason for a hospital stay.enablement services. IHEs are health evaluations performed by a clinician in the home to support payors’ participation in Medicare Advantage and other government-run managed care plans. Our episode payment platform managed $5.21 billion and $6.14 billion of spend in 2020 and 2019, respectively. In 2020, Oourur mobile network of providers completed evaluations for over 1.41.9 million unique individuals participating in Medicare Advantage and other managed care plans in 2020.2021. Total cost of care enablement services include multiple services around the management of total cost of care payment models, such as Accountable Care Organizations (“ACOs”), where our clients take responsibility for the cost of a patient’s healthcare over the course of a year. These services include, but are not limited to, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings. We believe that these core businesses have enabled us to become integral to how health plans and healthcare providers successfully participate in value-based payment programs, and that our platform lessens the dependence on facility-centric care for acute and post-acute services and shifts more services towards alternate sites and, most importantly, the home.

On March 1, 2022, we acquired Caravan Health, Inc. (“Caravan Health”). The combination creates one of the largest national networks of providers engaged in value-based payment models providing a broader range of value-based and shared savings models from advanced primary care to specialty care bundles to total cost of care programs. We believe the acquisition of Caravan Health will also position us to better to serve community hospitals, physician practices and clinics.

On July 7, 2022, we announced our plans to exit our Episodes of Care Services business. Our Caravan Health business will not be impacted. See —”Recent Developments in 2022 and Factors Affecting Our Results of Operations” below.
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Our solutions support value-based payment programs by aligning financial incentives around outcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, coordination and cost-savings. Through our platform, we coordinate what we believe is a holistic suite of clinical, social, and behavioral services to address an individual’s healthcare needs and prevent adverse events that drive excess cost. Our business model is aligned with our customers, as we generate revenue only when we successfully engage members for our health plan customers and generate savings for our provider customers.
Recent Developments in 2022 and Factors affecting our resultsAffecting Our Results of operationsOperations

Below is a summary of recent developments and factors that impact results of operations, including comparability to historical results of operations. As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below isFor a discussioncomplete list of the key factors impactingaffecting our results of operations.
Seasonalityoperations, refer to our 2021 Annual Report on Form 10-K.

Historically, there has been
Episodes of Care Services Restructuring

On July 7, 2022, the Board of Directors approved a seasonal patternrestructuring plan to wind down our revenueEpisodes of Care Services segment. The Caravan Health business will not be impacted. This decision was made in our Homelight of recent retrospective trend calculations released by the Center for Medicare & Community Services segment with the revenuesMedicaid Innovation that lowered target prices for episodes in the fourth quarterBPCI-A program, and which we believe have made the program unsustainable. We currently expect to incur restructuring charges in the range of each calendar year generally lower than the other quarters. Each year, our IHE customers provide us with a target member list (“TML”), which may$25-$35 million primarily comprising severance and related employee costs to be supplemented or amended during the year. Our customers generally limit the number of times we may attempt to contact their members. Throughout the year, as we complete IHEs and attempt to contact members, the number of members who have not received an IHE and whom we are still able to contact declines, typically resulting in fewer IHEs scheduled during the fourth quarter. As a precautionary measure in response to the COVID-19 pandemic, we temporarily paused IHEs in March 2020. Shortly following the suspension of in-home visits, we were able to expand our business model to perform virtual IHEs (“vIHEs”) and made up for some of the lost volume for IHEs through vIHEs. We resumed in-home visits beginning in July 2020. Although we continued to see some increase in IHE member cancellation rates, overall we saw significant incremental IHE volumerecorded primarily in the second half of 2020, particularly in2022. We may also incur additional restructuring costs comprising contract termination and facility closure costs, the fourth quarter, as certain customers increased the volumes they placed with usamount and in-home IHEs representedtiming of which cannot be estimated at this time. We expect the majority of those IHEs. As a result, for 2020, we did not see the historical seasonality we would normally expectrestructuring plan and the cash expenditures associated with respectthese actions to IHE volume.be completed in 2022.

There are approximately $85 million of annualized direct Episodes of Care Services costs which will be eliminated. In addition, there are approximately $60 million of annualized shared costs currently allocated to the first quarterEpisodes of 2021, the vast majorityCare Services segment, of our evaluations were IHEs although we continued to perform vIHEs. Overall, IHE volume was more in line with historical trends and therefore, during the remainder of 2021,which we expect to see a return to seasonality trends more consistent with our historical trendseliminate approximately $30-$35 million in our Home & Community Servicesannualized costs by the end of 2022 as we wind down the episodes business.

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segment. However, any further developments with respect to the COVID-19 pandemic may impact seasonality trends.Table of Contents
BPCI-A Reconciliation

During the second quarter of 2022, we received a semiannual BPCI-A reconciliation from CMS. Within that reconciliation, CMS applied a negative retrospective price adjustment to the benchmark prices against which savings are measured for specific episodes under the BPCI-A program. Several BPCI-A participants, including us, disputed the price adjustment. Our dispute is based on price trend data independently collected that indicates a positive price adjustment should be applied and corresponds with inflation in the medical services industry. CMS subsequently recommended participants provide formal evidence of the pricing errors. We responded to the request in July 2022, and upon receipt of our submission, CMS deemed the relevant reconciliation period to remain open. As a result of the open reconciliation period and our view that the information presented in the reconciliation was not accurate, we did not change our current revenue estimates and do not plan to update them until there is further resolution or clarity of this matter. As of June 30, 2022, we recorded $48.9 million, $24.8 million and $8.9 million in revenue related to performance periods beginning in April 2021, October 2021 and April 2022, respectively, that may be impacted in the event a negative price adjustment prevails. Changes in management’s estimates of prior period performance could result in the reversal of revenue and a further loss may be recorded. CMS has indicated it will respond to error notices prior to the fourth quarter of 2022.
Revenue in
The determination that the semiannual reconciliation is not deemed final has delayed the recognition of accounts receivable for our Episodes of Care Services segment generally is higheras of June 30, 2022. Estimated revenue amounts related to this reconciliation period continue to be included in contract assets on our Condensed Consolidated Balance Sheets. Historically, we received a final reconciliation in the second and fourth quarters. We recognize the revenue attributable to episodes reconciled during each 6-month episode performance measurement period over a 13-month performance obligation period that commences in the second or fourth quarter of each year, depending onthereby reducing the relevantassociated contract with our provider partners. The 13-month performance obligation period begins atassets and recording accounts receivable for the startamounts to be collected. Accordingly, the cash collections from the delayed reconciliation will also deviate from historical cash collection seasonality trends. We expect the related cash receipts, which we historically have received in the quarter following receipt of the relevantsemiannual BPCI-A reconciliations, will be delayed until CMS responds to our dispute.

The results of this initial reconciliation received in the second quarter of 2022 and the subsequent decision to exit the episodes of care business were determined to be an impairment triggering event for both long-lived intangible assets, including capitalized software, and extends throughgoodwill. As such, we performed an asset recoverability test on the receipt or generationassociated long-lived intangible assets and concluded the recoverability test failed and the estimated fair value was de minimis, resulting in a $66.7 million impairment of customer relationships and $26.5 million impairment of acquired and capitalized software for the three and six months ended June 30, 2022. Additionally, we completed an assessment of the semiannual reconciliation for the relevant performance measurement period, as well as the provision and explanation of statements of performance to each of our customers. As a result, during the first and third quarters of each year, we recognize three months of revenue for each of two overlapping performance obligation periods (i.e., three months of revenue from one performance obligation period, and three months of revenue from a second, overlapping performance obligation period). In contrast, during the second and fourth quarters of each year, we recognize revenue relating to three overlapping performance obligation periods—three months of revenue from one performance obligation period, three months of revenue from a second, overlapping performance obligation period, and one month of revenue from a third, overlapping performance obligation period (representing the thirteenth monthgoodwill of the third performance obligation period). We also recognize Episodes revenue based on our estimates of savings realized. The semiannual reconciliations for each performance measurement period under our Episodes programs are received or generated in the second and fourth quarters of each year, and indicate the actual savings realized. In addition, due to the semiannual reconciliations for our Episodes programs, and Bundled Payments for Care Improvement - Advanced Initiative (“BPCI-A”) in particular, we typically receive cash during the first and third quarters of each year, which can cause our liquidity to fluctuate from quarter to quarter. See “—Liquidity and Capital Resources.”
Customer mix

Our customer mix can affect our revenue and profitability in both of our segments. For example, due to the different contractual arrangements we have with different health plans, health plan mix during the period can affect our average per-visit fee, the geographic mix of plan members we are visiting, the mix of members we see that are covered by Medicare versus Medicaid and the selection of IHE, vIHE or IHE+ solutions, each of which has a different price point, and can affect the conversion rate associated with the number of members who agree to receive IHEs, the total number of IHEs completed and the number and type of ancillary services selected. The amounts we receive for our services in our Episodes of Care Services segment are similarlyreporting unit and determined by customer mix, as the amount of our administrative fee, our share of episode savingscarrying value exceeded the estimated fair value, resulting in a $426.7 million goodwill impairment during the three and risk for episode losses and the payors’ and providers’ share of savings, as well as the overall program size and the savings rate generated under each managed episode vary by customer.six months ended June 30, 2022.
Impact of IHE volume and margins

Our revenue and profitability in our Home & Community Services segment are affected by the number of IHEs we complete during a period and how cost effectively we are able to complete them.The number of IHEs we are able to complete during a period can be affected by a variety of factors. For example, decisions by our customers with respect to the TML, including any increase or reduction in the number of members included in the TML (or the member list from which it is derived), may impact our IHE completion rate and, as a result, our revenue. Similarly, our ability to complete IHEs is affected by the level of member engagement. In our experience, members of existing customers are more likely to have had an IHE from us in the past and are more likely to be responsive to our outreach. In contrast, for new customers, their members are often just getting to know us and may have never had an IHE before, which can make it harder to successfully contact them and obtain their consent to an IHE. Our ability to complete IHEs is also affected by the capacity of our mobile network of providers, which impacts our ability to efficiently reach all of the members on our TML.Caravan Health Acquisition

We believeOn March 1, 2022, we will benefit from demographic trendscompleted the acquisition of Caravan Health for an initial purchase price of approximately $250.0 million, subject to certain customary adjustments, and included $190.0 million in cash and $60.0 million in our Class A common stock, comprised of 4,726,134 shares at $12.5993 per share, which represented the coming years. Asvolume-weighted average price per share of our common stock for the U.S. population ages,five trading days ending three business days prior to March 1, 2022. In connection and concurrently with entry into the numberMerger Agreement, we entered into support agreements with certain shareholders of Medicare eligible individuals is increasing. Moreover, Medicare Advantage is growing fasterCaravan Health, pursuant to which such shareholders agreed that, other than the Medicare Classic or fee-for-service program according to the Centersterms of their respective support agreement, they will not, subject to certain limited exceptions, transfer, sell or otherwise dispose of any Signify shares for Medicare and Medicaid Services (“CMS”). We believe we are well positioneda period of up to capturefive years following closing of the growth in Medicare Advantage enrollment inmerger. In addition to the coming years and further increaseinitial purchase price, the numbertransaction included contingent additional payments of membersup to whom we provide IHEs.$50.0 million based on certain future performance criteria of Caravan Health, which if conditions
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Our long-term profitability in the Home & Community Services segment is also impacted by how cost-effectively we are able to complete IHEs. For example, it tends to be less costly for us to perform IHEs in densely populated urban areas and more costly for us to perform IHEs in difficult-to-reach jurisdictions. Our ability to cost-effectively perform IHEs is also affected by how efficiently we are able to schedule a provider’s day to maximize the number of IHEs he or she is able to complete in a day. The mix of providers we use may also impact our costs. We use a mix of physicians, nurse practitioners and physicians assistants, with physicians being the most costly to contract with for IHEs. If we increase or decrease our usage of a particular type of provider, it impacts the cost of performing IHEs and our margins.

In the first three months of 2021, we completed and invoiced to customers over 462,000 IHEs, including vIHEs, compared to over 303,000 IHEs in the first three months of 2020.
Impact of program size and savings rate

Our revenue and profitabilityTable of Contents
are met, may be paid in our Episodesthe second half of Care Services segment are affected by2023. The fair value of the program size of our episodes programs and the savings rates we are able to achieve under these programs. Program size for a particular customer represents the number of episodes we managed for a customer during a period multiplied by the respective baseline price of each episode, which represents the benchmark price set by the relevant program prior to any discounts. Our program size grows by increasing the number of episodes we manage. In connection with our episodes offerings, we receive an administrative fee that is based on the program size we manage for a customer. The BPCI-A program, in its current form, expires at the end of 2023, andcontingent consideration as of the endacquisition date was estimated to be approximately $30.5 million, and was approximately $35.4 million as of 2020, participation in the BPCI-A program was locked in place, meaning that new healthcare providers cannot enter the program, and participating healthcare providers cannot choose to participate in any additional episode types. Accordingly, our ability to grow our revenue under the BPCI-A program going forward will require us to maximize savings rates. See “Changes to the BPCI program.”

Revenue in our Episodes of Care Services segment is also affected by the savings rate we are able to achieve. Under our contracts with our provider partners in our episodes of care programs, we receive a share of any savings generated by the relevant provider for each episode managed. The savings rate during each period therefore affects our revenue period to period. The savings rate during each period is affected by a variety of factors, including how quickly new customers are able to integrate with our technology and data analytics tools, how long provider partners have been participating in an episode program and their resulting level of familiarity with the program and the degree of implementation of care redesign. The savings rate also varies by the type of solution we offer, and as a result, the savings rate will fluctuate depending on the number of episodes we manage under one type of program, such as BPCI-A, versus another program, such as our Commercial Episodes of Care programs.

Our ability to increase program size and savings rate will depend on a number of factors, including the effectiveness of our advanced data analytics capabilities and operating platform, market adoption of our solutions and the adoption of care redesign and bundled payment models overall.June 30, 2022.

As a resultpart of COVID-19, CMS allowed for certain provider elections to change episodes being managed by us and also implemented other changes that have temporarily reduced program size in the near term, the impact of which has been partially offset by a higher savings rate achieved from certain underperforming episodes being dropped. See “COVID-19.”

DueCaravan Health acquisition, we assigned preliminary values to the natureassets acquired and the liabilities assumed based upon their fair values at the acquisition date. We acquired $93.9 million of the timingintangible assets, consisting primarily of reconciliations,customer relationships of $69.8 million (10-year useful life), acquired technology of $23.4 million (5-year useful life) and a tradename of $0.7 million (3-year useful life), which we measure program size and savings rate on an annual basis and not on a quarterly basis. Weighted average program size declinedalso expect will increase our amortization expense in 2020 asfuture periods. As a result of the COVID-19 implications described elsewhere. We would expect these limitations and restrictions to end laterCaravan Health acquisition, we also recorded $199.3 million in 2021 and therefore for our program size to return to pre-2020 levels ingoodwill, which represented the future.
Changes toamount by which the BPCI programpurchase price exceeded the fair value of the net assets acquired.

Revenue generated byPro forma results of operations related to this acquisition have not been presented as the acquisition did not meet the prescribed significance tests set forth in Regulation S-X requiring such disclosure. The financial results of Caravan Health have been included in our BPCI solutions represented approximately 15%Condensed Consolidated Financial Statements since the date of our total revenue and over 90% of our Episodes of Care Services segment revenue in the first quarter of 2021. Our revenue and profitability are affected by changesacquisition. Due to the BPCI program. Underabove factors, and in particular the increase in amortization expense, our BPCI-A contracts, we earn an administrative fee, which is
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based on the sizeresults of the relevant provider’s program, and also share in the savings or losses generated in conjunction with our provider partners as compared to BPCI-A’s benchmark episode priceoperations for a particular episode. Significant changesperiods subsequent to the BPCI-A program can leadacquisition are not directly comparable to a decline inour results of operations for the program size and/or savings rates we are ableperiods prior to achieve in conjunction with our provider partners under the program.acquisition date.

In September 2020, CMS announced changes to BPCI-A for 2021. These changes included an adjustment to the baseline period on which clinical episode prices are calculated, such that prices for 2021 will be calculated on the basis of historical experience that includes the first year of the BPCI-A program. As a result, benchmark episode prices could be lower than in prior years because BPCI-A care redesign and savings measures will be reflected in a portion of the benchmark period. In addition, CMS announced changes to the pricing methodology by which benchmark episode prices will be calculated, which will impact savings rate opportunities and we also believe may have impacted healthcare provider demand to take on certain episodes (and therefore affected program size). The impact of these changes is not yet known, as this information is only provided to us on the semi-annual reconciliations received from CMS. Further, when healthcare providers selected episodes for 2021 at the end of 2020, CMS required such selections to be made in groups of similar episodes, rather than individually. For example, a provider partner that previously only participated in hip replacement episodes is now also required to participate in knee and shoulder replacement episodes as well. This impacted certain provider partner demand for various episodes and correspondingly affected program size. We expect the 2020 bundle selections to ultimately result in a program size in-line with that of the 2019 program size. Moreover, the clinical episodes selected by provider partners for 2021 will also apply to 2022 and 2023, meaning the selections made are binding through 2023. Lastly, in 2021, CMS is excluding from the BPCI-A program all episodes where the individual is diagnosed with COVID-19 during the episode. In contrast, in 2020, such episodes could be included or excluded at the election of the provider partner. All of these changes could lead to a decline in the program size and/or savings rates we are able to achieve.
IHE volume

Finally,During the BPCI-A program is scheduledthree and six months ended June 30 2022, we completed and sent to expirecustomers approximately 0.62 million and 1.19 million IHEs, including vIHEs, respectively, compared to 0.49 million and 0.96 million IHEs in 2023the three and it is not clear in what form, if any, CMS will renew the program, although in September 2020 CMS announced that it anticipated launching a mandatory bundle payment model upon the expiration of the BPCI-A program. If CMS does not renew the program, or makes significant changes in any successor program, it may have an impact on the number of episodes we are able to manage, our savings rate and, consequently, revenue and profitability in future periods.six months ended June 30, 2021, respectively.

COVID-19 Update

Our operations in our Home & Community Services segment were significantly affected by the COVID-19 pandemic early in 2020. As a precautionary measureHowever, as the COVID-19 pandemic has evolved, we have been able to pivot and flex the volume of virtual IHEs (“vIHEs”) when necessary, in responseparticular when there are spikes in COVID-19 case rates as new variants emerge. For example, in the second quarter of 2022, the proportion of IHEs conducted as vIHEs increased as compared to the pandemic, we temporarily paused IHEs in March 2020. Shortly following the suspensionsecond quarter of in-person visits, we were able to expand our business model to perform vIHEs and made up for some of the lost IHE volume through vIHEs. We resumed in-home visits beginning in July 2020.

As2021, primarily as a result of the pandemic, many of our customers postponed IHEsspikes in COVID-19 cases due to the emergence of new variants. Because we are able to pivot to vIHEs as needed, we have not experienced a material impact to our results of operation due to the ongoing pandemic since the second halfquarter of 2020. Although we continued to see some increase in IHE member cancellation rates, overall we saw significant incremental IHE volume in the second half of 2020, particularly in the fourth quarter, as certain customers increased the volumes they placed with us and in-person IHEs represented the majority of those IHEs. In order to meet this volume growth, we onboarded additional providers into our network, which resulted in proportionally higher expenses. Additionally, in 2020, the COVID-19 pandemic and particularly the resulting shift to virtual evaluations (which was most evident in the second quarter), had an impact on the quarterly volume and results of operations for the Home & Community Services segment. The shift to virtual evaluations was due to a combination of the pause in in-person IHEs between March and July 2020, the decline in the acceptance rates for in-person IHEs and an increase in the member cancellation rates as individuals were less willing to receive IHEs in-person since the start of the pandemic. We also experienced some provider unwillingness to perform IHEs in-person during the pandemic.

In the first quarter of 2021 the vast majority of our evaluations were in-person IHEs, although we continued to perform vIHEs. Overall, IHE volume was more in line with historical trends and therefore, during the remainder of 2021, we expect seasonality trends in our Home & Community Services segment to be more consistent with historical trends. We and our customers, continue to monitor the changing situation with COVID-19 cases on a state-by-state basis, the ongoing federal vaccine roll out and changes in recommendations made by the Centers for Disease Control (“CDC”).
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Our Episodes of Care Services segment has also been affected byexperienced a more prolonged and significant negative impact related to the pandemic. At certain times during the pandemic, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, including certain acute and post-acute care services, be suspended or canceled to avoid non-essential patient exposure to medical environments and potential infection with the virus that causes COVID-19.COVID-19 virus. In addition, the temporary suspension or cancellation of services was put in place to focus limited resources and personnel capacity toward the prevention of, and care for patients with, COVID-19. This resulted in fewer elective procedures and a general reduction in individuals seeking medical care starting at the end of the firstthird quarter of 2020, CMS announced that all episodes with a COVID-19 diagnosis irrespective of the impact on the outcome of the episode, would be excluded from reconciliation, and this exclusion was extended into 2022, resulting in a negative impact to our program size. Further, beginning with the reconciliation results received from CMS during the second quarter of 2021, we saw a negative impact on our savings rate, primarily related to the under-diagnosis of co-morbidities and the use of higher cost next site of care facilities, both of which contributed to a substantially lower number of episodes being manageddrove costs higher and, in 2020.turn, lowered our savings rates. Due to the nature of the BPCI-A program, however, there is a significant lag between when we perform our servicesthe episodes are initiated and when CMS reconciles those services. As such, there was no immediate impact to our revenuesservices and we recognize revenue over a 13-month period encompassing both of those points in 2020.time. The specific impact of thosethe lower volumes on our program size and revenues was more evident laterhas resulted in 2020 as evidenced by our 2020 annuala decline in weighted average program size. We expect this will continue in 2021 as discussed below.

In the third quarter of 2020size and in response tosavings rates since the COVID-19 pandemic CMS announced that healthcare providers could either (i) continue in the BPCI-A program with no change or (ii) as an exception to previous rules of the program, healthcare providers could choose between the following two options for 2020:

•eliminate upside and downside risk by excluding all episodes from reconciliation; or
•exclude from reconciliation those episodes with a COVID-19 diagnosis during the episode.

Healthcare providers made their elections by September 25, 2020. The results of these elections made by the providers reduced the total number of episodes we managed during 2020 and will reduce the number of episodes we manage during 2021 and therefore reduce program size. While these provider elections have temporarily reduced program size in the near term, this impact is partially offset by a higher savings rate achieved due to a combination of improved performance by some of our partners as well as certain partners that were underperforming choosing to exclude some or all of their episodes from reconciliation in 2020. Subsequently, CMS announced that all episodes in 2021 with a COVID-19 diagnosis would be automatically excluded from reconciliation, which will further reduce program size for all of 2021. There can be no assurance that the positive impact on our savings rate in 2020 will continue in 2021 and beyond.

began. Because our administrative fee is calculated as a percentage of program size and we receive a portion of the savings achieved in management of
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Table of Contents
an episode, the decrease in episodes and related reduction in overall program size have had, and we expect will continue to have, a negative effect on our revenue. Some of these measures and challenges will likely continue for the duration of the COVID-19 pandemic, which is uncertain, and will harm the results of operations, liquidity and financial condition of our provider partners and our business. Lastly, our representatives may be prohibited from entering hospitals, skilled nursing facilities and other post-acute facilities as a result of the pandemic, which affects our ability to manage post-acute care and could have a material impact on the savings rate being generated by the program.

Due to the passage of time between when we perform our services and the confirmation of results and subsequent cash settlement by CMS, COVID-19 did notand the aforementioned negative impacts have an impact on thealso negatively impacted our semiannual cash we received from CMS during 2020 as payments we receivedflows related to pre-COVID19 performance. The cash received from CMS in the first quarter of 2021 reflected the initial impact of COVID-19 on our business as described above and we expect the cash receipt in the third quarter of 2021 to further reflect the impact of COVID-19.BPCI-A program.

While we believe that the negative impact of COVID-19 on our Episodes of Care Services segment have mostly subsided, weWe continue to monitor trends related to COVID-19, including the ongoing federal vaccine rollout,dynamic created by new variants, changes in CDC recommendations and their impactimpact on our business, results of operations and financial condition.
Investment in growth and technologycondition on both of our operating segments.

We continue
Equity-based compensation expense

On March 1, 2022, our Board of Directors approved amendments to investcertain outstanding equity award agreements, subject to performance-based vesting criteria. The equity awards were amended with an effective date of March 7, 2022, and included 3,572,469 outstanding LLC Incentive Units and 817,081 outstanding stock options. The amendments added an alternative two-year service-vesting condition to the performance-vesting criteria, which, through the effective date of the amendment, were considered not probable of occurring and, therefore, we had not previously recorded any expense related to these awards. The amended equity awards will now vest based on the satisfaction of the earlier to occur of 1) a two year service condition, with 50% vesting in sustaining significant growth, expanding our suiteeach of solutionsMarch 2023 and being ableMarch 2024 or 2) the achievement of the original performance vesting criteria. As a result of this amendment, which results in vesting that is considered probable of occurring, we began to support a larger customer base over time. Achievementrecord equity-based compensation expense for these amended equity awards in March 2022. The equity-based compensation expense related to these amended awards is based on the fair value as of our growth strategy will require additional investmentsthe effective date of the amended equity awards and will be recorded over the two year service period.

The total fair value on March 7, 2022, the amendment effective date, based on a Black-Scholes value of $8.49, was $6.9 million for the March 2022 amended stock options as described above, of which we recorded $1.1 million during the six months ended June 30, 2022. As a result of these amendments, there are no longer any stock options outstanding that are subject only to performance-based vesting conditions that are not probable of occurring.

The total fair value on the amendment date for the March 2022 amended LLC Incentive Units was based on the closing stock price on the amendment date of $14.19, resulting in total fair value of $50.7 million, of which we recorded $8.0 million in equity-based compensation expense during the six months ended June 30, 2022. Subsequent to these amendments, as of June 30, 2022, there are 1,700,259 LLC Incentive Units that remain outstanding that are subject only to performance-based vesting conditions that are not probable of occurring.

Additionally, in March 2022, our Board of Directors and the Compensation Committee approved an annual long-term incentive plan equity grant (the “2022 Annual LTIP Equity Grant”) to certain employees. A total of 2,677,979 restricted stock units and 4,059,520 stock options with an exercise price of $14.19 were granted as part of this 2022 Annual LTIP Equity Grant. All awards granted as part of the 2022 Annual LTIP Equity Grant vest equally over four years. Total grant date fair value related to the 2022 Annual LTIP Equity Grant was $68.8 million and will be recorded as equity-based compensation expense over the four year service period beginning in March 2022.

As a result of the March 2022 amendments to equity awards with performance-based vesting criteria and the 2022 Annual LTIP Equity Grant, our total equity-based compensation expense is expected to be significantly higher expensesin 2022 and higher cash outflows being incurred, particularly in developing new solutions,beyond as well as in technology and human resources, as we aimcompared to achieve this growth without diluting or decreasing thehistorical periods.

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level and qualityTable of services we provide. DevelopingContents
Adoption of new solutions can be time- and resource-intensive, and even once we launch a new solution, it can take a significant amount of time to contract with customers, provide them with our suite of technology and data analytics tools and have them actually begin generating revenue. This may increase our costs for one or more periods before we begin generating revenue from new solutions. In addition to developing new solutions, we are making significant investments in developing our existing solutions and increasing capacity. We will continue to invest in our technology platform and human resources to empower our providers and our customers to further improve results and optimize efficiencies. However, our investments may be more expensive or take longer to develop than we expect and may not result in operational efficiencies.
Cost of being a public companyaccounting pronouncement - Leases

To operateIn February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) which requires lessees to recognize leases on the balance sheet by recording a right-of-use asset and lease liability. We adopted this new guidance as a public company, we have beenof January 1, 2022 and applied the transition option, whereby prior comparative periods will not be requiredretrospectively presented in the consolidated financial statements. We elected the package of practical expedients not to continue to implement changes in certain aspects of our business and develop, manage and train management level and other employees to comply with ongoing public company requirements. We will also incur new expenses as a public company, including costsreassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for all asset classes. We made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes.See Note 8 Leases to our public reporting obligations,Condensed Consolidated Financial Statements covered under Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

Upon adoption on January 1, 2022, we recognized right-of-use assets and lease liabilities for operating leases of $23.0 million and $35.6 million, respectively. The difference between the right-of-use asset and lease liability primarily represents the net book value of deferred rent and tenant improvement allowances recognized as of December 31, 2021, which includes increased professional feeswas adjusted against the right-of-use asset upon adoption.

Non-controlling interest

The non-controlling interest ownership percentage changes as new shares of Class A common stock are issued and LLC units are exchanged for accounting, proxy statementsour Class A common stock. During the six months ended June 30, 2022, the change in the non-controlling interest percentage was primarily driven by the shares issued in connection with the Caravan Health acquisition. As of June 30, 2022, we held approximately 75.4% of Cure TopCo’s outstanding LLC Units and stockholder meetings, equity plan administration, stock exchange fees and transfer agent fees. In addition, wethe remaining LLC Units of Cure TopCo are party to the tax receivable agreement (the “TRA”) withheld by the Continuing Pre-IPO LLC Members, the Reorganization Parties, Optionholders (as defined in the TRA) of certain entities treated as corporations for U.S. tax purposes that hold LLC Units (individually, a “Blocker Company” and together, the “Blocker Companies”) at the time of the “Mergers”, holders of synthetic equity units and any future party to the TRA (collectively, the “TRA Parties”) and are required to make certain distributions to them in accordance with the terms of the Tax Receivable Agreement. See “—Liquidity and capital resources—Tax Receivable Agreement.”
Effects of the reorganization on our corporate structure

Signify Health was formed for the purpose of the IPO, which was effective in February 2021 and had no activities of its own prior to such date. We are a holding company and our sole material asset is a controlling ownership in Cure TopCo. All of our business is conducted through Cure TopCo and its consolidated subsidiaries and affiliates, and the financial results of Cure TopCo and its consolidated subsidiaries are included in our Condensed Consolidated Financial Statements.

Cure TopCo is currently taxed as a partnership for federal income tax purposes and, as a result, its members, including Signify Health, pay taxes with respect to their allocable share of its net taxable income. We expect that redemptions and exchanges of non-voting common units of Cure TopCo (the “LLC Units”) will result in increases in the tax basis in our share of the tangible and intangible assets of Cure TopCo that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that we would otherwise be required to pay in the future. The TRA requires us to pay to the TRA Parties 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize from these tax basis increases and other tax attributes discussed herein. Furthermore, payments under the TRA will give rise to additional tax benefits and therefore additional payments under the TRA.Members.
Components of our results of operations
Revenue

OurComponents of results of operations including revenue, is generated from contracts with our customers within our two operating segments, Home & Community Services and Episodes of Care Services, under contracts that contain various fee structures. Through our Home & Community Services segment, we offer IHEs, performed either within the patient’s home, virtually or at a healthcare provider facility primarily to Medicare Advantage health plans (and to some extent Medicaid). Additionally, we offer certain diagnostic screeningexpenses and other ancillary services and, throughexpense, net are described in our Signify Community solution, services to address healthcare concerns related to social determinants of health (“SDOH”). Through our Episodes of Care Services segment, we primarily provide services designed to improve the quality and efficiency of healthcare delivery by developing and managing episodic payment programs in partnership with healthcare providers primarily under the BPCI-A program with CMS.

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In our Home & Community Services segment, we primarily generate revenue through IHEs. Revenue2021 Annual Report on Form 10-K. Below is recognized when the IHEs are submitted to our customers on a daily basis. Submissionan update to the customer occurs after the IHEs are completed and coded, a process which may take one to several days after completioncomponents of the evaluation. We are paid a flat fee for each completed IHE regardlessresults of the member’s location or the outcome of an IHE. We earn a separate fee for any additional diagnostic screenings the health plan elects to provide for the relevant member. operations.
Revenue is recognized when the additional screening occurs.

We have entered into EAR agreements and a separate letter agreement (the “EAR Letter Agreement”) with one of our customers. Beginningcustomers in 2020, revenueour Home & Community Services segment. Revenue generated under the underlying customer contracts includes an estimated reduction in the transaction price for IHEs associated with the initial grant date fair value of the outstanding customer EARs.EAR agreements and EAR Letter Agreement. The total grant date fair value of the outstanding EAR agreements was $51.8 million and is being recorded against revenue over their respective performance periods, both of which end in December 2022. The grant date fair value of the EAR Letter Agreement was estimated to be $76.2 million and will be recorded againstas a reduction of revenue through December 2022.June 30, 2026, coinciding with the service period as follows: $6.3 million in 2022, $20.0 million in 2023, $20.0 million in 2024, $19.9 million in 2025 and $10.0 million in 2026. See “—Liquidity and capital resources—Customer Equity Appreciation Rights agreements.Agreements.”

In our Episodes
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Table of Care Services segment, we primarily generate revenue through episodes of care under the BPCI-A program. We participate as a “convener participant” under the BPCI-A program. As a convener participant, we hold a contract directly with CMS and are responsible for developing and monitoring a BPCI-A episode of care program in partnership with healthcare providers. We enterContents
Caravan Health enters into back-to-back contracts with provider partners interested in participating in BPCI-A episodecustomers to provide multiple services around the management of care programs through whichthe ACO model. These include, among others, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings from CMS. Caravan Health enters into arrangements with customers wherein we assistreceive a contracted percentage of each customer’s portion of shared savings if earned. We recognize shared savings revenue as performance obligations are satisfied over time, commensurate with compliance with CMS rules and program requirements and provide a suite of analytic, technology and post-acute management services. Under the BPCI-A program, we recognizerecurring ACO services provided to the revenue attributable to episodes reconciled during each six-month episode performance measurement periodcustomer over a 13-month performance obligation period that commences in the second or fourth quarter of each12-month calendar year depending on the relevant contract with our provider partners.period. The 13-month performance obligation period begins at the start of the relevant episodes of care and extends through the receipt or generation of the semiannual reconciliation for the relevant performance measurement period, as well as the provision and explanation of statements of performance to each of our customers. We are generally paid an administrative fee, which is paid out ofshared savings and also share in the savings or losses generated by our provider partners as compared to BPCI-A’s benchmark episode price for a particular episode. The transaction price is 100% variable, and therefore, we estimate thean amount which we expect to be entitled to receive for each episode performance measurement period over a 13-month12-month calendar year performance obligation period.

In makingorder to estimate this estimate, wevariable consideration, management initially uses estimates of historical performance of the ACOs. We consider inputs such as attributed patients, expenditures, benchmarks and inflation factors. We adjust our estimates at the overall program size, whichend of each reporting period to the extent new information indicates a change is defined bywarranted. We apply a constraint to the historic cost andvariable consideration estimate in circumstances where we believe the frequency of occurrence of defined episodes of care. Additionally, we estimate rates for shared savingsdata received is incomplete or losses by using data sources suchinconsistent, so as historical trend analysis together with indicative data ofnot to have the current volume of episodes.estimates result in a significant revenue reversal in future periods. Although our estimates are based on the information available to us at each reporting date, several factorsnew and material information may cause actual revenue earned to differ from the estimates recorded in each period. These include, among others, limited historical experience, as the current BPCI-A program only commencedHierarchical Conditional Category (“HCC”) coding information,quarterly reports from CMS, unexpected changes in the fourth quarter of 2018 and has been affected by the COVID-19 pandemic in 2020,attributed patients and other limitations of the program beyond our control. We receive final reconciliations from CMS and collect the cash related to shared savings earned annually in the third or fourth quarter of each year for the preceding calendar year.

Also withinThe remaining sources of Caravan Health revenue in our Episodes of Care Services segment we generate revenue through our Commercial Episodes of Care program. After we sign up payor customers to sponsor an episode program, weare recognized over time when, or as, the performance obligations are satisfied and are primarily based on a fixed fee or per member per month fee. Therefore, they do not begin to generate any revenue until we have helped them design the programs, signed up provider partners to participate in the programrequire significant estimates and initiated episodes. Revenues under our Commercial Episodes of Care program are also drivenassumptions by program size and savings rate. Completed episodes are retrospectively reconciled following semi-annual performance measurement periods and our entire administrative fee is at risk, meaning if a customer generates losses one year, we cannot recoup that through savings in a subsequent year.management.

See “—Critical accounting policies—Revenue recognition.”
Operating expenses

Operating expenses are composed of:

•Service expense. Service expense represents direct costs associated with generating revenue. These costs include fees paid to providers for performing IHEs, provider travel expenses and the total cost of payroll, related benefits and other personnel expenses for employees in roles that serve to provide direct revenue generating services to customers. Additionally, service expense also includes costs related to the use of certain professional service firms, member engagement expenses, coding expenses and certain other direct costs.
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•Selling, general and administrative expense (“SG&A”). SG&A includes the total cost of payroll, related benefits and other personnel expense for employees who do not have a direct role associated with revenue generation, including those involved with developing new service offerings. SG&A includes all general operating costs including, but not limited to, rent and occupancy costs, telecommunications costs, information technology infrastructure and operations costs, software licensing costs, advertising and marketing expenses, recruiting expenses, costs associated with developing new service offerings and expenses related to the use of certain subcontractors and professional services firms. We expect to incur significant additional legal, accounting and other expenses associated with being a public company, including, among others, costs associated with our compliance with the Sarbanes-Oxley Act and other regulatory requirements.
•Transaction-related expenses. Transaction-related expenses primarily consist of expenses incurred in connection with acquisitions and other corporate development such as mergers and acquisitions activity that did not proceed, strategic investments and similar activities, including consulting expenses, compensation expenses and other integration-type expenses. Additionally, expenses associated with the IPO are included in transaction-related expenses.
•Asset impairment. Asset impairment includes charges resulting from the impairment of long-lived assets when it is determined that the carrying value exceeds the estimated fair value of the asset.
•Depreciation and amortization. Depreciation expense includes depreciation of property and equipment, including leasehold improvements, computer equipment, furniture and fixtures and software. Amortization expense includes amortization of capitalized internal-use software and software development costs, customer relationships, acquired software and certain trade names.
Other expense, net

Other expense, net is composed of:

•Interest expense. Interest expense consists of accrued interest and related payments on our outstanding long-term debt and Revolving Credit Facility, as well as the amortization of debt issuance costs.
•Other (income) expense, net. Other (income) expense, net primarily consists of changes in fair value of the customer EARs as measured at the end of each period. Interest and dividends on cash and cash equivalents are also included in other (income) expense, net.

Income tax expense

Our business was historically operated through Cure TopCo, a limited liability company treated as a partnership for U.S. federal income tax purposes, which is generally not subject to U.S. federal or certain state income taxes. In connection with the Reorganization Transactions and the IPO, we acquired LLC Units in Cure TopCo. Accordingly, we are now subject to U.S. federal and state income tax with respect to our allocable share of the income of Cure TopCo.

Noncontrolling interest

In connection with the Reorganization Transactions, we were appointed as the sole managing member of Cure TopCo pursuant to the Amended LLC Agreement. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Cure TopCo and also have a substantial financial interest in Cure TopCo, we consolidate the financial results of Cure TopCo, and a portion of our net income (loss) is allocated to the noncontrolling interest to reflect the entitlement of the Continuing Pre-IPO LLC Members to a portion of Cure TopCo’s net income (loss). As of March 31, 2021, we hold approximately 74.5% of Cure TopCo’s outstanding LLC Units and the remaining LLC Units of Cure TopCo are held by the Continuing Pre-IPO LLC Members.


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Results of Operationsoperations for the three months ended March 31,June 30, 2022 and 2021 and 2020

The following is a discussion of our consolidated results of operations for the three months ended June 30, 2022 and 2021. A discussion of the results by each of our two operating segments, Home & Community Services and Episodes of Care Services, follows the discussion of our consolidated results.
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Table of Contents

The following table summarizes our results of operations for the periods presented:

Three months ended June 30,% Change
202220212022 v 2021
(in millions)
Revenue$246.2 $212.8 15.7 %
Operating expenses:
Service expense127.7 104.1 22.6 %
Selling, general and administrative expense84.4 64.9 30.0 %
Transaction-related expense1.7 1.0 61.1 %
Asset impairment519.9 — NM
Depreciation and amortization20.1 17.3 16.8 %
Total operating expenses753.8 187.3 302.5 %
(Loss) income from operations(507.6)25.5 NM
Interest expense4.6 6.5 (30.8)%
Loss on extinguishment of debt— 5.0 NM
Other expense (income)(27.4)14.3 (291.3)%
Other expense, net(22.8)25.8 (188.3)%
Loss before income taxes(484.8)(0.3)NM
Income tax expense (benefit)5.2 (0.2)NM
Net loss(490.0)(0.1)NM
Net loss attributable to non-controlling interest(119.5)(0.1)NM
Net loss attributable to Signify Health, Inc.$(370.5)$— NM

Revenue

Our total revenue was $246.2 million for the three months ended June 30, 2022, representing an increase of $33.4 million, or 15.7%, from $212.8 million for the three months ended June 30, 2021. This increase was primarily driven by a $32.2 million increase in revenue from our Home & Community Services segment as well as a $1.2 million increase in revenue from our Episodes of Care Services segment. See “—Segment results” below.

Operating expenses

Our total operating expenses were $753.8 million for the three months ended June 30, 2022, representing an increase of $566.5 million, or 302.5%, from $187.3 million for the three months ended June 30, 2021. This increase was driven by the following:

•Service expense - Our total service expense was $127.7 million for the three months ended June 30, 2022, representing an increase of $23.6 million, or 22.6%, from $104.1 million for the three months ended June 30, 2021. This increase was primarily driven by expenses related to our network of providers, which increased by $10.3 million, driven by the overall higher IHE volume, partially offset by a higher mix of vIHEs compared to in-person IHEs, which have a higher cost per evaluation. Compensation-related expenses increased by $8.0 million primarily driven by additional headcount including the incremental employees retained as part of the Caravan Health acquisition and higher benefits expense. Equity-based compensation expense increased by $0.7 million primarily due to additional equity grants and the
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amendment of awards with performance-based vesting to time-based vesting. Additionally, the following variable expenses increased during the three months ended June 30, 2022, primarily driven by overall higher IHE volume: $1.7 million in member outreach and other related expenses; $1.7 million in other variable costs; $0.8 million in the costs of providing other diagnostic and preventive services, including certain laboratory and testing fees; and $0.6 million in travel and entertainment. The impact of COVID-19 was less in 2022, resulting in a decrease of approximately $0.2 million in pandemic-related expenses during the first quarter of 2022 as compared to the first quarter of 2021, including lower costs related to COVID-19 tests for our providers and lower costs for personal protective equipment used by our providers while conducting IHEs.

•Selling, general and administrative (“SG&A”) expense - Our total SG&A expense was $84.4 million for the three months ended June 30, 2022, representing an increase of $19.5 million, or 30.0%, from $64.9 million for the three months ended June 30, 2021. This increase was primarily driven by equity-based compensation expense, which was higher by $10.9 million primarily due to additional equity grants and the amendment of awards with performance-based vesting to time-based vesting. Compensation-related expenses increased by $5.0 million due to additional headcount to support the overall growth in our business including the incremental employees retained as part of the Caravan Health acquisition and higher benefits costs. The remeasurement of contingent consideration increased $2.8 million in 2022 related to the potential earn out for Caravan Health, Other costs also increased, comprising $1.1 million in information technology-related expenses, including infrastructure and software costs, an increase of $1.1 million in employee travel and entertainment expenses as COVID-19 imposed travel restrictions eased, and $0.4 million in facilities-related expense. These increases were partially offset by a decrease of $1.2 million in other variable costs and $0.6 million in professional fees.

•Transaction-related expenses - Our total transaction-related expenses were $1.7 million for the three months ended June 30, 2022, representing a decrease of $0.7 million, or 61.1%, from $1.0 million for the three months ended June 30, 2021. In 2022, the transaction-related expenses primarily included certain integration-related expenses, including compensation expenses and consulting and other professional services expenses, following the Caravan Health acquisition. In 2021, the transaction-related expenses consisted primarily of consulting and other professional services expenses, incurred in connection with our IPO and general corporate development activities, including potential acquisitions that did not proceed.

•Asset impairment - Our total asset impairment was $519.9 million for the three months ended June 30, 2022. We did not record an asset impairment for the three months ended June 30, 2021. The asset impairment loss in 2022 was related to our decision to wind down our Episodes of Care Services segment as the carrying value of assets exceeded the estimated fair value as of June 30, 2022. The asset impairment loss includes a goodwill impairment of $426.7 million, a $66.7 million impairment of customer relationships and $26.5 million impairment of acquired and capitalized software.

•Depreciation and amortization - Our total depreciation and amortization expense was $20.1 million for the three months ended June 30, 2022, representing an increase of $2.8 million, or 16.8%, from $17.3 million for the three months ended June 30, 2021. This increase in depreciation and amortization expense was primarily driven by a net increase in amortization expense of $2.7 million, primarily due to additional capital expenditures related to internally-developed software over the past year and the $93.9 million in intangible assets acquired in connection with the Caravan Health acquisition in March 31,2022, partially offset by certain intangible assets becoming fully amortized in 2021. Additionally, there was an increase in depreciation expense of $0.2 million, primarily driven by additional capital expenditures over the past year.

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Other expense, net

Other expense, net was $22.8 million expense for the three months ended June 30, 2022, representing a decrease of $48.6 million from $25.8 million in income for the three months ended June 30, 2021. This decrease was primarily driven by the remeasurement of the fair value of the outstanding customer EAR liabilities, which resulted in an unrealized gain of $26.9 million for the three months ended June 30, 2022, representing a decrease of $41.4 million from expense of $14.5 million for the three months ended June 30, 2021. In 2021, we recorded a loss on extinguishment of debt of $5.0 million in connection with the June 2021 refinancing of our credit agreement. Interest expense also decreased by $1.9 million primarily driven by the lower outstanding principal balance following our June 2021 refinancing of the 2021 Credit Agreement partially offset by higher interest rates.

Income tax expense (benefit)
Income tax expense was $5.2 million for the three months ended June 30, 2022, representing an increase of $5.4 million from $0.2 million income tax benefit for the three months ended June 30, 2021. The effective tax rate for the three months ended June 30, 2022 was (1.1)% compared to 52.7% for the three months ended June 30, 2021. The effective tax rate in 2022 is lower than the statutory federal and 2020.state income tax rate of approximately 25% primarily due to nondeductible goodwill impairment, impact of non-controlling interest, and change in valuation allowance.

Segment results

We evaluate the performance of each of our two operating segments based on segment revenue and segment adjusted EBITDA. Service expense for each segment is based on direct expenses associated with the revenue generating activities of each segment. We allocate SG&A expenses to each segment primarily based on the relative proportion of direct employees.

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The following table summarizes our segment revenue, segment adjusted EBITDA and the percentage of total consolidated revenue and consolidated adjusted EBITDA, respectively, for the periods presented:

Three months ended June 30,% Change
2022% of Total2021% of Total2022 v 2021
(in millions)
Revenue
Home & Community Services
Evaluations$207.0 84.1 %$173.2 81.4 %19.5 %
Other0.6 0.2 %2.2 1.0 %(73.7)%
Total Home & Community Services revenue207.6 84.3 %175.4 82.4 %18.3 %
Episodes of Care Services
Episodes19.8 8.0 %35.3 16.6 %(43.9)%
Caravan Health16.6 6.7 %— — %100.0 %
Other2.2 1.0 %2.1 1.0 %5.8 %
Total Episodes of Care Services revenue38.6 15.7 %37.4 17.6 %3.2 %
Segment Adjusted EBITDA
Home & Community Services65.2 104.2 %55.8 102.1 %17.1 %
Episodes of Care Services(2.6)(4.2)%(1.2)(2.1)%129.6 %

Home & Community Services revenue was $207.6 million for the three months ended June 30, 2022, representing an increase of $32.2 million, or 18.3%, from $175.4 million for the three months ended June 30, 2021. This increase was primarily driven by Evaluations revenue, which increased by $33.8 million. The higher Evaluations revenue was driven by increased IHE volume partially offset by a higher proportion of IHEs conducted as vIHEs, which are performed at a lower price per evaluation compared to in-person IHEs. There were more vIHEs performed in the early part of the second quarter of 2022 as a result of regional spikes in COVID-19 cases due to the emergence of new variants. Evaluations revenue included a reduction associated with the grant date fair value of the outstanding customer EARs and EAR Letter Agreement of $6.5 million and $4.9 million during the three months ended June 30, 2022 and 2021, respectively. Other revenue decreased by $1.6 million, primarily due to a decrease in revenue from our biopharmaceutical services which we exited and standalone sales of our social determinants of health product.

Episodes of Care Services revenue was $38.6 million for the three months ended June 30, 2022, representing an increase of $1.2 million, or 3.2%, from $37.4 million for the three months ended June 30, 2021. This increase was primarily driven by the Caravan Health acquisition, which contributed $16.6 million in revenue for the three months ended June 30, 2022. This increase was partially offset by a decrease of $15.5 million in Episodes revenue due to the adverse effects of COVID-19 on program size and savings rate, including lower healthcare utilization, the exclusion of episodes of care with a COVID-19 diagnosis and the impact of the patient case mix adjustment and inpatient rehabilitation center utilization on savings rate. Other revenue increased $0.1 million in 2022 primarily driven by higher membership in our complex care management services product offering.

Home & Community Services Adjusted EBITDA was $65.2 million for the three months ended June 30, 2022, representing an increase of $9.4 million, or 17.1%, from $55.8 million for the three months ended June 30, 2021. This increase was primarily driven by the increase in revenue described above partially offset by higher
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operating expenses as a result of the variable costs associated with increased volume and the investments to support our growth and technology.

Episodes of Care Services Adjusted EBITDA was a loss of $2.6 million for the three months ended June 30, 2022, representing a decrease of $1.4 million, or 129.6%, from a loss of $1.2 million for the three months ended June 30, 2021. This increase in the loss was primarily driven by the lower Episodes revenue described above partially offset by the contribution from the Caravan Health acquisition.
Results of operations for the six months ended June 30, 2022 and 2021

The following is a discussion of our consolidated results of operations for the six months ended June 30, 2022 and 2021. A discussion of the results by each of our two operating segments, Home & Community Services and Episodes of Care Services, follows the discussion of our consolidated results.

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:periods presented:

Three months ended March 31,% ChangeSix months ended June 30,% Change
202120202021 v. 2020202220212022 v 2021
(in millions)(in millions)
RevenueRevenue$180.0 $131.7 36.7 %Revenue462.7 392.8 17.8 %
Operating expenses:Operating expenses:Operating expenses:
Service expenseService expense98.567.346.3 %Service expense242.2 202.6 19.5 %
Selling, general and administrative expenseSelling, general and administrative expense57.351.112.1 %Selling, general and administrative expense154.7 122.2 26.7 %
Transaction-related expenseTransaction-related expense5.62.4130.9 %Transaction-related expense4.9 6.6 (26.8)%
Asset impairmentAsset impairment519.9 — NM
Depreciation and amortizationDepreciation and amortization16.714.515.6 %Depreciation and amortization38.1 34.0 12.2 %
Total operating expensesTotal operating expenses178.1135.331.6 %Total operating expenses959.8 365.4 162.7 %
Income (loss) from operations1.9 (3.6)(151.6)%
(Loss) income from operations(Loss) income from operations(497.1)27.4 NM
Interest expenseInterest expense6.85.229.6 %Interest expense8.6 13.3 (35.9)%
Other expense (income), net56.7— NM
Loss on extinguishment of debtLoss on extinguishment of debt— 5.0 NM
Other expense (income)Other expense (income)1.4 71.0 (98.0)%
Other expense, netOther expense, net63.55.2NMOther expense, net10.0 89.3 (88.8)%
Loss before income taxesLoss before income taxes(61.6)(8.8)594.5 %Loss before income taxes(507.1)(61.9)NM
Income tax expense(9.9)0.1NM
Income tax benefitIncome tax benefit(0.8)(10.1)(91.6)%
Net lossNet loss(51.7)(8.9)478.0 %Net loss$(506.3)$(51.8)NM
Net loss attributable to pre-Reorganization periodNet loss attributable to pre-Reorganization period(17.2)— NMNet loss attributable to pre-Reorganization period— (17.2)NM
Net loss attributable to non-controlling interestNet loss attributable to non-controlling interest(11.3)— NMNet loss attributable to non-controlling interest(124.9)(11.4)NM
Net loss attributable to Signify Health, Inc.Net loss attributable to Signify Health, Inc.(23.2)— NMNet loss attributable to Signify Health, Inc.$(381.4)$(23.2)NM

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Revenue

Our total revenue was $180.0$462.7 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $48.3$69.9 million, or 36.7%17.8%, from $131.7$392.8 million for the threesix months ended March 31, 2020.June 30, 2021. This increase was primarily driven by a $49.3$66.7 million increase in revenue from our Home & Community Services segment partially offset byas well as a $1.0$3.2 million decreaseincrease in revenue from our Episodes of Care Services segment. See “Segment“—Segment results” below.

Operating expenses

Our total operating expenses were $178.1$959.8 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $42.8$594.4 million, or 31.6%162.7%, from $135.3$365.4 million for the threesix months ended March 31, 2020.June 30, 2021. This increase was driven by the following:

•Service expense—expense - Our total service expense was $98.5$242.2 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $31.2 million,$39.6 million, or 46.3%19.5%, from $67.3$202.6 million for the threesix months ended March 31, 2020.June 30, 2021. This increase was primarily driven by expenses related to our network of providers, which increased by $15.1$19.7 million as compared to the six months ended June 30, 2021, driven by the overall higher IHE volume partially offset by theas well as a higher mix of in-person IHEs compared to vIHEs, performed during the quarter, which have a lower cost per evaluation than in-person IHEs.evaluation. Compensation-related
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expenses increased by $10.2$14.7 million primarily driven by additional headcount including the incremental employees retained as part of the Caravan Health acquisition and incentive payhigher benefits expense. Equity-based compensation increased $0.4 million primarily due to supportadditional equity grants and the overall current and future growth in both segments.amendment of awards with performance-based vesting to time-based vesting. Additionally, the following expenses increased during the threesix months ended March 31, 2021June 30, 2022, primarily driven by the overall higher IHE volume: $2.3 million in other variable costs; $1.6 million in the costs of providing other ancillarydiagnostic and preventive services, including certain laboratory and testing fees, increased by $2.9 million;fees; $1.2 million in member outreach services and other related expenses, increased by approximately $2.2 million; and other variable costs increased by $0.5 million.$1.0 million in travel related costs. The impact of COVID-19 also resultedwas less in 2022, resulting in a decrease of approximately $0.9$1.3 million in one-time costs,pandemic-related expenses during 2022 as compared to 2021, including lower costs related to COVID-19 tests for our providers and incrementallower costs for personal protective equipment used by our providers while conducting IHEs during the pandemic, which were partially offset by a decrease in travel and entertainment costs for both segments of $0.6 million resulting from continued COVID-19 imposed travel restrictions.IHEs.

•Selling, general and administrative expense—(“SG&A”) expense - Our total SG&A expense was $57.3$154.7 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $6.2$32.5 million, or 12.1%26.7%, from $51.1$122.2 million for the threesix months ended March 31, 2020June 30, 2021. This increase was primarily driven by compensation-related expenses,equity-based compensation which increased $13.9 million primarily due to additional equity grants and the amendment of awards with performance-based vesting to time-based vesting. Compensation-related expenses increased by $5.8$9.2 million due to additional headcount to support the overall growth in our business including the incremental employees retained as part of the Caravan Health acquisition and increased incentive compensation.higher benefits costs. Other costs also increased, primarily to support the growthincluding an increase of $2.8 million in our business, including: professional and consulting fees, which increased by $1.5 million, information technology-related expenses, including infrastructure and software costs, an increase of $0.6$2.2 million in employee travel and facilities-relatedentertainment expenses including rent expense under our operating leases, whichas COVID-19 imposed travel restrictions eased, an increase of $2.0 million in other variable costs and an increase of $0.4 million in facilities related expenses. The remeasurement of contingent consideration increased by $0.3 million.$2.8 million in 2022 related to the potential earnout for Caravan Health. These increases were partially offset by a $3.5decrease of $0.8 million decrease in stock-based compensation expense due to immediate vesting upon certain grants in 2020 partially offset by additional grants made since the first quarter of 2020, a $1.6 million decrease in employee travel and entertainment driven by COVID-19 related travel restrictions and a $0.3 million decrease in other variable costs.professional services fees.

•Transaction-related expenses—expenses - Our total transaction-related expenses were $5.6$4.9 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increasea decrease of $3.2$1.7 million, or 130.9%26.8%, from $2.4$6.6 million for the threesix months ended March 31, 2020.June 30, 2021. In 2022, the transaction-related expenses consisted primarily of consulting and other professional services incurred in connection with general corporate development activities, including the Caravan Health acquisition. In addition, transaction-related expenses in 2022 included certain
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integration-related expenses, including compensation expenses and consulting and other professional services expenses, following the Caravan Health acquisition. In 2021, the transaction-related expenses consisted primarily of costsconsulting and other professional services, as well as compensation expenses, incurred in connection with our IPO and potential acquisitions and othergeneral corporate development activities, including potential acquisitions that did not proceed. These transaction-related expenses consisted primarily of consulting and compensation expenses. In 2020,

•Asset impairment - Our total asset impairment was $519.9 million for the transaction-related expensessix months ended June 30, 2022. We did not record an asset impairment for the six months ended June 30, 2021. The asset impairment loss in 2022 was related to our Episodes of Care Services segment as the Remedy Partners Combination atcarrying value of the endassets exceeded the estimated fair value as of 2019June 30, 2022. The asset impairment loss included a goodwill impairment of $426.7 million, a $66.7 million impairment of customer relationships and potential acquisitions$26.5 million impairment of acquired and other corporate development activities that did not proceed. These transaction-related expenses consisted primarily of consulting, compensation and integration-type expenses.capitalized software.

•Depreciation and amortization—amortization - Our total depreciation and amortization expense was $16.7$38.1 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $2.2$4.1 million, or 15.6%12.2%, from $14.5$34.0 million for the threesix months ended March 31, 2020.June 30, 2021. This increase in depreciation and amortization expense was primarily driven by a net increase in amortization expense of $1.6$3.8 million, primarily due to additional capital expenditures related to internally-developed software over the past year and the $93.9 million in intangible assets acquired in connection with the Caravan Health acquisition in March 2022, partially offset by certain intangible assets becoming fully amortized in 2021. Additionally, there was an increase in depreciation expense of $0.6$0.3 million, primarily driven by additional capital expenditures over the past year.

Other expense, net

Other expense, net was $63.5$10.0 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increasea decrease of $58.3$79.3 million from $5.2$89.3 million for the threesix months ended March 31, 2020.June 30, 2021. This increasedecrease was primarily driven by an increase in other expense (income), net of $56.7 million as well as an increase in interest expense of $1.6 million. The increase in other expense (income), net was driven by $56.7 million in expense related to the quarterly remeasurement of the fair value of the outstanding customer EAR liabilities, which resulted in expense of $2.0 million for six months ended June 30, 2022, representing a decrease of $69.3 million from expense of $71.3 million for the six months ended June 30, 2021. The remeasurementIn 2021, we recorded a loss on extinguishment of debt of $5.0 million in connection with the June 2021 refinancing of the fair value of the outstanding customer EAR liabilities in 2020 was not significant.2021 Credit Agreement. Interest expense increasedalso decreased by $1.6$4.7 million primarily driven by the additional indebtedness associated withlower outstanding principal balance following our June 2021 refinancing of the $140.0 million pursuant to the fourth amendment to the existing2021 Credit Agreement for $125 million andpartially offset by the fifth amendment to the existing Credit Agreement for $15.0 million, whichhigher interest rates. These decreases were partially offset by quarterly principal payments of long-term debt under our credit agreement entered into$0.3 million increase in interest income earned on December 21, 2017, as amended (the “Credit Agreement”)higher excess cash balances and rising interest rates during the three months ended June 30, 2022 .

Income tax expense (benefit) expense
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Income tax benefit was $9.9$(0.8) million for the threesix months ended March 31, 2021,June 30, 2022, representing a decrease of $10.0$9.2 million from $0.1 million inan income tax expensebenefit of $(10.1) million for the threesix months ended March 31, 2020. As a result of the Reorganization Transactions, we are subject to corporate income taxes on our share of the total net loss.

Loss attributable to the pre-Reorganization period

Loss attributable to the pre-Reorganization period relates to the loss incurredJune 30, 2021. The effective tax rate for the period from January 1, 2021 through February 12,six months ended June 30, 2022 was 0.2% compared to 16.3% for the six months ended June 30, 2021.

Loss attributable The effective tax rate in 2022 is lower than the statutory federal and state income tax rate of approximately 25% primarily due to nondeductible goodwill impairment, impact of non-controlling interest,

Loss attributable to non-controlling interest for the three months ended March 31, 2021 relates to the portion of net loss post-Reorganization Transactions allocable to the Continuing pre-IPO holders and change in Cure TopCo, LLC. Non-controlling interest does not apply to the three months ended March 31, 2020 as that was prior to the Reorganization Transactions.valuation allowance.

Segment results

We evaluate the performance of each of our two operating segments based on segment revenue and segment adjusted EBITDA. Service expense for each segment is based on direct expenses associated with the revenue generating activities of each segment. We allocate SG&A expenses to each segment primarily based on the relative proportion of direct employees.
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The following table summarizes our segment revenue, and segment adjusted EBITDA and the percentage of total consolidated revenue and consolidated adjusted EBITDA, respectively, for the three months ended March 31, 2021 and 2020:periods presented:

Three months ended March 31,% ChangeSix months ended June 30,% Change
2021% of Total2020% of Total2021 v 20202022% of Total2021% of Total2022 v 2021
(in millions)(in millions)
RevenueRevenueRevenue
Home & Community ServicesHome & Community ServicesHome & Community Services
EvaluationsEvaluations$150.3 83.5 %$101.1 76.8 %48.7 %Evaluations$393.2 85.0 %$323.5 82.4 %21.5 %
OtherOther2.1 1.2 %2.0 1.5 %8.1 %Other1.3 0.3 %4.3 1.1 %(70.3)%
Total Home & Community Services revenueTotal Home & Community Services revenue152.4 84.7 %103.1 78.3 %47.9 %Total Home & Community Services revenue394.5 85.3 %327.8 83.5 %20.3 %
Episodes of Care ServicesEpisodes of Care ServicesEpisodes of Care Services
EpisodesEpisodes25.4 14.1 %25.7 19.4 %(1.2)%Episodes43.9 9.5 %60.7 15.4 %(27.7)%
Caravan HealthCaravan Health19.8 4.3 %— — %100.0 %
OtherOther2.2 1.2 %2.9 2.3 %(23.7)%Other4.5 1.0 %4.3 1.1 %3.9 %
Total Episodes of Care Services revenueTotal Episodes of Care Services revenue27.6 15.3 %28.6 21.7 %(3.4)%Total Episodes of Care Services revenue68.2 14.7 %65.0 16.5 %4.9 %
Segment Adjusted EBITDASegment Adjusted EBITDASegment Adjusted EBITDA
Home & Community ServicesHome & Community Services41.1 119.4 %24.6 112.3 %67.7 %Home & Community Services121.1 112.6 %96.9108.8 %25.0 %
Episodes of Care ServicesEpisodes of Care Services(6.7)(19.4)%(2.7)(12.3)%(148.8)%Episodes of Care Services(13.5)(12.6)%(7.9)(8.8)%NM

Home & Community Services revenue was $152.4$394.5 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $49.3$66.7 million, or 47.9%20.3%, from $103.1$327.8 million for the threesix months ended March 31, 2020.June 30, 2021. This increase was primarily driven by Evaluations revenue, which increased by $49.2$69.7 million. The higher Evaluations revenue was driven by increased IHE volume partially offset byand a reduction in the mixproportion of IHEs conducted as vIHEs, which only started to beare performed in the second quarter of 2020 and haveat a lower price per evaluation thancompared to in-person IHEs. Evaluations revenue included a reduction associated with the grant date fair value of the outstanding customer EARs and EAR Letter Agreement of $4.9$13.0 million and $1.3$9.8 million during
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the threesix months ended March 31,June 30, 2022 and 2021, and 2020, respectively. Other revenue increaseddecreased by $0.1million,$3.0 million, primarily due to growtha decrease in revenue from our biopharmabiopharmaceutical services which we exited and standalone sales of our social determinants of health product.

Episodes of Care Services revenue was $27.6$68.2 million for the threesix months ended March 31, 2021,June 30, 2022, representing a decreasean increase of $1.0$3.2 million, or 3.4%4.9%, from $28.6$65.0 million for threethe six months ended March 31, 2020.June 30, 2021. This decreaseincrease was primarily driven by the Caravan Health acquisition, which contributed $19.8 million in revenue for the six months ended June 30, 2022. This increase was partially offset by a decrease of $0.7$16.8 million in Episodes revenue due to the adverse effects of COVID-19 on program size and savings rate, including lower healthcare utilization, the exclusion of episodes of care with a COVID-19 diagnosis and the impact of the patient case mix adjustment and inpatient rehabilitation center utilization on savings rate. Other revenue resulting from a decreaseincreased $0.2 million in 2022 primarily driven by higher membership in our complex care management services product offering and a decrease of $0.3 million in Episodes revenue due to a decrease in program size driven by the impact of COVID-19 which was partially offset by an improved savings rate.offering.

Home & Community Services Adjusted EBITDA was $41.1$121.1 million for the threesix months ended March 31, 2021,June 30, 2022, representing an increase of $16.5$24.2 million, or 67.7%25.0%, from $24.6$96.9 million for the threesix months ended March 31, 2020.June 30, 2021. This increase was primarily driven by the increase in revenue described above partially offset by the impact of COVID-19, including continuing to perform vIHEs, which have a lower price per evaluation than in-person IHEs and higher operating expenses as a result of the variable costs associated with increased volume and the investments to support our growth and technology.
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Episodes of Care Services Adjusted EBITDA was negative $6.7a loss of $13.5 million for the threesix months ended March 31, 2021,June 30, 2022, representing a decreasean increase in loss of $4.0$5.6 million, from negative $2.7a loss of $7.9 million for the threesix months ended March 31, 2020.June 30, 2021. This decreaseincrease in the loss was primarily driven by higher operating expenses as a result of the investments to support our growth and technology, the decrease in Otherlower Episodes revenue and the impact of COVID-19 related program size reductionsdescribed above partially offset by improved savings rate.the contribution from the Caravan Health acquisition.
Liquidity and capital resources

Liquidity describes our ability to generate sufficient cash flows to meet the cash requirements of our business operations, including working capital needs to meet operating expenses, debt service, acquisitions when pursued and other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and their sufficiency to fund our operating and investing activities.

Our primary sources of liquidity are proceeds from our IPO, our existing cash and cash equivalents, cash provided by operating activities and borrowings under our 2021 Credit Agreement.Agreement, including borrowing capacity under our Revolving Facility (as defined below). As of March 31, 2021,June 30, 2022, we had unrestricted cash and cash equivalents of $756.5$439.4 million. Our total indebtedness was $411.4$347.3 million as of March 31, 2021. June 30, 2022.

In connectionJune 2021, we entered into a credit agreement with a secured lender syndicate (the “2021 Credit Agreement”). The 2021 Credit Agreement includes a term loan of $350.0 million (the “2021 Term Loan”) and a revolving credit facility (the “Revolving Facility”) with a $185.0 million borrowing capacity. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation —Liquidity and capital resources —Indebtedness” in our 2021 Annual Report on Form 10-K. As of June 30, 2022, we had available borrowing capacity under the Revolving Facility of $172.8 million, as the borrowing capacity is reduced by outstanding letters of credit of $12.2 million. In July 2022, S&P upgraded our corporate credit rating, which in accordance with the IPO, in February 2021, we received net proceedsterms of $609.7 million. Based onthe 2021 Credit Agreement, will reduce our current expectations, we believe that our primary sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments for at least the next 12 months.applicable interest rate by 25 basis points, effective July 2022.

Our principal liquidity needs have beenare working capital and general corporate needs,expenses, debt service, capital expenditures, obligations under the Tax Receivable Agreement, income taxes, acquisitions and acquisitionsother investments to help achieve our growth strategy. In March 2022, we acquired Caravan Health, using approximately $189.6 million in cash, net of the cash acquired from Caravan Health. In addition, we issued approximately $60.0 million of our Class A common stock, comprised of 4,726,134 shares at $12.5993 per share, which represented the volume-weighted average price per share of our common stock for the five trading days ending three business days prior to March 1, 2022. Under the terms of the merger agreement, there could be a contingent payment made to the sellers of Caravan Health in 2023 of up to $50 million if certain milestones are achieved.

Our capital expenditures for property and equipment to support growth in the business were $0.7$3.8 million and $6.2$1.9 million for the threesix months ended March 31,June 30, 2022 and 2021, and 2020, respectively. The higher capital expenditures during 2020 were driven by an expansion at one of our office locations to support our growth. In addition to these historical liquidity needs, we expect our future liquidity needs will also be comprised of cash to (i) provide capital to facilitate the organic and inorganic growth of the business, (ii) make payments under our TRA and (iii) pay income taxes.

On July 7, 2022, our Board of Directors approved a restructuring plan to wind down our Episodes of Care Services segment. See “Recent Developments in 2022 and Factors Affecting Our Results of Operations —Episodes of Care Services Restructuring.” We currently expect to incur restructuring charges in the range of $25 million to $35 million primarily comprising severance and related employee costs to be recorded primarily in the second half of 2022. We may also incur additional restructuring costs comprising contract termination and facility closure costs, the amount and timing of which cannot be estimated at this time. We expect the majority of the restructuring plan and the cash expenditures associated with these actions to be completed in 2022.

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Our liquidity may fluctuatehas historically fluctuated on a quarterly basis due to our agreements with CMS under the BPCI-A program.program and will be further impacted due to our planned exit of the BPCI-A program and wind down of our Episodes of Care Services business. See “—Recent Developments in 2022 and Factors Affecting Our Results of Operations —Episodes of Care Services Restructuring.” Cash receipts generated under these contracts, which represents the majority of revenue in our Episodes of Care Services segment, are subject to a semiannual reconciliation cycle, which occurshistorically occurred in the second and fourth quarters of each year. As a result, we typically receive cashCash receipts under these contracts were typically received in the quarter subsequent to the receipt of the reconciliation, or during the first and third quarters of each year, which canhas and will continue to cause our liquidity position to fluctuate from quarter to quarter.quarter until our exit is complete when these will no longer be sources of cash. Due to our dispute of the pricing adjustment in the semiannual reconciliation received from CMS during the second quarter 2022, the cash we typically would have received in the third quarter 2022 will be delayed until CMS issues a resolution and final reconciliation. Further, if we are not successful in our dispute of the reconciliation results initially received in June 2022 from CMS, we expect our cash receipts for the remaining semi-annual reconciliation periods could be negatively impacted, which would negatively impact our liquidity. See “—Recent Developments in 2022 and Factors Affecting Our Results of Operations —BPCI-A Reconciliation”.

During 2020,In addition, Caravan Health’s participation in the COVID-19 pandemic ledCMS MSSP ACO program will also result in fluctuations in liquidity from period to period, as this is a deviation fromcalendar year program, with annual shared savings reconciled and distributed approximately nine months after the calendar year program ends. For example, we would expect shared savings receipts in the third or fourth quarter of 2022 related to the 2021 ACO plan year.

Our Home & Community Services segment generally experiences seasonality patterns in IHE volume as described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors affecting our results of operations” in our 2021 Annual Report on Form 10-K. We did experience a higher IHE volume during the second quarter of 2022 compared to the first quarter 2022 and expect a historical seasonality trend we generally experienceto continue to occur during 2022 with higher second half IHE volume, thus creating a seasonality effect on liquidity. Additionally, liquidity in our Home & Community Services segment whereby the fourth quarter volume and revenue are generally lower than the other quarters. As a result and due to the shift to vIHEswas temporarily impacted by delayed collections during our temporary suspension of IHEs in March 2020, our liquidity trends were negatively impacted during certain periods in 2020. In the first quarter of 2021,2022 from certain clients where we are experiencing significant expansion. We experienced improved collections during the vast majoritysecond quarter of our evaluations were performed on an in-home basis, although we continued2022 compared to perform vIHEs as an ongoing product offering. Additionally, the overall IHE volume in the first quarter was more in line with historical trends inof 2022 as we and our clients resolved some of the Home & Community Services segment, and thereforetemporary delays, although we currently anticipate 2021are still experiencing collection delays compared to the end of 2021.
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liquidity to be more consistent with historical seasonality trends. In our Episodes of Care Services segment, the lower number of episodes managed in 2020 has not yet had an impact on our liquidity becauseongoing negative effects of the timing ofCOVID-19 pandemic and CMS’ response to the pandemic, have impacted the semiannual reconciliations we receive and relatedthe subsequent cash receipts from CMS under the BPCI-A program.since late 2020. We expect to seereceive lower cash payments from CMS for reconciliations received in 2022 as compared to the reconciliations received prior to the pandemic. See “—Recent Developments in 2022 and Factors Affecting our Results of Operations —COVID-19 Update.” Additionally, in 2021, CMS announced a change to the period in which they will pay funds related to expirations. This change resulted in a delayed payment for one period, which had a temporary adverse impact on our liquidity of the lower number of episodes managed reflectedcash received in the first quarter of 2022 following the receipt of our semiannual reconciliation during the fourth quarter of 2021. Further, as discussed in “—Recent Developments in 2022 and Factors Affecting our Results of Operations—BPCI-A Reconciliation” above, the semiannual reconciliation initially received in the second quarter of 2022 was not deemed final as we have disputed the pricing calculation. Accordingly, the cash paymentreceipts, which we receive from CMShistorically would have received in the third quarter, of 2021.will be delayed until CMS responds to our dispute and issues a final reconciliation.

In the first quarter of 2022, we announced we are developing a technology center in Galway, Ireland where we intend to employ software engineers and other employees to support our operations in the United States. This will be our first international expansion, which will require capital funding and expose us to currency risk.

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We believe that our cash flow from operations, availabilitycapacity under our Credit AgreementRevolving Facility and available cash and cash equivalents on hand will be sufficient to meet our liquidity needs for at least the next 12 months. We anticipate that to the extent that we require additional liquidity, it will be funded through the incurrence of additional indebtedness, the issuance of additional equity, or a combination thereof. We cannot assure you that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control. See “Risk“—Item 1A. Risk factors.” Accordingly, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell or issue additional equity to finance such acquisitions, which could possibly result in additional expenses or dilution.
Comparative cash flows

The following table sets forth our cash flows for the periods indicated:

Three months ended March 31,
20212020
(in millions)
Net cash provided by operating activities$86.7 $4.2 
Net cash provided by (used in) investing activities(6.4)(11.2)
Net cash (used in) provided by financing activities603.6 76.2 
Net increase in cash, cash equivalents and restricted cash683.9 69.2 
Cash, cash equivalents and restricted cash - beginning of year77.0 50.2 
Cash, cash equivalents and restricted cash - end of period$760.9 $119.4 
Six months ended June 30,
20222021
(in millions)
Net cash (used in) / provided by operating activities/$(35.5)$66.0 
Net cash used in investing activities(208.0)(13.9)
Net cash provided by financing activities1.0 509.9 
Net (decrease) / increase in cash, cash equivalents and restricted cash(242.5)562.0 
Cash, cash equivalents and restricted cash - beginning of year684.2 77.0 
Cash, cash equivalents and restricted cash - end of period$441.7 $639.0 

Operating activities

Net cash used in operating activities was $35.5 million in 2022, a decrease of $101.5 million, compared to net cash provided by operating activities was $86.7of $66.0 million for the three months ended March 31, 2021, an increase of $82.5 million, compared to $4.2 million for the three months ended March 31, 2020.in 2021.

Net loss was $51.7$506.3 million for the three months ended March 31, 2021,in 2022, as compared to $8.9a net loss of $51.8 million for the three months ended March 31, 2020.in 2021. The increase in net loss was primarily due to the remeasurementimpairment of the outstanding Customer EARsgoodwill and certain intangible assets related to our decision to wind down our Episodes of Care Services segment restructuring partially offset by revenue growth in our Home & Community Services revenue.segment. Non-cash items were $67.8$588.5 million for the three months ended March 31, 2021in 2022 as compared to $22.7$115.2 million for the three months ended March 31, 2020.in 2021. The increase in non-cash net non-cash expense items included in net lossincome was primarily driven by the fairimpairment of goodwill and certain intangible assets related to our Episodes of Care Services segment restructuring offset by the remeasurement of customer equity appreciation rights driven by changes in relative value of the Customer EARs partially offset by a deferred tax benefit.our stock price in 2022 compared to 2021.

Changes in operating assets and liabilities resulted in a cash decrease of $117.7 million in 2022, as compared to a cash increase of $4.5 million in 2021. The effect of changeschange in operating assets and liabilities was primarily driven by a cash increasenet decrease in accounts receivable of $70.6$0.9 million for the three months ended March 31, 2021, asin 2022 compared to a net decrease in accounts receivable of $9.6$54.0 million in 2021. Accounts receivable for our Home & Community Services segment increased $62.3 million in 2022 compared to a $40.9 million increase in 2021. The increase in accounts receivable in 2022 was primarily driven by higher IHE volume in 2022 and the three months ended March 31, 2020. The most significant drivers were as follows:impact of temporarily delayed collections for certain Home &
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•Table of ContentsA net increase
Community Services customers during 2022. Collections improved in the cash inflow relatedsecond quarter of 2022 compared to accounts receivablethe first quarter of $39.1 million for2022, yet are still experiencing collection delays compared to the three months ended March 31,end of 2021. Accounts receivable relatedfor our Episodes of Care Services segment decreased $61.6 million in 2022 compared to a $94.9 million decrease in 2021. The lower accounts receivable in the Episodes of Care Services segment decreased for the three months ended March 31, 2021 by a total of $114.9 millionin 2022 as compared to a decrease2021 was primarily driven by the impact of approximately $95.8 million fordisputing the three months ended March 31, 2020 primarily duesemiannual BPCI-A reconciliation, As discussed in “—Recent Developments in 2022 and Factors Affecting our Results of Operations—BPCI-A Reconciliation” above, the semiannual reconciliation initially received in the second quarter of 2022 was not deemed final as we have disputed the pricing calculation. Accordingly, no amounts related to this reconciliation period were included in accounts receivable at June 30, 2022 and the cash receipts, fromwhich we historically would have received in the third quarter of 2022, will be delayed until CMS responds to our dispute and issues a final reconciliation. This decrease was partially offset by accounts receivable related to our Caravan Health business, which was acquired on March 1, 2022.
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The net impact of changes in net contract assets and liabilities during 2022 was a $59.6 million reduction in cash flows as compared to an $17.1 million decrease in cash flows in 2021. The increase in net contract assets in 2022 was primarily driven by the delayed reconciliation period offor the BPCI-A program at a higher savings rate than those receivedthe end of the second quarter of 2022, changes in the prior year periodestimate of variable consideration generated by Caravan Health, and a contract asset related to the first reconciliation period. Accounts receivable related to thevariable consideration for a customer in our Home & Community Services segment increased $13.7 million duringwith a discount over the three months ended March 31, 2021 compared to approximately $33.7 million for the three months ended March 31, 2020 primarilycontract term. An increase in operating expenses as a result of the higher IHE volume resultinginvestments to support our growth and technology has further negatively impacted our operating cash flows.

Accounts receivable, contract assets and contract liabilities fluctuate from period to period as a result of periodically slower client collections, particularly in increased revenue;our Home & Community Services segment as we and
•A net decrease in cash outflow related to accounts payable our clients reconcile claims and accrued expenses of $35.5 million primarily due toresolve any temporary claims processing delays and the timing of Episodes shared savings payments. Accounts payable and accrued expenses decreased $13.8 million for the three months ended March 31, 2021 as compared to a decrease of $49.3 million for the three months ended March 31, 2020. We made shared savings payments related to the first reconciliation period during the three months ended March 31, 2020; however there were no shared savings payments during the three months ended March 31, 2021 as the majority of receipts related to the third reconciliation were received at the endresults of the quarter and there is a lag before payments are required to be made to partners. This increasesemiannual reconciliations in cash is temporary as we expect to make the shared savings payments related to the third reconciliation period in the second quarterour Episodes of 2021. The net decrease in cash outflow was partially offset by higher annual bonus payments made during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.Care Services segment.

Investing activities

Net cash used in investing activities was $6.4$208.0 million for the three months ended March 31, 2021, a decreasein 2022, an increase of $4.8$194.1 million, compared to net cash used byin investing activities of $11.2$13.9 million in 2021. The primary use of cash from investing activities in 2022 was the initial cash consideration, net of cash acquired, for the three months ended March 31, 2020.Caravan Health acquisition of $189.6 million. Capital expenditures for property and equipment were $0.7$3.8 million in 20212022 compared to $6.2$1.9 million in 2020.2021. The $5.5$1.9 million decreaseincrease in capital expenditures for property and equipment was primarily driven by investments in certain facilities and other requirements to support the growth in the business in early 2020.computer equipment purchases. Capital expenditures for internal-use software development were $5.7$14.3 million in 20212022 compared to $5.0$11.6 million in 2020.2021. The $0.7$2.7 million increase in capital expenditures for internal-use software development was primarily driven by additional investments in our technology platforms to support future growth. Investing activities also included a $0.3 million equity investment in AloeCare Health in 2022.

Financing activities

Net cash provided by financing activities was $603.6$1.0 million for the three months ended March 31, 2021, an increasein 2022, a decrease of $527.4$508.9 million, compared to net cash provided by financing activities of $76.2$509.9 million forin 2021. The primary source of cash from financing activities in 2022 was proceeds of $3.9 million related to the three months ended March 31, 2020.issuance of common stock in connection with the exercise of stock options, partially offset by scheduled principal payments under our 2021 Credit Agreement of $1.8 million and $0.8 million in tax distributions on behalf of the non-controlling interest. The primary source of cash from financing activities in 2021 was the$604.8 million in net proceeds of $604.8 million related tofrom our IPO after deducting underwriterunderwriting discounts and commissions and other issuance costs. This source of cash in 2021 was partially offset by scheduled principal payments on long-term debt under our Credit Agreement of $1.0 million. The primary sourcemillion and the net reduction in long-term debt of cash in 2020 was a net $77.0$61.5 million in proceeds from borrowings underconnection with the revolvingJune 2021 refinancing of our credit facility.agreement. Additionally, we receivedpaid approximately $0.2 million in net income tax refunds on behalf of New Remedy. These sources of cash were partially offset by scheduled principal payments on long-term debt under our Credit Agreement of $0.7 million.
Dividend Policy

Assuming Cure TopCo makes distributions to its members in any given year, the determination to pay dividends, if any, to our Class A common stockholders out of the portion, if any, of such distributions remaining after our payment of taxes, TRA payments and expenses (any such portion, an “excess distribution”) will be made at the sole discretion of our Board of Directors. Our Board of Directors may change our dividend policy at any time.
Tax Receivable Agreement

We are a party to the TRA with the TRA Parties, under which we generally are required to pay to the TRA Parties 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize as a result of (i) certain favorable tax attributes we acquired from the Blocker Companies in the Mergers (including net operating losses, the Blocker Companies’ allocable share of existing tax basis and refunds of taxes attributable to pre-Merger tax periods), (ii) increases in our allocable share of existing tax basis and tax basis adjustments that may result from (x) future redemptions or exchanges of LLC Units by Continuing Pre-IPO LLC Members for cash or$9.2
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million in debt issuance costs in connection with the IPO Contribution and (z) certain payments made under the TRA and (iii) deductions in respect of interest and certain compensatory payments made under the TRA. These payment obligations are our obligations and not obligations of Cure TopCo. Our obligations under the TRA also apply with respect to any person who is issued LLC Units in the future and who becomes a partyJune 2021 refinancing, $13.1 million related to the TRA. We do not anticipate making payments undercompletion of the TRA until afterfirst milestone associated with the 20212020 PatientBlox acquisition and $10.4 million in tax return has been finalized.distributions on behalf of the non-controlling interest.
Customer Equity Appreciation Rights (“EAR”) Agreements

In each of December 2019 and September 2020, we entered into EAR agreements with one of our customers. Pursuant to the agreements, certain revenue targets arewere established for the customer to meet in the next three years. If they meet those targets, they retain the EAR. If they do not meet such targets, they forfeit all or a portion of the EAR. Each EAR agreement allows the customer to participate in the future growth in the fair market value of our equity and can only be settled in cash (or, under certain circumstances, in whole or in part with a replacement agreement containing substantially similar economic terms as the original EAR agreement) upon a change-in-control of us, other liquidity event, or upon approval of our Board of Directors with the consent of New Mountain Capital subject to certain terms and conditions. Each EAR will expire 20 years from the date of grant, if not previously settled.

Pursuant to the terms of the EAR agreements, the value of the EARs will be calculated as an amount equal to the non-forfeited portion of a defined percentage (3.5% in the case of the December 2019 EAR and 4.5% in the case of the September 2020 EAR) of the excess of (i) the aggregate fair market value of the Reference Equity (as defined below) as of the applicable date of determination over (ii) a base threshold equity value defined in each agreement. Pursuant to the terms of each agreement, the “Reference Equity” is the Class A common stock of the Company and the aggregate fair market value of the Reference Equity will be determined by reference to the volume-weighted average trading price of the Company’s Class A common stock (assuming all of the holders of LLC Units redeemed or exchanged their LLC Units for a corresponding number of newly issued shares of Class A common stock) over a period of 30 calendar days. In addition, following the IPO, the base threshold equity value set forth in each agreement was increased by the aggregate offering price of the IPO.

IfOn December 31, 2021, we entered into an amendment of the December 2019 EAR and the September 2020 EAR (collectively, the “EAR Amendments”). The EAR Amendments provide, among other things, that the customer may exercise any unexercised, vested and non-forfeited portion of each EAR upon the sale of our Class A common stock by New Mountain Capital, our sponsor, subject to certain terms and conditions. These terms and conditions include, among others, that the customer has met its revenue targets under each EAR for 2022 and that New Mountain Capital has sold our Class A common stock above a certain threshold as set forth in each amendment. We have the option to settle any portion of the EARs so exercised in cash or in Class A common stock, provided that the aggregate amount of any cash payments do not exceed $25.0 million in any calendar quarter (with any amounts exceeding $25.0 million to be paid in the following quarter or quarters).

We and our customer also agreed to extend our existing commercial arrangements through the middle of 2026 and established targets for the minimum number of IHEs to be performed on behalf of the customer each year (the “Volume Targets”). The EAR Amendments did not result in any incremental expense as the fair value at the time of modification did not exceed the fair value of the original December 2019 EAR and September 2020 EAR immediately prior to the modification. Accordingly, we will continue to recognize the original grant date fair value of the 2019 EAR and 2020 EAR awards as a reduction to revenue.

We also entered into the EAR Letter Agreement with the customer that provides that, in the event of a change in control occurs onof the Company or certain other corporate transactions, and subject to achievement of the Volume Targets, if the aggregate amount paid under the EARs prior to July 1, 2021,and in connection with such event (the “Aggregate EAR Value”) is less than $118.5 million, then the casecustomer will be paid the difference between $118.5 million and the Aggregate EAR Value. The EAR Letter Agreement was determined to be a separate equity-linked instrument,
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independent from the original EARs, as amended. The grant date fair value is determined based on an option pricing model. Similar to the original EARs, we will record the initial grant date fair value as a reduction to revenue over the performance period. Estimated changes in fair market value will be recorded each accounting period based on management’s current assumptions related to the underlying valuation approaches as other (income) expense, net on the Condensed Consolidated Statement of Operations. The grant date fair value of the September 2020 EAR the manner in which the value of each EAR is calculated is subjectLetter Agreement was estimated to adjustment. As defined in each EAR, a change in control prior to an initial public offeringbe $76.2 million and will be deemed to have occurred if New Mountain Capital ceases to beneficially own, directly or indirectly, at least a majority of the total voting power of Signify Health, LLC (f/k/a Cure Borrower, LLC) or ceases to have the right, directly or indirectly, to elect or designate for election at least a majority of the board of directors of Signify Health, LLC. Following an initial public offering, a change in control will be deemed to have occurred if any person or group of persons other than New Mountain Capital shall beneficially own 35% or more of the total voting power of Signify Health, LLC or New Mountain Capital ceases to have the right, directly or indirectly, to elect or designate for election at least a majority of the board of directors of Signify Health, LLC. New Mountain Capital holds a majority of our total voting power and has the right, both by voting power and contractually, to designate for election at least a majority of the board of directors of Signify Health, LLC, andrecorded as a result,reduction of revenue through June 30, 2026, coinciding with the Reorganization Transactionsservice period. The EAR Letter Agreement was executed on December 31, 2021 and, the IPO did not affect the EAR agreements ortherefore, there was no material impact the manneron our results of operations in which the value of each EAR is calculated except as set forth above.2021.

As of March 31, 2021,June 30, 2022, cash settlement of the EARs was expected to be a minimum of $118.5 million, assuming all performance conditions are achieved through 2026, but was not considered probable, due to the change in control and liquidity provisions of each EAR. The grant date fair value of the December 2019 customer EAR was estimated to be $15.2 million and is being recorded as a reduction of revenue through December 31, 2022, coinciding with the three-year performance period. The grant date fair value of the September 2020 customer EAR was estimated to be $36.6 million and is being recorded as a reduction of revenue through December 31, 2022, coinciding with the 2.5-year performance period. As of March 31, 2021,June 30, 2022, the total combined estimated fair market value of the outstandingEARs, as amended, and EAR agreementsLetter Agreement was approximately $233.5$136.8 million.
Non-GAAP financial measures

Adjusted EBITDA and Adjusted EBITDA Margin are not measures of financial performance under accounting principles generally accepted in the United States of America (“GAAP”)GAAP and should not be considered substitutes for GAAP measures, including net income or loss, which we consider to be the most directly comparable
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GAAP measure. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for net income or loss or other consolidated income statement data prepared in accordance with GAAP. Other companies may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting its usefulness as a comparative measure.

We define Adjusted EBITDA as net lossincome (loss) before interest expense, loss on extinguishment of debt, income tax expense, depreciation and amortization and certain items of income and expense, including asset impairment, other (income) expense, net, transaction-related expenses, equity-based compensation, compensation expense related to synthetic equity units, remeasurement of contingent consideration, SEU expense and non-recurring expenses. We believe that Adjusted EBITDA provides a useful measure to investors to assess our operating performance because it eliminates the impact of expenses that do not relate to ongoing business performance, and that the presentation of this measure enhances an investor’s understanding of the performance of our business.

Adjusted EBITDA is a key metric used by management and our boardBoard of directorsDirectors to assess the performance of our business. We believe that Adjusted EBITDA provides a useful measure to investors to assess our operating performance because it eliminates the impact of expenses that do not relate to ongoing business performance, and that the presentation of this measure enhances an investor’s understanding of the performance of our business. We believe that Adjusted EBITDA Margin is helpful to investors in measuring the profitability of our operations on a consolidated level.

Our use of the terms Adjusted EBITDA and Adjusted EBITDA Margin may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and Adjusted EBITDA Margin have important limitations as analytical tools. For example, Adjusted EBITDA and Adjusted EBITDA Margin:

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•do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
•do not reflect changes in, or cash requirements for, our working capital needs;
•do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our core operations;
•do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; and
•do not reflect equity-based compensation expense and other non-cash charges; and exclude certain tax payments that may represent a reduction in cash available to us.
Adjusted EBITDA increased by $12.5$8.0 million, or 57.7%14.7%, to $34.4$62.6 million infor the first three months of 2021ended June 30, 2022 from $21.9$54.6 million infor the first three months of 2020.ended June 30, 2021. Adjusted EBITDA increased by $18.6 million, or 20.8%, to $107.6 million for the six months ended June 30, 2022 from $89.0 million for the six months ended June 30, 2021.

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA Margin is helpful to investors in measuring the profitability of our operations on a consolidated level.basis. Adjusted EBITDA Margin decreased by approximately 20 basis points to 25.4% for the three months ended June 30, 2022 from 25.6% for the three months ended June 30, 2021. Adjusted EBITDA Margin increased by 250approximately 50 basis points to 19.1% in23.2% for the first threesix months of 2021ended June 30, 2022 from 16.6% in22.7% for the first threesix months of 2020.ended June 30, 2021.

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The following table shows a reconciliation of net lossincome (loss) to Adjusted EBITDA for the periods presented:

Three months ended March 31,
20212020
(in millions)
Net loss$(51.7)$(8.9)
Interest expense6.8 $5.2 
Income tax (benefit) expense(9.9)$0.1 
Depreciation and amortization16.7 $14.5 
Other expense (income), net(a)
56.7 $— 
Transaction-related expenses(b)
5.6 $2.4 
Equity-based compensation(c)
2.5 6.0 
Customer equity appreciation rights(d)
4.9 1.3 
Remeasurement of contingent consideration(e)
0.2 0.2 
SEU Expense (f)
1.5 — 
Non-recurring expenses(g)
1.1 1.1 
Adjusted EBITDA$34.4 $21.9 
Three months ended June 30,Six months ended June 30,
2022202120222021
(in millions)
Net loss$(490.0)$(0.1)$(506.3)$(51.8)
Interest expense4.6 6.5 8.6 13.3 
Loss on extinguishment of debt— 5.0 — 5.0 
Income tax expense (benefit)5.2 (0.2)(0.8)(10.1)
Depreciation and amortization20.1 17.3 38.1 34.0 
Asset impairment(a)
519.9 — 519.9 — 
Other expense (income), net(b)
(27.4)14.3 1.4 71.0 
Transaction-related expenses(c)
1.7 1.0 4.9 6.6 
Equity-based compensation(d)
14.9 3.3 21.4 5.8 
Customer equity appreciation rights(e)
6.5 4.9 13.0 9.8 
Remeasurement of contingent consideration(f)
4.8 2.0 4.9 2.2 
SEU Expense(g)
0.2 0.3 0.3 1.8 
Non-recurring expenses(h)
2.1 0.3 2.2 1.4 
Adjusted EBITDA$62.6 $54.6 $107.6 $89.0 
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(a)(a)Asset impairment is related to customer relationships, acquired and capitalized software and goodwill which was impaired due to our decision to wind down our Episodes of Care business which was triggered by the receipt of the reconciliation from CMS in June 2022. See “—Recent Developments in 2022 and Factors Affecting our Results of Operations—Episodes of Care Services Restructuring.”
(b) Represents other non-operating (income) expense that consists primarily of the quarterly remeasurement of fair value of the outstanding customer EARs and EAR Letter Agreement as well as interest and dividends earned on cash and cash equivalents.
(b)(c) Represents transaction-related expenses that consist primarily of expenses incurred in connection with acquisitions and other corporate development activities, suchincluding the Caravan Health acquisition and related integration expenses as well as potential mergers and acquisitions activity,that did not proceed, strategic investments and similar activities. Expenses incurred in connection with our IPO, which cannot be netted against proceeds, are also included in transaction-related expenses.expenses in 2021.
(c)(d) Represents expense related to equity incentive awards, including incentive units, stock options and restricted stock units,RSUs, granted to certain employees, officers and non-employee directors as long-term incentive compensation. We recognize the related expense for these awards ratably over the vesting period or as achievement of performance criteria become probable.
(d)(e) Represents the reduction of revenue related to the grant date fair value of the customer EARs granted pursuant to the customer EAR agreements we entered into in December 2019 and September 2020.2020, as amended and the EAR Letter Agreement we entered into in December 2021.
(e)(f) Represents remeasurement of contingent consideration in 2022 related to potential payments due upon completion of certain performance targets in connection with the Caravan Health acquisition. In 2021, relatedrelates to potential payments due upon completion of certain milestone events in connection with our acquisition of PatientBlox. In 2020, represents the remeasurement of contingent consideration to the selling shareholders of Censeo Health, a business acquired in 2017, pending the resolution of an Internal Revenue Service (“IRS”) tax matter. The matter was resolved in 2020.
(f)(g) Represents compensation expense related to outstanding synthetic equity awards of SEUs subject to time-based vesting. A limited number of synthetic equity unitsSEUs were granted in 2020 and 2021 at the time of the IPO; no future grants of SEUs will be made. Compensation expense related to these awards is tied to the 30-trading day average price of our Class A common stock, and therefore is subject to volatility and may fluctuate from period to period until settlement occurs.
(g)(h) Represents certain gains and expenses incurred that are not expected to recur, including those associated with one-time costs related to the COVID-19 pandemic,employee termination benefits, the closure of certain facilities the sale of certain assets and the early termination of certain contracts.contracts as well as one-time expenses associated with the COVID-19 pandemic.

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Contractual Obligations and Commitments

Our material cash requirements include non-cancelable purchase commitments, lease obligations, debt and debt service, payments under the TRA and settlement of the outstanding customer EARs, among others. As of March 31, 2021,June 30, 2022, there have been no material changes from the contractual obligations and commitments previously disclosed in our 2021 Annual Report on Form 10-K.10-K other than as described below.

Effective April 1, 2022, we entered into a new lease agreement for a facility in Galway, Ireland. The lease term is 15 years with an option to terminate after 10 years. It is not reasonably certain that we will not exercise the option to terminate after 10 years; therefore, the total lease payments are expected to be approximately $7.0 million over 10 years.
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Off-balance sheet arrangements

Except for operating leases and certain letters of credit entered into in the normal course of business and the unconsolidated VIEs related to Caravan Health as described in the Condensed Consolidated Financial Statements, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical accounting policies

The discussion and analysis of our financial condition and results of operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures of contingent assets and liabilities. We base these estimates on our historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results experienced may vary materially and adversely from our estimates. Revisions to estimates are recognized prospectively. Our significant accounting policies are discussed in Note 2, “Significant Accounting Policies” to our Condensed Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q. There have been no significantmaterial changes, other than as described below, to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described under Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our 2021 Annual Report on Form 10-K.
Revenue recognition

There have been no material changes to our revenue recognition critical accounting policies and estimates, other than as described below related to our Episodes of Care Services segment. We recognize revenue as the control of promised services is transferred to our customers and we generate all of our revenue from contracts with customers. The amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for these policiesservices. The measurement and recognition of revenue requires us to make certain judgments and estimates.

We apply the five-step model to recognize revenue from customer contracts. The five-step model requires us to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when, or as, we satisfy the performance obligation.

The unit of measure for revenue recognition is a performance obligation, which is a promise in a contract to transfer a distinct or series of distinct goods or services to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Our customer contracts have either (1) a single performance obligation as the promise to transfer services is not separately identifiable from other promises in the contracts and is, therefore, not distinct; (2) a series of distinct performance obligations; or (3) multiple performance obligations, most commonly due to the contract covering multiple service offerings. For contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation on the basis of the relative standalone selling price of each distinct service in the contract.

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Episodes of Care Services

The episodes solutions we provide in our Episodes of Care Services segment are an integrated set of services which represent a single performance obligation in the form of a series of distinct services. This performance obligation is satisfied over time as the various services are delivered. We primarily offer these services to customers under the BPCI-A program.

Under the BPCI-A program, we recognize the revenue attributable to episodes reconciled during each six-month episode performance measurement period over a 13-month performance obligation period that commences in the three months ended March 31, 2021.second or fourth quarter of each year, depending on the relevant contract with our provider partners. The 13-month performance obligation period begins at the start of the relevant episodes of care and extends through the receipt or generation of the semiannual reconciliation for the relevant performance measurement period, as well as the provision and explanation of statements of performance to each of our customers. The transaction price is 100% variable and therefore we estimate an amount in which we expect to be entitled to receive for each six-month episode performance measurement period over a 13-month performance obligation period. Due to the recent announcement related to our planned exit from the Episodes of Care Services business, we may need to reevaluate the 13-month performance obligation period as our services wind down in the second half of 2022.

For each partner agreement, the fees are generally twofold, an administrative fee, which is based on a stated percentage of program size and is paid out of savings, and a defined share of program savings or losses, if any. In order to estimate this variable consideration, management estimates the expected program size as well as the expected savings rate for each six-month period of episodes of care. The estimate is performed both at the onset of each performance measurement period based on information available at the time and at the end of each reporting period. In making the estimate, we consider inputs such as the overall program size which is defined by the historic cost multiplied by the frequency of occurrence of defined episodes of care. Additionally, we estimate savings rates by using data sources such as historical trend analysis together with indicative data of the current volume of episodes.

We adjust our estimates at the end of each six-month performance measurement period, generally in the second and fourth quarter each year, and may further adjust at the end of each reporting period to the extent new information indicates a change is needed. We apply a constraint to the variable consideration estimate in circumstances where we believe the claims data received is incomplete or inconsistent, so as not to have the estimates result in a significant revenue reversal in future periods. Although our estimates are based on the information available to us at each reporting date, several factors may cause actual revenue earned to differ from the estimates recorded each period. These include, among others, CMS-imposed restrictions on the definition of episodes and benchmark prices, healthcare provider participation, the impacts of the COVID-19 pandemic and other limitations of the program beyond our control.

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During the second quarter of 2022, we received a semiannual BPCI-A reconciliation from CMS. Within that reconciliation, CMS applied a negative retrospective price adjustment to the benchmark prices against which savings are measured for specific episodes under the BPCI-A program. Several BPCI-A participants, including us, disputed the price adjustment. Our dispute is based on price trend data independently collected that indicates a positive price adjustment should be applied and corresponds with inflation in the medical services industry. CMS subsequently recommended participants provide formal evidence of the pricing errors. We responded to the request in July 2022, and upon receipt of our submission, CMS deemed the reconciliation period to remain open. As a result of the open reconciliation period and our view that the information presented in the reconciliation was not accurate, we did not change our current revenue estimates and do not plan to update them until there is further resolution or clarity of this matter. As of June 30, 2022, we recorded $48.9 million, $24.8 million and $8.9 million in revenue related to performance periods beginning in April 2021, October 2021 and April 2022, respectively, that may be impacted in the event a negative price adjustment prevails. Changes in management’s estimates of prior period performance could result in the reversal of revenue and a further loss may be recorded. CMS has indicated it will respond to error notices in the third quarter of 2022.

The determination that the semiannual reconciliation is not deemed final has delayed the recognition of accounts receivable for our Episodes of Care Services segment as of June 30, 2022. Estimated revenue amounts related to this reconciliation period continue to be included in contract assets on our Condensed Consolidated Balance Sheets. Historically, we received a final reconciliation in the second quarter of each year, thereby reducing the associated contract assets and recording accounts receivable for the amounts to be collected. Accordingly, the cash collections from the delayed reconciliation will also deviate from historical cash collection seasonality trends.

Within our Episodes of Care Services segment, we also generate revenue through our non-BPCI-A Episodes of Care program. Similar to the BCPI-A program, revenues under our non-BPCI-A Episodes of Care program are also driven by estimates of program size and savings rate, subject to similar constraints as described above. Completed episodes are retrospectively reconciled following semi-annual performance periods.

In our Episodes of Care Services segment, we also generate revenue through Caravan Health. Caravan Health enters into contracts with customers to provide multiple services around the management of the ACO model. These include, but are not limited to, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings from CMS. Caravan Health enters into arrangements with customers wherein we receive a contracted percentage of each customer’s portion of shared savings if earned. We recognize shared savings revenue as performance obligations are satisfied over time, commensurate with the recurring ACO services provided to the customer over a 12-month calendar year period. The shared savings transaction price is variable, and therefore, we estimate an amount in which we expect to be entitled to receive for each 12-month calendar year performance obligation period.

In order to estimate this variable consideration, management initially uses estimates of historical performance of the ACOs. We consider inputs such as attributed patients, expenditures, benchmarks and inflation factors. We adjust our estimates at the end of each reporting period to the extent new information indicates a change is needed. We apply a constraint to the variable consideration estimate in circumstances where we believe the data received is incomplete or inconsistent, so as not to have the estimates result in a significant revenue reversal in future periods. Although our estimates are based on the information available to us at each reporting date, new and material information may cause actual revenue earned to differ from the estimates recorded each period. These include, among others, HCC coding information,quarterly reports from CMS, unexpected changes in attributed patients and other limitations of the program beyond our control. We receive final reconciliations from CMS and collect the cash related to shared savings earned annually in the third or fourth quarter of each year for the preceding calendar year.
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The remaining sources of revenue in our Episodes of Care Services segment are recognized over time when, or as, the performance obligations are satisfied and are primarily based on a fixed fee or per member per month fee. Therefore, they do not require significant estimates and assumptions by management. See Note 6 Revenue Recognition.
Recent accounting pronouncements

For more information on recently issued accounting pronouncements, see Note 2 to our Condensed Consolidated Financial Statements covered under Part I, Item 1 of this Quarterly Report on Form 10-Q.
Emerging growth company status

We are an “emerging growth company” as defined in the JOBS Act of 2012. We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We intend to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be different than the information you receive from other public companies.

We also intend to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as we qualify as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our proxy statement and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

Based on the market value of our common stock that is held by non-affiliates as of June 30, 2022, the last business day of our most recently completed second fiscal quarter, we expect we will become a large accelerated filer as of December 31, 2022 and lose our emerging growth company status as of year end.
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Item 3. Quantitative and qualitative disclosures about market risks.

In the ordinary course of our business activities, we are exposed to market risks that are beyond our control and which may have an adverse effect on the value of our financial assets and liabilities, future cash flows and earnings. The market risks that we are exposed to primarily relate to changes in interest rates associated with our long-term debt obligations and cash and cash equivalents.

At March 31, 2021,June 30, 2022, we had total variable rate debt outstanding under our Credit Agreement of $411.4$347.3 million. If the effective interest rate of our variable rate debt outstanding as of March 31, 2021June 30, 2022 were to increase by 100 basis points, (1%)or 1%, our annual interest expense would increase by approximately $4.1$3.5 million.

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At March 31, 2021,June 30, 2022, our total unrestricted cash and cash equivalents were $756.5$439.4 million. Throughout the year, we invest any excess cash in short-term investments, primarily money market accounts, where returns effectively reflect current interest rates. As a result, market interest rate changes may impact our interest income. The impact will depend on variables such as the magnitude of rate changes and the level of excess cash balances. We do not consider this risk to be material. We manage such risk by continuing to evaluate the best investment rates available for short-term, high-quality investments.
Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and President, Chief Financial and Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure.

In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and President, Chief Financial and Administrative Officer of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and President, Chief Financial and Administrative Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and President, Chief Financial and Administrative Officer, as appropriate to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because ofDue to the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures is also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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Changes in Internal Control overOver Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting during the three months ended March 31, 2021June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART II
II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of litigation and claims are inherently unpredictable and uncertain, we are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, are believed to, either individually or taken together, have a material adverse effect on our business, financial condition or results of operations. Regardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors.

There have been no material changes with respect to the risk factors disclosed in our 20202021 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

The following sets forth information regarding securities sold or issued by the registrant in the three months ended March 31, 2021 and the period subsequent period prior to the filing of this report. No underwriters were involved in these sales. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these securities. In each of the transactions described below, the recipients of the securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.

•In connection with the Reorganization Transactions, we issued 140,758,464 shares of Class A common stock and 67,065,763 shares of Class B common stock to Pre-IPO LLC Members. As of March 31, 2021, there were 9,443,460 shares of Class B common stock subject to vesting.
The offer, sale and issuance of the securities described above were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering.

Use of Proceeds from our Initial Public Offering of Common Stock
On February 10, 2021, our registration statement on Form S-1 (File No. 333-252231) was declared effective by the SEC in connection with the IPO. At the closing of the IPO on February 16, 2021, we sold 27,025,000 shares of Class A common stock, including 3,525,000 shares pursuant to the underwriters’ over-allotment option, at an initial public offering price of $24.00 per share and received gross proceeds of $648.6 million, which resulted in net proceeds to us of $609.7 million, after deducting underwriting discounts and commissions of $38.9 million and before fees and expenses incurred in connection with the IPO. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Barclays Capital Inc. and Deutsche Bank Securities Inc. acted as lead bookrunner agents for the offering. BofA Securities Inc., UBS Securities LLC, Robert W. Baird & Co. Incorporated, Piper Sandler & Co. and William Blair & Company, L.L.C. acted as additional bookrunners.

We used the net proceeds from the IPO to purchase 27,025,000 newly-issued LLC Units from Cure TopCo at a purchase price per LLC Unit equal to the initial public offering price of Class A common stock after underwriting discounts and commissions.

Cure TopCo used a portion of the proceeds from the issuance of LLC Units to us to pay fees and expenses of approximately $14.6 million incurred in connection with the IPO and Reorganization Transactions.
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None.

Item 3. Defaults upon Senior Securities.

None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.

None.
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Item 6. Exhibits.

The following exhibits listed in the index below are filed or incorporated by reference as a part of this Quarterly Report on Form 10-Q.

10.1*
Form of Non-Qualified Stock Option Award Agreement Under Signify Health, Inc. 2021 Long-Term Incentive Plan
10.2*
Form of Restricted Stock Unit Award Agreement Under Signify Health, Inc. 2021 Long-Term Incentive Plan
31.1*
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of the Chief Financial Officer pursuant to Rule 13(a)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
101*The following financial information from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Changes in Members’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements
104*Cover Page Interactive Data File – The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 is formatted in iXBRL (included as Exhibit 101)
 
*    Filed or furnished herewith
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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.


SIGNIFY HEALTH, INC.
Date:May 12, 2021 August 4, 2022By:/s/ Kyle Armbrester
Kyle Armbrester
Chief Executive Officer
Date:May 12, 2021 August 4, 2022By:/s/ Steven Senneff
Steven Senneff
President, Chief Financial and Administrative Officer


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