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, 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.

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May ~~6, 2022,~~5, 2023, the registrant had ~~87,367,972~~111,374,586 shares of Class A common stock, $0.0001 par value per share, and no shares of Class B common stock, $0.0001 par value per share issued and outstanding.

~~CareMax, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A for the quarter ended March 31, 2022 (this “Form 10-Q/A”).~~

Except as described above and set forth in this Form 10-Q/A, this Form 10-Q/A does not amend or update any other information contained in the Original Filing. This Form 10-Q/A does not purport to reflect any information or events subsequent to the Original Filing, except as expressly described herein.


	March 31, 2022 (As Restated)			December 31, 2021		March 31, 2023			December 31, 2022
ASSETS

CURRENT ASSETS
Cash	$	32,740		$	47,917
Current Assets
Cash and cash equivalents						$	44,222		$	41,626
Accounts receivable, net		53,581			41,998		158,989			151,036
Inventory		702			550
Prepaid expenses		4,829			3,786
Risk settlements due from providers		655			539
Risk settlement assets							858			707
Other current assets							5,928			3,968
Total Current Assets		92,508			94,790		209,998			197,336

Property and equipment, net		16,895			15,993		22,726			21,006
Goodwill		464,264			464,566
Operating lease right-of-use assets							115,018			108,937
Goodwill, net							602,643			700,643
Intangible assets, net		55,604			59,811		118,189			123,585
Deferred debt issuance costs		1,860			1,972		1,842			1,685
Other assets		17,953			15,960		27,286			17,550
Total Assets	$	649,085		$	653,092	$	1,097,701		$	1,170,743

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current Liabilities
Accounts payable	$	5,165		$	3,110	$	8,134		$	7,687
Accrued expenses		12,365			8,690		18,602			18,631
Risk settlements due to providers		228			196
Current portion of long-term debt		6,272			6,275
Risk settlement liabilities							13,868			14,171
Related party debt, net							31,548			30,277
Current portion of third-party debt, net							274			253
Current portion of operating lease liabilities							3,898			5,512
Other current liabilities		4,107			3,687		4,103			790
Total Current Liabilities		28,137			21,959		80,428			77,322

Derivative warrant liabilities		11,911			8,375		2,868			3,974
Long-term debt, less current portion		109,660			110,960
Long-term debt, net							260,642			230,725
Long-term operating lease liabilities							106,291			96,539
Contingent earnout liability							98,425			134,561
Other liabilities		7,186			6,428		9,283			8,075
Total Liabilities		156,895			147,722		557,938			551,196
COMMITMENTS AND CONTINGENCIES (Note 13)
COMMITMENTS AND CONTINGENCIES (NOTE 15)
STOCKHOLDERS' EQUITY
Preferred stock (1,000,000 authorized and zero outstanding as of March 31, 2022 and December 31, 2021)		-			-
Class A common stock ($0.0001 par value; 250,000,000 shares authorized; 87,367,972 shares issued and outstanding at March 31, 2022 and December 31, 2021)		9			9
Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of March 31, 2023 and December 31, 2022)							-			-
Class A common stock ($0.0001 par value; 250,000,000 shares authorized; 111,360,802 and 111,332,584 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively)							11			11
Additional paid-in-capital		508,945			505,327		659,424			657,126
Retained (deficit) earnings		(16,763	)		33
Accumulated deficit							(119,672	)		(37,590	)
Total Stockholders' Equity		492,190			505,370		539,763			619,547

Total Liabilities and Stockholders' Equity	$	649,085		$	653,092	$	1,097,701		$	1,170,743

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Three Months Ended March 31,			Three Months Ended March 31,			Three Months Ended March 31,
	2022			2021			2023			2022
Revenue
Medicare risk-based revenue	$	107,747		$	27,816		$	121,593		$	107,747
Medicaid risk-based revenue		20,165			-			25,626			20,165
Government value-based care revenue								10,010			-
Other revenue		9,008			102			15,754			9,008
Total revenue		136,920			27,918			172,983			136,920

Operating expenses
External provider costs		92,856			18,159			110,673			92,856
Cost of care		27,349			5,353			38,627			27,349
Sales and marketing		3,301			291			3,765			3,301
Corporate, general and administrative		18,978			1,795			23,945			18,978
Depreciation and amortization		5,062			514			6,576			5,062
Goodwill impairment								98,000			-
Acquisition related costs		266			-			20			266
Total operating expenses		147,811			26,112			281,606			147,811
Operating (loss) income		(10,890	)		1,806
Interest expense		(1,728	)		(504	)
Loss on remeasurement of warrant liabilities		(3,536	)		-
Operating loss								(108,623	)		(10,890	)
Nonoperating income (expense)
Interest expense, net								(10,458	)		(1,728	)
Change in fair value of derivative warrant liabilities								1,107			(3,536	)
Gain (loss) on remeasurement of contingent earnout liabilities								36,136			-
Other income (expense), net		(462	)		-			(66	)		(462	)
(Loss) income before income tax		(16,616	)		1,302
Income tax provision		(181	)		-
Net (loss) income	$	(16,797	)	$	1,302
								26,718			(5,726	)
Weighted average basic shares outstanding		87,367,972			10,796,069
Weighted average diluted shares outstanding		87,367,972			10,796,069
Net (loss) income per share
Loss before income tax								(81,904	)		(16,616	)
Income tax expense								(177	)		(181	)
Net loss							$	(82,082	)	$	(16,797	)

Weighted-average basic shares outstanding								111,360,802			87,367,972
Weighted-average diluted shares outstanding								111,360,802			87,367,972
Net loss per share
Basic	$	(0.19	)	$	0.12		$	(0.74	)	$	(0.19	)
Diluted	$	(0.19	)	$	0.12		$	(0.74	)	$	(0.19	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'~~/MEMBERS'~~ EQUITY

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Note 1. DESCRIPTION of business

CareMax, Inc. (“CareMax” or the “Company”), ~~f/k/a~~formerly Deerfield Healthcare Technology Acquisitions Corp. (“DFHT”), is a Delaware corporation, ~~was originally formed~~which announced its initial public offering in July 2020 (the "IPO") as a publicly traded special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination involving one or more businesses. CareMax is a technology-enabled care platform providing high-quality, value-based care and chronic disease management through physicians and health care professionals committed to the overall health and wellness continuum of care for its patients. ~~The~~As of March 31, 2023, the Company ~~currently operates~~operated 4862 ~~wholly owned, multi-specialty~~ centers ~~in Florida, Tennessee~~ and ~~New York,~~managed affiliated providers across 10 states that offer a comprehensive suite of healthcare and social services, and a proprietary software and services platform that provides data, analytics, and rules-based decision tools/workflows for physicians across the United States.

The Business Combination and Acquisitions

On December 18, 2020, DFHT entered into a Business Combination Agreement (the “Business Combination Agreement”) with CareMax Medical Group, L.L.C., a Florida limited liability company (“CMG”), ~~the~~and entities listed in ~~Annex I to~~ the Business Combination Agreement (the “CMG Sellers”), IMC Medical Group Holdings, LLC, a Delaware limited liability company (“IMC”), IMC Holdings, LP, a Delaware limited partnership (“IMC Parent”), and Deerfield Partners, L.P. (“Deerfield Partners”). The Business Combination (as defined below) ~~was approved by DFHT’s stockholders and~~ closed on June 8, 2021 (the “Closing Date”), whereby DFHT acquired 100% of the equity interests ofin CMG and 100% of the equity interests in IMC, with CMG and IMC becoming wholly owned subsidiaries of DFHT. Immediately upon completion (the “Closing”) of the transactions contemplated by the Business Combination Agreement and the related financing transactions (the “Business Combination”), the name of the combined company was changed to CareMax, Inc.

Unless the context otherwise requires, ~~“the Company,~~the “Company,” “we,” “us,” and “our” refer, for periods prior to the completion of the Business Combination, to CMG and its subsidiaries, and, for periods upon or after the completion of the Business Combination, to CareMax, Inc. and its subsidiaries.

Subsequent to consummation of the Business Combination, primarily during the second half of 2021, the Company acquired Senior Medical Associates, LLC ("SMA"), Stallion Medical Management, LLC ("~~SMM)~~SMM"), Unlimited Medical Services of Florida, LLC ("DNF"), Advantis Physician Alliance, LLC ("Advantis"), Business Intelligence & Analytics LLC ("BIX"), and three additional businesses (together with the acquisitions of SMA, SMM, DNF, Advantis and BIX, the "Acquisitions") ~~which did not have a~~. Refer to Note 5, Goodwill and Other Intangible Assets, for information about measurement period adjustments.

On November 10, 2022, the Company acquired the Medicare value-based care business of Steward Health Care System ("Steward Value-Based Care"), further described in Note 3, Acquisitions. No material ~~impact on our condensed consolidated financial statements.~~ No ~~significant~~ measurement period adjustments related to the Acquisitions or the Steward Acquisition were recognized during the three months ended March 31, 2023 or 2022. As of March 31, 2022, due to the timing of these transactions, the initial accounting for acquisitions of Advantis and BIX and the three additional businesses is incomplete, pending determination of the final purchase price and any remaining working capital adjustments.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. The condensed consolidated balance sheet at December 31, ~~2021,~~2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Accordingly, the unaudited condensed consolidated financial statements should be read in connection with the Company’s audited financial statements and related notes as of and for the year ended December 31, ~~2021~~2022 as filed with the SEC on March ~~16, 2022.~~ 30, 2023.

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

Certain amounts in prior period financial statements have been reclassified to conform to the current period presentation. Such reclassifications have not materially affected previously reported amounts. In the opinion of management, the accompanying unaudited and condensed consolidated financial statements include all adjustments of a normal recurring nature, which are necessary for a fair statement

~~(6)~~

~~CAREMAX, inc.~~

~~NOTES TO condensed consolidated FINANCIAL STATEMENTS~~

(u~~naudited~~)

of financial position, operating results and cash flows for the periods presented. Operating results for ~~the three months ended March 31, 2022~~any interim period are not necessarily indicative of ~~the~~ results ~~that may be expected~~ for the ~~year ending December 31, 2022.~~

Pursuant to the Business Combination, the acquisition of CMG by DFHT was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, DFHT was treated as the “acquired” company. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of CMG issuing equity for the net assets of DFHT, accompanied by a recapitalization. The net assets of DFHT were stated at historical cost, with no goodwill or other intangible assets recorded. Further, CMG was determined to be the accounting acquirer in the acquisition of IMC (the “IMC Acquisition”), as such, the acquisition was considered a business combination under Accounting Standard Codification ("ASC") Topic 805, ~~Business Combinations, and was accounted for using the acquisition method of accounting. CareMax recorded the fair value of assets acquired and liabilities assumed from IMC.~~

~~Unless otherwise noted, information for periods prior to the Closing Date reflects the financial information of CMG only.~~full year.

The condensed consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated.

~~Restatement of Previously Reported Financial Statements~~

In conjunction with the Company's close process for the year ended December 31, 2022, management identified an error related to classification of equity consideration issued to the Company's real estate advisor in July 2021 (the "Prepaid Asset"). The Prepaid Asset was previously presented as part of the Company's short-term assets, in Warrants and prepaid expenses. The Company determined that the Prepaid Asset relates to services that are performed by the real estate advisor over multiple years. Accordingly, the Prepaid Asset should be recorded in other assets, except for the portion that represents the Prepaid Asset amortization expense expected to be recognized during the next twelve months following a given period.

The following table reflects the impact of the restatement to the specified line items presented in the Company's previously reported unaudited condensed consolidated balance sheet as of March 31, 2022:

(in thousands)
As Originally Reported

Adjustment

As Restated

ASSETS

Affected financial statement line items

Prepaid expenses

20,045

(15,215
)

4,829

Total Current Assets
$
107,723

$
(15,215
)
$
92,508

Other assets

2,738

15,215

17,953

~~There was no impact on the condensed consolidated statement of operations, statements of changes in stockholders'/members' equity or statement of cash flows.~~

~~The accompanying applicable Notes have been updated to reflect the restatement described above.~~

Segment Financial Information

The Company’s chief operating decision maker regularly reviews financial operating results on a ~~condensed~~ consolidated basis for purposes of allocating resources and evaluating financial performance. The Company identifies operating segments based on this review by its chief operating decision ~~makers~~maker and operates in and reports as a single operating ~~segment, the objective of which is to care for its patients’ needs.~~segment. For the periods presented, all of the Company’s long-lived assets were located in the United States, and all revenue was earned in the United States.

~~Variable Interest Entities~~Medicare and Medicaid Risk-Based Revenue

Medicare and Medicaid Risk-Based Revenue consists primarily of fees for medical services provided under capitated arrangements directly with various Medicare Advantage and Medicaid managed care payors. The Company receives a fixed fee per patient under what is typically known as a “risk contract.” Risk contracting, or full risk capitation, refers to a model in which the Company receives from the third-party payor a fixed payment of at-risk premium less an administrative charge on a per patient per month basis (“PMPM”) for a defined patient population, and the Company is then responsible for providing healthcare services required by that patient population. PMPM fees can fluctuate throughout the contract based on the health status (acuity) of each individual enrollee. In certain contracts, PMPM fees also include “risk adjustments” for items such as performance incentives, performance guarantees and risk shares. The capitated revenues are recognized based on the estimated PMPM fees earned net of projected performance incentives, performance guarantees, risk shares and rebates because we are able to reasonably estimate the ultimate PMPM payment of these contracts. We recognize revenue in the month in which eligible members are entitled to receive healthcare benefits. Subsequent changes in PMPM fees and the amount of revenue to be recognized are reflected through subsequent period adjustments to properly recognize the ultimate capitation amount.

For enrolled members in which we control healthcare services, we act as the principal and the gross fees under these contracts are reported as revenue and the cost of third-party medical care is included in external provider costs.

The Company generates management services organization (“MSO”) revenue for services it renders to independent physician associations (the “IPAs”) under administrative service contracts. The MSO revenue is recognized in the month in which the eligible members are entitled to receive healthcare benefits during the contract term. For MSO contracts in which the Company acts as a principal in coordinating and controlling the range of services provided (other than clinical decisions) and, thus, accepts full financial risk for members attributed to the IPA and is therefore responsible for the cost of all healthcare services required by those members, the fees are recognized on a gross basis, consistent with ASC 606, Revenue From Contracts with Customers ("ASC 606"). The related revenue is recorded in Medicare risk-based and Medicaid risk-based revenue.

Government Value-Based Care Revenue

~~The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity ("VIE"~~Government Value-Based Care Revenue consists primarily of revenue derived from the Medicare Shared Savings Program (“MSSP”). ~~These evaluations~~The MSSP is sponsored by the Center for Medicare and Medicaid Services (“CMS”). The MSSP allows accountable care organizations (“ACOs”) to receive a share of cost savings they generate in connection with the managing of costs and quality of medical services rendered to Medicare beneficiaries. Payments to ACO participants, if any, are ~~complex, involve judgment,~~calculated annually and paid once a year by CMS on cost savings generated by the ~~use~~ACO participant relative to the ACO participants’ CMS benchmark. Under the MSSP, an ACO must meet certain qualifications to receive the full amount of ~~estimates and assumptions based on available historical information, among other factors.~~its allocable cost savings or they either receive nothing or are responsible for shared losses. The ~~Company considers itself~~MSSP rules require CMS to ~~control an entity~~develop a benchmark for savings to be achieved by each ACO if itthe ACO is to receive shared savings. An ACO that meets the ~~majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary~~MSSP’s quality performance standards will be eligible to receive a share of the ~~VIE. The Company consolidates VIEs when it~~savings to the extent its assigned beneficiary medical expenditures are below the medical expenditure benchmark provided by CMS. A Minimum Savings Rate (“MSR”) must be achieved before the ACO can receive a share of the savings. Once the MSR is surpassed, all the savings below the benchmark

(7)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

provided by CMS will be shared at a certain percentage with the ACO. The MSR varies depending on the number of beneficiaries assigned to the ACO.

The promised services under the Company's MSSP arrangements are to provide the population health services to beneficiaries for a given performance period. As part of these arrangements, the Company stands ready to provide the population health services throughout the performance period.

The Company estimates the variable consideration that constitutes the transaction price of these arrangements by utilizing third-party data and historical experience. As the Company’s performance obligation is met, revenue is recorded over time using its estimation methods and consideration is made, to the extent possible, that it is probable that a significant reversal will not occur once any uncertainty associated with the variable consideration is subsequently resolved. Since the Company has determined ~~that~~it only has one performance obligation under each of these arrangements, it allocates the full transaction price towards each arrangement’s individual performance obligation.

Government Value-Based Care Revenue is recognized on a net basis, because the Company does not coordinate or control the range of services provided and, thus, accepts partial or no financial risk.

Other Revenue

Other revenue primarily represents partial and no risk capitation, MSO and pharmacy revenue. Capitation revenue represents a fixed amount of money per patient per month paid in advance for the delivery of primary care services only, whereby the Company is ~~the primary beneficiary~~not liable for medical costs in excess of the ~~VIE. Management performs ongoing reassessments~~fixed payment. Capitated revenues are typically prepaid monthly to the Company based on the number of patients selecting us as their primary care provider. Our capitated rates are fixed, contractual rates. Incentive payments for Healthcare Effectiveness Data and Information Set (“HEDIS”) and any services paid on a fee for service basis by a health plan are also included in other revenue. Other revenue also includes ancillary fees earned under contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether ~~changes~~those patients receive their care from our affiliated medical groups. Revenue for primary care services for patients in a partial risk or upside-only contracts is reported in other revenue.

For MSO contracts in which the Company does not coordinate or control the range of services provided and, thus, accepts partial or no financial risk for members attributed to the IPA, the revenue is recognized on a net basis, consistent with ASC 606, and is recorded in Other revenue.

Accounts Receivable

Accounts receivable are carried at the amounts the Company deems collectible. Accordingly, an allowance is provided based on credit losses expected over the contractual term. This allowance is netted against the receivable balance with the loss being recognized within general and administrative expenses in the ~~facts~~consolidated statements of operations. Accounts receivables are written off when they are deemed uncollectible. As of March 31, 2023 and ~~circumstances regarding~~December 31, 2022, the ~~Company’s involvement with a VIE will cause~~Company's provision for credit losses was $1.1 million and $1.2 million, respectively.

Amounts due to the ~~consolidation conclusion~~Company within 12 months of the reporting period are recorded in Accounts receivable, net. Amounts which the Company excepts to ~~change. Changes~~receive following the 12-month period are recorded in ~~consolidation status are applied prospectively. Refer to Note 14 “~~Other assets. Accordingly, as of March 31, 2023, $~~Variable Interest Entities~~9.6~~” for additional information.~~ million of accounts receivable was included in Other Assets (none as of December 31, 2022).

Significant Accounting Policies

~~Other than addition of the Variable Interest Entity policy, there~~There have been no changes to our ~~critical~~significant accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, which was filed with the SEC on March ~~16, 2022.~~30, 2023.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and disclosed. The Company bases its estimates on the available information, its experiences and various other assumptions believed to be reasonable under the circumstances including estimates of the impact of COVID-19.accompanying notes. The areas where significant estimates are used in the accompanying financial statements include, but are not limited to, revenues

(8)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

and related receivables from risk adjustments, medical services expense and related payables, purchase price allocations, including fair value estimates of intangibles and contingent ~~consideration;~~consideration, the valuation of and related impairment testing of long-lived assets, including goodwill and intangible ~~assets;~~assets, the valuation of ~~the~~ derivative warrant ~~liabilities;~~liabilities, and the estimated useful lives of fixed assets and intangible assets, including internally developed ~~software; revenue recognition and liability for unpaid claims.~~software. Actual results could differ from those estimates.

The Company re-evaluated key assumptions and estimates related to risk contracts as of March 31, 2023. Based on this review, the Company identified changes in estimates to revenue, external provider costs and accounts receivable, net, driven by the new information from the Company's payors, as well as adverse claims development on prior period dates of service. Based on this updated information, the Company recognized a net decrease to revenue of $26.9 million, a net decrease to external provider costs of $12.4 million and a net decrease to accounts receivable, net, of $14.5 million during the three months ended March 31, 2023. Additionally, the Company recognized a net decrease to revenue of $0.7 million, a net increase to external provider costs of $6.3 million and a net decrease to accounts receivable, net, of $7.1 million during the three months ended March 31, 2022, driven by claims development from COVID related sicknesses.

Emerging Growth Company

Section 102(b)(1) of the ("JOBS ~~Act~~Act") exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to nonemerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Additionally, as an emerging growth company, the Company is exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and the Company’s independent registered public accounting firm is not required to evaluate and report on the effectiveness of internal control over financial reporting.

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and accounts receivable. The ~~Company’s cash balances with individual banking institutions are in excess~~Company believes it is not exposed to any significant concentrations of ~~federally insured limits~~credit risk from ~~time to time.~~these financial instruments. The Company has not experienced any losses on its deposits of cash and cash equivalents.

~~Our three largest payor relationships were with Anthem, Humana and Centene, which as of March 31, 2022 represented~~ 24%, 16~~%, and~~ 26~~% of our accounts receivable balance, respectively. As of December 31, 2021, Anthem, Humana and Centene represented~~ 27%, 12~~% and~~ 23~~% of our accounts receivable balance, respectively. Anthem, Humana and Centene represented~~ 35%, 17~~%, and~~ 16%Composition of the Company's revenues ~~during~~and accounts receivable balances for the ~~three months ended March 31, 2022 (~~payors comprising 10% or more of revenue was as follows:86


	Total Revenue
	Three Months Ended March 31,
	2023			2022
Payor A		31	%		35	%
Payor B	n/a			n/a
Payor C		22	%		17	%
Payor D		12	%		16	%
Payor E		20	%	n/a


	Accounts Receivable, net
	As of March 31, 2023			As of December 31, 2022
Payor A		12	%		13	%
Payor B		7	%		11	%
Payor C		14	%		13	%
Payor D		14	%		13	%
Payor E		7	%		6	%

(9)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(u%, naudited11~~% and~~ 0~~% during the three months ended March 31, 2021).~~)

~~Recent~~Recently Adopted Accounting Pronouncements

The Company ~~has~~ elected to defer compliance with ASC Topic 842, Leases("ASC 842"), consistent with ~~those~~the requirements for a private company due to the Company’s status as an ~~EGC~~emerging growth company and the provisions of the JOBS Act. Accordingly, the ~~Company~~ ~~adopted~~adoption of ASC 842 was applicable for the Company for the annual reporting period beginning January 1, 2022, and interim reporting periods within the annual reporting period beginning after December 15, 2022. The Company elected to adopt practical expedients which permits it to not reassess its prior conclusions about lease identification, lease classification and initial direct costs under the new standard. The Company elected to combine lease and non-lease components for all lease contracts and also elected not to recognize ROU assets and lease liabilities for leases with terms of 12 months or less. The Company did not elect the hindsight practical expedient, which would have allowed the Company to revisit key assumptions, such as lease term, that were made when the lease was originally entered.

We implemented ASC 842 effective January 1, 2022, using the modified retrospective approach, which allows entities to either apply the new lease standard to the beginning of the earliest period presented or only to the consolidated financial statements in the period of adoption without restating prior periods. We have elected to apply the new guidance at the date of the adoption, January 1, 2022, without restating prior periods. The financial effect of the adoption was an increase of approximately $73.7 million to the right-of-use asset and corresponding lease liabilities to the Company’s balance sheet as of January 1, 2022.

Accounting Pronouncements Not Yet Adopted

The Company has determined that there are no recently issued accounting pronouncements that will have a material impact on its consolidated financial position, results of operations, or cash flows.

InThere were no acquisitions during the three months ended March 2020, the FASB issued temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR. In addition, in January 2021, the FASB issued guidance which refined the scope of ASC 848, Reference Rate Reform, and clarified some of its guidance as part of FASB's ongoing monitoring of global reference rate reform activities. This guidance permitted entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements and calculating price alignment interest in connection with reference rate reform activities under way in global financial markets. An entity may apply these amendments prospectively through December 31, 2023 or 2022. ~~The Company is currently evaluating the effect the update will have on its condensed consolidated financial statements and related disclosures.~~

NOTE 4. REINSURANCE

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." The ASU improves comparability after business combinations by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements.

(11)

CAREMAX, inc.

~~We do not expect that any other recently issued accounting guidance will have a significant effect on our~~NOTES TO condensed consolidated ~~financial statements.~~FINANCIAL STATEMENTS

(unaudited

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS

~~(9)~~Goodwill

The following table shows changes in the carrying amount of goodwill (in thousands):


	Carrying Amount
Balance at December 31, 2022	$	700,643
Impairment		(98,000	)
Balance at March 31, 2023	$	602,643

The Company's policy is to test goodwill for impairment annually on December 31 or on an interim basis if an event triggering impairment may have occurred. During the three months ended March 31, 2023, the economic uncertainty and market volatility resulting from the rising interest rate environment, the recent banking crisis and other industry developments resulted in a decrease in the Company's stock price and market capitalization. Management believes such decrease was a triggering event requiring an interim goodwill impairment quantitative analysis. The Company performed a market capitalization reconciliation to evaluate the Company’s estimated fair value balance and support the implied control premium. Based on the quantitative analysis performed, the Company's estimated fair value as of March 31, 2023 was less than its carrying value as of March 31, 2023 by 17.9% or $98.0 million. The $98.0 million goodwill impairment charge has been reflected in goodwill impairment in the accompanying statements of operations for the three months ended March 31, 2023.

If all other assumptions were held constant and the long-term projected growth rate was decreased by 50 basis points, the estimated fair value would decrease by approximately 1% or approximately $7.0 million. If all other assumptions were held constant and the share price decreased by 10%, the estimated fair value would decrease by approximately 5.8% or $31.4 million. If all other assumptions were held constant and the weighted average cost of capital increased by 100 basis points, the estimated fair value would decrease by approximately 2% or approximately $8.0 million. There is no assurance that actual results will not differ materially from the underlying assumptions used to prepare discounted cash flow analyses. Further adverse changes to macroeconomic conditions or our earnings forecasts could lead to additional goodwill or intangible asset impairment charges in future periods and such charges could be material to our results of operations.

The Company's cumulative goodwill impairment was $168.0 million and $70.0 million as of March 31, 2023 and December 31, 2022, respectively.

(12)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

~~NOTE 4. GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill~~

~~The following table summarizes changes in the carrying amount of goodwill for the three months ended March 31, 2022 (in thousands~~):

Carrying Amount

Balance at December 31, 2021

$
464,566

Measurement period adjustments

(302
)
Balance at March 31, 2022

$
464,264

Intangible Assets

The following tables ~~summarize~~summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (in thousands):


	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (years)		Gross Carrying Amount		Accumulated Amortization			Net Book Value
March 31, 2022
Risk Contracts	$	64,570	$	(13,226	)	$	51,343		7
March 31, 2023
Risk contracts										$	102,070	$	(27,887	)	$	74,183
Provider network											42,900		(2,383	)		40,517
Non-compete agreements	$	4,170	$	(892	)	$	3,278		5		4,170		(1,725	)		2,445
Trademarks		1,862		(1,114	)		748		2		1,862		(1,387	)		475
Other		251		(16	)		235		5		693		(123	)		570
Total	$	70,852	$	(15,248	)	$	55,604			$	151,695	$	(33,506	)	$	118,189


	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (years)		Gross Carrying Amount		Accumulated Amortization			Net Book Value
December 31, 2021
Risk Contracts	$	64,822	$	(9,818	)	$	55,004		7
December 31, 2022
Risk contracts										$	102,070	$	(24,217	)	$	77,853
Provider Network											42,900		(851	)		42,049
Non-compete agreements	$	4,202	$	(686	)	$	3,516		5		4,170		(1,518	)		2,652
Trademarks	$	1,867	$	(827	)	$	1,040		2		1,862		(1,352	)		510
Other	$	251	$	—		$	251		5		693		(171	)		522
Total	$	71,141	$	(11,331	)	$	59,811			$	151,695	$	(28,109	)	$	123,585

Amortization expense totaled $~~3.9~~5.4 million and $~~252,000~~3.9 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

NOTE 7. DEBT AND RELATED PARTY DEBT

~~(10)~~Credit Agreement

In May 2022, the Company entered into a credit agreement (the “Credit Agreement”) that provided for an aggregate of up to $300 million in term loans, comprised of (i) initial term loans in the aggregate principal amount of $190 million (the “Initial Term Loans”) and (ii) a delayed term loan facility in the aggregate principal amount of $110 million (the “Delayed Draw Term Loans”). The Credit Agreement permits the Company to enter into certain incremental facilities subject to compliance with the terms, conditions and covenants set forth therein. In May 2022, the Company drew $190 million of the Initial Term Loans and used approximately $121 million of the net proceeds from this borrowing to repay its outstanding obligations under the credit agreement dated June 8, 2021, as amended and recognized related debt extinguishment losses of $6.2 million. In November 2022 and March 2023, the Company drew $45 million and $30 million of the Delayed Draw Term Loans, respectively.

(13)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

~~NOTE 6. LONG TERM DEBT~~Based on the elections made by the Company, as of March 31, 2023, borrowings under the Credit Agreement bore interest of Term SOFR (calculated as the Secured Overnight Financing Rate published on the Federal Reserve Bank of New York’s website, plus the applicable credit spread adjustment, based on the elected interest period), plus an applicable margin rate of 9.00%. As permitted under the Credit Agreement, the Company elected to capitalize 4.00% of the interest as principal amount. As a result of this election, the cash interest component of the applicable margin increased by 0.50%.

Amortization payments under the Credit Agreement are payable in quarterly installments, commencing at the end of the quarter of the second anniversary of the closing of the Credit Agreement, in amounts equal to 0.25% of the aggregate outstanding principal amount of Initial Term Loans and Delayed Draw Term Loans. All amounts owed under the Credit Agreement are due in May 2027.

The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, liens or encumbrances, to make certain investments, to enter into sale-leaseback transactions or sell certain assets, to make certain restricted payments or pay dividends, to enter into consolidations, to transact with affiliates and to amend certain agreements, subject in each case to the exceptions and other qualifications as provided in the Credit Agreement. The Credit Agreement also contains covenants that require the Company to satisfy a minimum liquidity requirement of $50.0 million, which may be decreased to $25.0 million if the Company achieves a certain adjusted EBITDA, and maintain a maximum total leverage ratio based on the Company’s consolidated EBITDA, as defined in the Credit Agreement, with de novo losses excluded from the calculation of such ratio for up to 36 months after the opening of a de novo center, which maximum total leverage ratio will initially be 8.50 to 1.00, commencing with the fiscal quarter ended September 30, 2022 and is subject to a series of step-downs. For the fiscal quarters ending September 30, 2026 and thereafter the Company must maintain a maximum total leverage ratio no greater than 5.50 to 1.00.

On March 8, 2023 (the “Amendment Closing Date”), the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement.

The Second Amendment amended the Credit Agreement to, among other things, (i) provide for a new incremental delayed draw term loan B facility in an aggregate principal amount of $60.0 million (the “Delayed Draw Term Loan B Facility”); (ii) revise the commitment expiration date for the Company’s existing $110.0 million Delayed Draw Term Loan to forty-five days following the Amendment Closing Date, (iii) extend the commencement of amortization payments on loans under the Credit Agreement from March 31, 2024 to May 31, 2025; (iv) reduce the amount of interest that the Company may elect to capitalize from 4.00% to 3.50% beginning on the second anniversary of the execution date of the Credit Agreement, 3.00% beginning on the third anniversary of the execution date of the Credit Agreement, and 1.50% beginning on December 10, 2025; (v) increase the amount of the super-priority revolving credit facility that is permitted to be added to the Credit Agreement to $45.0 million and provide that the entirety of such facility may be used for general corporate purposes; and (vi) amend the prepayment provisions of the Credit Agreement, including to have such provisions run as of the Amendment Closing Date.

Loan and Security Agreement - Related Party Debt

In November 2022, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”), by and among Sparta Merger Sub I Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Sparta Merger Sub II Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Sparta Merger Sub I LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger LLC I”), Sparta Merger Sub II LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (together with Merger LLC I, the “Guarantors”), Steward Accountable Care Network, Inc. (n/k/a as Steward Accountable Care Network, LLC) and Steward National Care Network, Inc. (n/k/a Steward National Care Network, LLC), as borrowers (the “Borrowers”), , CAJ Lending LLC (“CAJ”) and Deerfield Partners L.P., as lenders (the “Lenders”), and CAJ, as administrative agent and collateral agent (in such capacity, the “Agent”). Mr. Carlos A. de Solo, a director of the Company and the Company’s President and Chief Executive Officer, Mr. Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

Pursuant to the Loan and Security Agreement, the Lenders provided the Borrowers a term loan (the “Term Loan”) in the aggregate principal amount of approximately $35.5 million. The Company used the proceeds of the Term Loan to fund the Financed Net Pre-Closing Medicare AR acquired in connection with the Steward Acquisition.

(14)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

The Term Loan bears fixed interest of 12.0% per annum. In addition, the Borrowers paid a facility fee equal to 3.0% of the aggregate principal amount of the Term Loan, which was accounted for as a debt discount. Any additional interest (if applicable) accrued and owing during the term of the Loan and Security Agreement will be paid in-kind and capitalized to principal monthly in arrears. From and after the occurrence and during the continuance of an event of default, the Term Loan will bear interest at a rate equal to 4.0% above the interest rate applicable immediately prior to the occurrence of the event of default. If Mr. Carlos de Solo is no longer serving as the Chief Executive Officer of the Company under certain circumstances and, following a request from CAJ, the Borrowers are unable to refinance the portion of the Term Loan advanced by CAJ, then the interest rate applicable to such portion may be increased by 5.0%. Pursuant to the Agreement and Plan of Merger relating to the Steward Acquisition (the “Merger Agreement”), Sparta Holding Co. LLC, a Delaware limited liability company (the “Seller”), agreed to pay the costs of financing the Financed Net Pre-Closing Medicare AR and, at the Steward Closing, paid to the Borrowers $6.8 million, representing all scheduled payments of interest and fees from the Steward Closing Date up to and including November 30, 2023, which amount was then paid in advance by the Borrowers to the Lenders.

The Loan and Security Agreement matures on the earlier of November 30, 2023, or three business days after the Borrowers receive payment for the Financed Net Pre-Closing Medicare AR from the federal government. The Term Loan may be prepaid, in whole or in part, without penalty or premium.

The Loan and Security Agreement contains customary representations, warranties, affirmative covenants, negative covenants and events of default. The Loan and Security Agreement is secured by the Borrowers’ rights in the Medicare Shared Savings Receivables (as defined in the Loan and Security Agreement) and any and all proceeds thereof. The Loan and Security Agreement is subordinated in right of payment to the Credit Agreement.

Elevance Health

In October 2022, in connection with the collaboration agreement with Elevance Health (formerly known as Anthem), which was announced in August 2021, the Company entered into a promissory note for an amount of $1.0 million due in October 2032. This borrowing bears fixed interest of 6.25% per annum.

As atof March 31, ~~2022~~2023 and December 31, ~~2021, long term~~2022, debt consisted of the following ((in thousands):

March 31, 2022

December 31, 2021

Secured term loans

$
120,313

$
121,875

Other

58

65

Unamortized debt issuance costs

(4,438
)

(4,704
)

115,932

117,236

Current portion

(6,272
)

(6,275
)
Long-term portion

$
109,660

$
110,960


	March 31, 2023			December 31, 2022
Indebtedness under the Credit Agreement	$	272,730		$	240,277
Indebtedness under the Loan and Security Agreement - Related party debt		35,510			35,510
Other		1,647			1,657
Less: Unamortized discounts and debt issuance costs		(17,422	)		(16,188	)
		292,465			261,256
Less: Current portion		(31,822	)		(30,530	)
Long-term portion	$	260,642		$	230,725

Future maturities of debt outstanding at March 31, ~~2022~~2023 were as follows (in thousands):


	Amount
Remainder of 2022		4,706
2023		6,265
Year			Amount
Remainder of 2023			$	35,715
2024		8,611		275
2025		11,726		2,480
2026		89,063		2,923
2027				267,907
Thereafter				588
Total	$	120,370	$	309,887

As of March 31, 2023, we were in compliance, in all material respects, with all covenants under our credit facilities.

NOTE 7.8. STOCKHOLDERS' EQUITY

The condensed consolidated statement of changes in equity reflects the Reverse Recapitalization discussed in Note 2. As CMG was deemed the accounting acquirer in the Reverse Recapitalization with DFHT, all periods prior to the consummation of the Business Combination reflect the balances and activity of CMG.

Related Advisory Agreement

On July 13, 2021, the Company entered into an exclusive real estate advisory agreement (the ~~"Advisory Agreement"~~“Advisory Agreement”) with Related CM Advisor, LLC (the “Advisor”), a Delaware limited liability company and a subsidiary of The Related Companies, L.P. (“Related”) (the “Advisory Agreement”), pursuant to which the Advisor has agreed to provide certain real estate advisory

(15)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

services to the Company on an exclusive basis. The services include identifying locations for new centers nationwide as part of the Company’s de novo growth strategy, including, but not limited to, locations within and proximate to affordable housing communities that may be owned by Related.

In connection with the Advisory Agreement, the Company and ~~the~~ Advisor entered into a subscription agreement (the “Subscription Agreement”), whereby the Advisor purchased 500,000 shares (the “Initial Shares”) of the Company’s Class A ~~common stock, par value $0.0001~~ ~~per share ("Class A~~ Common ~~Stock")~~Stock for an aggregate purchase price of $5.0 million and the Company issued to the Advisor (i) a warrant (the “Series A Warrant”) to purchase 2,000,000 shares of Class A Common Stock (the “Series A Warrant Shares”), which vested immediately upon issuance, is exercisable for a period of five years and is not redeemable by the Company and (ii) a warrant (the “Series B Warrant” and together with the Series A Warrant, the “Warrants”) to purchase up to 6,000,000 shares of Class A Common Stock (the “Series B Warrant Shares” and, together with the Series A Warrant Shares, the “Warrant Shares”), pursuant to which 500,000 Series B Warrant Shares will vest and become exercisable from time to time upon the opening of each center under the Advisory Agreement for which the Advisor provides services, other than two initial centers.

The company assessed the substance of the Subscription Agreement and determined that all instruments referenced in the Subscription Agreement should be assessed under the guidance of ASC 718 ~~Compensation - Stock Compensation~~, as non-employee awards issued to Related in exchange for real estate advisory services to be rendered per the Advisory Agreement. As a result, the Company recorded the Series A Warrants as a component of additional paid-in-capital using the fair value as of July 13, 2021.

The Series B Warrant is exercisable, to the extent vested, until the later of five years from the date of issuance or one year from vesting of the applicable Series B Warrant Shares and is redeemable with respect to vested Warrant Shares at a price of $0.01 per Warrant Share if the price of the Class A Common Stock equals or exceeds $18.00 per share, or $0.10 per Warrant Share if the price of the Class A Common Stock equals or exceeds $10.00 per share, in each case when such price conditions are satisfied for any 20 trading days within a 30-trading day period and subject to certain adjustments and conditions as described

~~(11)~~

~~CAREMAX, inc.~~

~~NOTES TO condensed consolidated FINANCIAL STATEMENTS~~

(u~~naudited~~)

in the Series B Warrant. In the event that the Series B Warrant is called for redemption by the Company, the Advisor may pay the exercise price for the Series B Warrant Shares six months following the notice of redemption by the Company.

Series B Warrants are recognized at their grant date fair value once vesting becomes probable.No warrants vested during the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company recorded $2.5 million ~~which represents the fair value of vested Series B Warrants,~~ in other assets ~~except for the portion that represents Series B Warrant amortization expected to be recognized during the next twelve months, which is recorded in prepaid expenses,~~ to reflect vesting of 500,000 Series B Warrant Shares using their grant date fair value. Refer to Note ~~10,~~ 12, Related Party Transactions,, for additional information.

~~Preferred Stock~~

~~The Amended~~Balances associated with the Series A and ~~Restated Charter authorizes~~Series B warrants are recorded in the ~~Company to issue~~ ~~1,000,000~~ ~~shares of preferred stock, with such designations, voting~~right-of-use assets and other ~~rights~~assets, except for the portion that represents amortization expected to be recognized over the next twelve months, which is recorded in other current assets. The portion of Series A and ~~preferences~~Series B warrants recorded in other current assets as ~~may be determined from time to time by the Company’s board of directors. As~~ of March 31, 2023 and December 31, 2022 ~~there were~~ was $no0.6 ~~shares of preferred stock issued or outstanding.~~million and $0.6 million, respectively.

Redeemable Warrants - Public Warrants

OnIn July, ~~16,~~ 2020, in connection with the IPO, DFHT sold 2,875,000 Public Warrants. Each whole Public Warrant entitles the registered holder to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment, at any time commencing on the later of 12 months from the closing of the IPO and 30 days after the completion of the Business Combination, provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreements entered into at the time of the IPO, a warrant holder may exercise its Public Warrants only for a whole number of shares of Class A Common Stock. This means only a whole Public Warrant may be exercised at a given time by a warrant holder. No fractional warrants were issued upon separation of the units issued in connection with the IPO and only whole Public Warrants will trade. The Company may redeem the Public Warrants when the price per share of Class A Common Stock equals or exceeds certain threshold prices.

Redeemable Warrants - Private Placement Warrants

Also in connection with the IPO, DFHT issued the 2,916,667 Private Placement Warrants at a purchase price of $1.50 per warrant. The Private Placement Warrants (including the Class A Common Stock issuable upon exercise of the Private

(16)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

Placement Warrants) are not transferable, assignable or salable until 30 days after the completion of the Business Combination (except, among other limited exceptions to DFHT’s officers and directors and other persons or entities affiliated with the initial purchasers of the Private Placement Warrants) and they will not be redeemable by CareMax for cash so long as they are held by the initial stockholders or their permitted transferees. With some exceptions, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants. If the Private Placement Warrants are held by holders other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.

~~(12)~~

~~CAREMAX, inc.~~

~~NOTES TO condensed consolidated FINANCIAL STATEMENTS~~

(u~~naudited~~)

Contingent Consideration ~~Common Shares~~- Business Combination

Pursuant to the Business Combination Agreement, the CMG Sellers and IMC Parent, who received Class A Common Stock in connection with the Business Combination, ~~are~~became entitled to receive ~~earn-out consideration~~Contingent Consideration to be paid out in the form of Class A Common Stock. The Business Combination Agreement ~~provides~~provided that up to an additional 3,500,000 and 2,900,000 ~~contingently issuable shares of Class A Common (the "Earnout Shares") are~~Earnout Shares would become payable after the Closing to the CMG ~~Sellers~~ sellers and IMC Parent,: respectively: (i) if within the first year after the Closing, the volume weighted average trading price of Class A Common Stock equals or exceeds $12.50 on any 20 trading days in any 3030-day~~-day~~ trading period (the “First Share Price Trigger”), then 1,750,000 and 1,450,000 Earnout Shares ~~are~~would become issuable to the CMG Sellers and IMC Parent, respectively, and (ii) if within the two years after the Closing (the “Second Earnout Period”), the volume weighted average trading price of Class A Common Stock equals or exceeds $15.00 on any 20 trading days in any 3030-day~~-day~~ trading period (the “Second Share Price Trigger” and together with the First Share Price Trigger, the “Share Price Triggers”), then 1,750,000 and 1,450,000 Earnout Shares ~~will be~~would become issued and paid to the former owners of CMG ~~Sellers~~ and IMC, ~~Parent,~~ respectively. If prior to (i) the satisfaction of the Share Price Triggers, and (ii) the end of the Second Earnout Period, the Company enters into a change in control transaction as described in the Business Combination Agreement, and the price per share of the Company’s Class A Common Stock payable to the stockholders of the Company in such change in control transaction is greater than the Share Price Triggers that have not been satisfied during the Earnout Period, then at ~~the~~ closing of such change in control transaction, the Share Price Triggers ~~will~~would be deemed to have been satisfied and the Company ~~is required to~~shall issue, as of such closing, all of the ~~applicable unissued~~Earnout Shares. The contingent consideration was classified as a liability for the period ended June 30, 2021. On July 9th, 2021, the volume weighted average trading price of Class A Common Stock exceeded the $12.50 on 20 or more days resulting in the satisfaction of the First Share Price Trigger. After the First Share Price Trigger was achieved on July 9, 2021, the estimated fair value of the Earnout Shares was ~~initially accounted for~~recorded as an equity-classified instrument as a ~~liability-classified instrument~~component of stockholders' equity, with ~~changes~~the change in ~~its~~ fair value from the prior reporting period recorded in ~~our condensed consolidated statements of operations until July 9, 2021. On July 9, 2021, the First Share Price Trigger was achieved, resulting in issuance of~~earnings. Accordingly, 1,750,000 and 1,450,000 Earnout Shares were issued and paid to the CMG Sellers and IMC Parent, respectively. Subsequent to the achievement of the First Share Price Trigger, the Company determined the Earnout Shares subject to the second Share Price Trigger should be equity classified and were recorded as such on July 9, 2021, the date of the event that caused the reclassification.

~~Stock-based compensation~~Contingent Consideration - Steward Acquisition

Pursuant to the Merger Agreement signed in connection with Steward Acquisition, upon 100,000 Medicare lives from and/or attributable to the seller parties' Medicare network participating in risk-based, value-based care arrangements contracted through the Company with a Medical Expense Ratio of less than 85% for two consecutive calendar quarters, the Company will issue the seller, for immediate distribution to its equity holders, a number of shares of Class A Common Stock (the “Earnout Share Consideration” and together with the Initial Share Consideration, the “Share Consideration”) that, when added to the initial share consideration issued as part of the Steward Acquisition, would have represented 41% of the issued and outstanding shares of the Company’s Class A Common Stock as of the November 10, 2022 (the "Steward Closing"), in each case after giving effect to issuances of Class A Common Stock between the Steward Closing and June 30, 2023 in connection with the exercise of warrants to purchase Class A Common Stock outstanding as of the Steward Closing, the potential earnout under the Company’s Business Combination and any forfeitures, surrenders or other dispositions to the Company of Class A Common Stock outstanding as of the Steward Closing. If not previously issued, the Earnout Share Consideration will also be issuable upon a Change in Control (as defined in the Merger Agreement) of the Company. The Company accounts for the Earnout Share Consideration as a liability, because the number of shares issuable at the time the contingency is resolved is not fixed, based on the provisions summarized above.

Preferred Stock

The Company’s third amended and restated certificate of incorporation authorizes the Company to issue up to 1,000,000 shares of preferred stock, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. During the year ended December 31, 2022, the Company issued one share of Series A Preferred Stock to the seller of Steward Value-Based Care. This share of Series A Preferred Stock has a stated par value of $0.0001 and has no economic rights. The holder of the outstanding share of Series A Preferred Stock is entitled to vote with

(17)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

holders of outstanding shares of Common Stock, voting together as a single class, with respect to the Special Matters (as defined in the Certificate of Designation of Series A Preferred Stock filed by the Company with the Secretary of State of the State of Delaware on November 10, 2022), and has no other voting rights. In any such vote, the share of Series A Preferred Stock will be entitled to 37,241,783 votes. The voting rights under the share of Series A Preferred Stock last until the earlier of (i) the two year anniversary of the Steward Closing and (ii) the issuance of the Earnout Share Consideration in connection with the Steward Acquisition.

NOTE 9. STOCK-BASED COMPENSATION

On June 4, 2021, the stockholders of the Company approved the CareMax, Inc. 2021 Long-term Incentive Plan (the “2021 Plan”)~~, effective on the Closing Date.~~. The 2021 Plan permits the grant of equity-based awards to officers, directors, employees and other service providers. The 2021 Plan permits the grant of an initial share pool of 7,000,000 shares of Class A Common Stock and will be increased automatically, without further action of the Company’s board of directors, on January 1st of each calendar year commencing after the Closing Date and ending on (and including) January 1, 2031, by a number of shares of Class A Common Stock equal to the lesser of (i) four percent of the aggregate number of shares of Class A Common Stock outstanding on December 31st of the immediately preceding calendar year, excluding for this purpose any such outstanding shares of Class A Common Stock that were granted under the 2021 Plan and remain unvested and subject to forfeiture as of the relevant December 31st, or ~~(B)~~(ii) a lesser number of shares of Class A Common Stock as determined by the Company’s board of directors or the Compensation Committee of the board of directors prior to the relevant January 1st.

During the three months ended March 31, 2023 and 2022, wethe Company grantedzero and 77,000 restricted stock units, respectively, under the 2021 ~~Plan at a weighted-average grant date fair value of $7.41~~ ~~per share (there were~~ no ~~grants during~~Plan. During the three months ended March 31, ~~2021). In addition, during the three months ended March 31,~~2023 and 2022, ~~and 2021~~ there was no vesting of previously ~~granted~~issued awards.

During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense oftotaling $2.3 million and $1.1 million, ($0 during the three months ended March 31, 2021). Stock-based compensation expense is included in the corporate, general and administrative expenses in our condensed consolidated statements of operations.respectively. As of March 31, 2023 and 2022, the Company had $16.4 million and $7.9 million, respectively, of compensation expense related to ~~all non-vested~~unvested equity awards ~~(RSU, PSU,~~(RSUs, PSUs, options) that will vest over the ~~weighted-average~~weighted average period of1.9 years and 2.5 years, ~~(there were~~ no ~~awards outstanding as of March 31, 2021).~~respectively.

NOTE 8.10. NET ~~INCOME (LOSS)~~LOSS PER SHARE

The Business Combination was accounted for as a reverse recapitalization by which CMG issued equity for the net assets of the Company accompanied by a recapitalization. Earnings per share have been recast for all historical periods to reflect the Company’s capital structure for all comparative periods.

~~(13)~~

~~CAREMAX, inc.~~

~~NOTES TO condensed consolidated FINANCIAL STATEMENTS~~

(u~~naudited~~)

The following table sets forth the calculation of basic and diluted ~~earnings~~net loss per share for the periods indicated based on the weighted-average number of common ~~share~~shares outstanding ~~for the period subsequent to the transactions that occurred in connection with the Business Combination~~ (in thousands, except share and per share data):

Three Months Ended March 31,

2022

2021

Net (loss) income attributable to CareMax, Inc. class A common stockholders

$
(16,797
)

$
1,302

Weighted average basic shares outstanding

87,367,972

10,796,069

Weighted average diluted shares outstanding

87,367,972

10,796,069

Net (loss) income per share

Basic

$
(0.19
)

$
0.12

Diluted

$
(0.19
)

$
0.12


	Three Months Ended March 31,
	2023			2022
Net loss attributable to CareMax, Inc. class A common stockholders	$	(82,082	)	$	(16,797	)

Weighted-average basic shares outstanding		111,360,802			87,367,972
Weighted-average diluted shares outstanding		111,360,802			87,367,972

Net loss per share
Basic	$	(0.74	)	$	(0.19	)
Diluted	$	(0.74	)	$	(0.19	)

The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive or because issuance of shares underlying such securities is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Series A Warrants and Series B Warrants		8,000		—
Public and Private Warrants		5,792		—
Series A and Series B Warrants						8,000,000		8,000,000
Public and Private Placement Warrants						5,791,652		5,791,652
Earnout Shares		3,200		—		40,700,000		3,200,000
Unvested restricted stock units		1,162		—		2,547,830		1,162,000
Unvested performance stock units		66		—
Unvested performance stock units (assumes 100% target payout)						209,163		66,000
Unvested options		131		—		373,565		131,000
Total		18,351		—		57,622,210		18,350,652

(18)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

NOTE 9.11. FAIR VALUE MEASUREMENTS

Financial Instruments that are Measured at Fair Value on a Recurring Basis

The following ~~table presents~~tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value (in thousands):

March 31, 2022

Quoted Prices
in Active
Markets

Significant other
Observable
Units

Significant other
Unobservable
Units

Description

(Level 1)

(Level 2)

(Level 3)

Derivative warrant liabilities

$
—

$
—

$
11,911


			Fair Value
March 31, 2023			Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
Description	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Derivative warrant liabilities - Public Warrants	$	1,380	$	1,380	$	—	$	—
Derivative warrant liabilities - Private Placement Warrants		1,488		–		–		1,488
Contingent earnout consideration		98,425		–		–		98,425
Total liabilities measured at fair value	$	101,293	$	1,380	$	—	$	99,913

December 31, 2021

Quoted Prices
in Active
Markets

Significant other
Observable
Units

Significant other
Unobservable
Units

Description

(Level 1)

(Level 2)

(Level 3)

Derivative warrant liabilities

$
—

$
—

$
8,375


			Fair Value
December 31, 2022			Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
Description	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Derivative warrant liabilities - Public Warrants	$	1,495	$	1,495	$	—	$	—
Derivative warrant liabilities - Private Placement Warrants		2,479		–		–		2,479
Contingent earnout consideration		134,561		–		–		134,561
Total liabilities measured at fair value	$	138,535	$	1,495	$	—	$	137,040

Fair value of Public Warrants is measured using the listed market price of such warrants.

Fair value of the ~~Public Warrants issued in connection with the IPO and the~~ Private Placement Warrants ~~was initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants has been~~is estimated using a Monte Carlo simulation model each measurement date. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The ~~fair value~~Company estimates the volatility of ~~Public Warrants issued in connection with~~its common stock based on historical volatility of select peer companies that matches the ~~IPO has been measured~~expected remaining life of the warrants. The risk-free interest rate is based on the ~~listed market price~~U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of ~~such~~the warrants. The expected life of the warrants ~~since~~is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the ~~IPO.~~ historical rate, which the Company anticipates remaining at zero.

During the three months ended March 31, ~~2022,~~2023, the Company recognized a ~~loss~~benefit resulting from ~~an increase~~a decrease in the fair value of the derivative warrant liabilities of $1.1 million (a loss of $3.5 ~~million.~~million during the three months ended March 31, 2022).

Fair value of contingent earnout consideration is calculated using 37.5 million shares, which the Company estimates will be issuable to the seller of Steward Value-Based Care upon achievement of certain performance metrics, the closing price of the Company's Class A Common Stock at the end of the relevant reporting period ($2.67 and $3.65 as of March 31, 2023 and December 31, 2022, respectively), and a 99% probability of payout.

Transfers between level 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers between levels ~~during~~for the three months ended March 31, ~~2022.~~2023 or 2022.

~~(14)~~(19)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

Activity of the liabilities measured at fair value was as follows (in thousands):


Balance as of December 31, 2021	$	9,250
Change in fair value of derivative warrant liabilities		(4,401	)
Payment of contingent consideration		(875	)
Contingent consideration issued as part of the Steward Acquisition		210,856
Change in fair value of contingent consideration		(76,295	)
Balance as of December 31, 2022		138,535
Change in fair value of derivative warrant liabilities		(1,107	)
Change in fair value of contingent consideration		(36,136	)
Balance as of March 31, 2023	$	101,293

The following table provides quantitative information regarding Level 3 fair value ~~measurements~~measurement inputs used in measurement of fair value of Private Placement Warrants:


	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Exercise price	$	11.50		$	11.50		$	11.50		$	11.50
Unit price	$	7.47		$	7.68
Underlying stock price							$	2.67		$	3.65
Volatility		50.8	%		37.6	%		75.3	%		69.1	%
Expected life of the options to convert		4.19			4.44
Expected life of the options to convert (years)								3.19			3.44
Risk-free rate		2.40	%		1.17	%		3.72	%		4.08	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

~~The change in the fair value of the warrant liabilities for the three months ended March 31, 2022 is summarized as follows (in thousands~~):Financial Instruments that are not Measured at Fair Value on a Recurring Basis

Fair value of derivative warrant liabilities at December 31, 2021

$
8,375

Change in fair value of derivative warrant liabilities

3,536

Fair value of derivative warrant liabilities at March 31, 2022

$
11,911


March 31, 2023			Fair Value
	Carrying Value		Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
(in thousands)			(Level 1)		(Level 2)		(Level 3)
Liabilities
Fixed rate debt (a)	$	36,479	—		—		$	33,767
Floating rate debt (a)		272,730	—		—			294,165
Total	$	309,209	$	—	$	—	$	327,932

			Fair Value
December 31, 2022	Carrying Value		Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
(in thousands)			(Level 1)		(Level 2)		(Level 3)
Liabilities
Fixed rate debt (a)	$	36,498	—		—		$	32,820
Floating rate debt (a)		240,277	—		—			240,280
Total	$	276,775	$	—	$	—	$	273,100

(a) The debt amounts above do not include the impact of debt issuance costs or discounts.‌

NOTE ~~10.~~12. RELATED PARTY TRANSACTIONS

The Related Companies

On July 13, 2021, the Company entered into the Advisory Agreement with the Advisor, the substance of which is described in Note 7,8, ~~Stockholders~~Stockholders' Equity. The relative fair value method was used to allocate the $5.0 million purchase price between the shares of Class A Common Stock and the Series A Warrants under the Subscription Agreement. The Company recorded the excess of the grant date fair value difference between the fair value of the equity and Series A Warrants at the grant date (July 13, 2021) as prepaid service contracts totaling $14.5 million, subject to amortization over the terms of the respective agreements. During the three months ended March 31, 2023, the Company recognized $0 of expense related to amortization of the Series A Warrants ($0.1 million during the three months ended March 31, 2022).‌

(20)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

other assets to reflect vesting of 500,000 Series B Warrant Shares using their grant date fair value. Refer to Note 8, Stockholders' Equity, for additional information.

Balances associated with the Series A and Series B warrants are recorded in the right-of-use assets and other assets, except for the portion that represents amortization expected to be recognized over the next twelve months, which is recorded in other current assets. The portion of Series A and Series B warrants recorded in other current assets as of March 31, 2023 and December 31, 2022 was $0.6 million and $0.6 million, respectively.

In addition, during the three months ended March 31, 2022, we recorded $0.4 million in construction in progress representing construction advisory services provided to us by Related (none during the three months ended March 31, 2023).

On July 13, 2021, the Company's board of directors (the "Board") appointed Mr. Bryan Cho, an Executive Vice President of Related, to serve as a Class III director of the Company. The appointment of Mr. Cho was made in connection with the Advisory Agreement, which provides the Advisor with the right to designate a director to serve on the Company's board of directors, subject to the continuing satisfaction of certain conditions, including that the Advisor and its affiliates maintain ownership of at least 500,000 shares of Class A Common Stock.

As a director of the Company, Mr. Cho will receive compensation in the same manner as the Company’s other non-employee directors.

Steward Health Care System LLC

In connection with closing of the Steward Acquisition, the Company issued 23,500,000 shares of the Company's Class A Common Stock, which at closing, resulted in the equity holders of the Seller owning approximately 21% of the Company’s Class A Common Stock.

On and effective as of November 17, 2022, the Board appointed Dr. Ralph de la Torre to serve as a Class II director of the Board. Dr. de la Torre will serve until the Company’s 2023 Annual Meeting of Stockholders and until his successor is duly elected or appointed or his earlier death, resignation or removal. The appointment of Dr. de la Torre was made in connection with that certain Investor Rights Agreement, dated November 10, 2022, by and among the Company, the Seller, Dr. de la Torre, Dr. Michael Callum, the Executive Vice President for Physician Services and an equity holder of the Seller, Medical Properties Trust, Inc., a Maryland corporation, and certain other equity holders of the Seller, which provides that Dr. de la Torre has the right to designate an individual to be nominated to serve on the Board, subject to the continuing satisfaction of certain conditions. Dr. de la Torre is the Chairman, Chief Executive Officer and principal equity holder of Steward Health Care System, LLC.

CAJ and Deerfield

In November 2022, the Company entered into Loan and Security Agreement, described in Note 7, Debt and Related Party Debt, whereby CAJ and Deerfield are the lenders.‌

Mr. Carlos A. de Solo, a director of the Company and the Company’s President and Chief Executive Officer, Mr. Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

Mr. Kevin Berg, who is on the Company’s Board, is a Senior Advisor with Deerfield. As a director of the Company, Mr. Berg will receive compensation in the same manner as the Company’s other non-employee directors.‌

MSP Recovery, Inc.‌

Ms. Beatriz Assapimonwait serves on the Company's Board. Ms. Assapimonwait also joined the board of directors of MSP Recovery, Inc. ("MSP Recovery") in 2022. As of March 31, 2023 and December 31, 2022, the Company had accounts receivable from MSP Recovery of $1.1 million and $2.3 million, respectively. During the three months ended March 31, 2023 and 2022, the Company ~~recognized vesting~~had subrogation income from MSP Recovery of $~~500,000~~0 ~~shares of Series B Warrants related to opening of one center for which the Advisor provides services under the Advisory Agreement. Refer to Note 7,~~ and $~~Stockholder's Equity~~0.2~~, for additional information.~~

NOTE 13. LEASES

The Company has entered into operating lease agreements for centers and office space expiring at various times through 2043, inclusive of renewal options that the Company is reasonably certain to exercise. The exercise of such lease renewal options is at our sole discretion, and to the extent we are reasonably certain we will exercise a renewal option, the years related to that option are included in our determination of the lease term for purposes of classifying and measuring a given lease.‌

Operating lease expense primarily represents fixed lease payments for operating leases recognized on a straight-line basis over the applicable lease term. Variable lease expense represents the payment of real estate taxes, insurance, maintenance and, for certain locations, additional rentals based on a percentage of sales in excess of stipulated minimums (excess rent). The payment of variable real estate taxes, insurance and maintenance is generally based on the Company’s pro-rata share of the total building square footage. Lease expense is recorded in cost of care and corporate, general and administrative expenses in the condensed consolidated statements of operations.

ASC 842 Disclosures

Lease costs were as follows (in thousands):


	Three Months Ended March 31, 2023
Operating lease cost	$	4,284
Variable lease cost		669
Short-term lease cost		281
Total lease cost	$	5,234

During the three months ended March 31, 2023, we obtained $5.7 million of right-of-use assets in exchange for new operating lease liabilities and paid $2.8 million for amounts included in the measurement of operating lease liabilities, included in the operating cash flows from operating lease assets and liabilities in our consolidated statements of cash flows.

Weighted-average of the remaining lease terms and weighted-average discount rate were as follows:


	Three Months Ended March 31, 2023
Weighted average remaining lease term (years)	11.9
Weighted-average discount rate		7.18	%

As of March 31, 2023, maturities of operating lease liabilities were as follows (in thousands):


Year	Amount
Remainder of 2023	$	6,053
2024		15,883
2025		15,223
2026		14,361
2027		13,545
Thereafter		106,604
Total lease payments		171,668
Less: Present value discount		(61,478	)
Present value of lease liabilities	$	110,190

At March 31, 2023, the Company ~~and is taxed~~entered into leases that have not yet commenced with aggregated estimated future lease payments of approximately $103.0 million, which are not included in the above table. These leases relate to properties that are being constructed by the future lessors. These leases are expected to commence throughout 2023 or 2024, with initial lease terms ranging from 10 to 20 years.

ASC 840 Disclosures

(22)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

Prior to adoption of ASC 842, the Company accounted for its lease arrangements under ASC 840, Leases, with no right-of-use assets or lease liabilities being reflected on the condensed consolidated balance sheets. The Company recognized $4.3 million of lease expense during the three months ended March 31, 2022.

Future minimum rental payments under these lease agreements, including renewal options which are considered reasonably certain of exercise, consisted of the following at ~~the federal and state levels accordingly.~~March 31, 2022:


Year	Amount
2022	$	8,381
2023		13,531
2024		13,440
2025		13,130
2026		12,556
Thereafter		139,501
Total lease payments	$	200,539

NOTE 14. INCOME TAXES

Income tax ~~provision for~~expense was $0.2 million and $0.2 million during the three months ended March 31, 2023 and 2022, respectively. The effective tax rate was $(~~181,000~~0.2~~, compared to $~~)% and (01.1 ~~for~~)% during the three months ended March 31, ~~2021. The effective tax rate for the three months ended March 31,~~2023 and 2022, ~~was (1.1~~)%respectively, based on the assessment of a full valuation allowance, excluding a portion attributable to athe "naked credit" deferred tax liability.

NOTE ~~13.~~15. COMMITMENTS AND CONTINGENCIES

Compliance

The health care industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse ~~statues~~statutes and regulations by healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed. Compliance with these laws and regulations, specifically those related to the Medicare and Medicaid programs, can be subject to government review and interpretation, as well as regulatory actions unknown and not yet asserted at this time. Management believes that the Company is in substantial compliance with current laws and regulations.

Litigation

The Company is involved in various legal actions arising in the normal course of business. Management has not identified any legal actions during the three months ended March 31, 2023 or 2022 that were deemed to be material.

NOTE ~~14.~~16. VARIABLE INTEREST ENTITIES

Medical Care of NY, P.C., Medical Care of Tennessee, PLLC and Medical Care of ~~Tennessee,~~Texas, PLLC (together, the "PCs") were established ~~in 2022~~ to employ healthcare providers to deliver healthcare services to patients in New York, Tennessee, and ~~Tennessee.~~Texas. In addition, the Company has an Administrative Service Agreement (the "ASA") with Care Optical, LLC (the "Care Optical"), which provides optometry services in the state of Florida. The Company concluded that it has variable interest in the PCs and Care Optical on the basis of its ~~Administrative Service Agreements (the "ASAs")~~ASAs which provide for a management fee payable to the Company from the PCs and Care Optical in exchange for providing management and administrative services which creates risk and a potential return to the Company. The PCs' and Care Optical's equity at risk, as defined by GAAP, is insufficient to finance their activities without additional support, and therefore, the PCs and Care Optical are considered to be VIEs.

In order to determine whether the Company has a controlling financial interest in the PCs and Care Optical, and, thus, is the PCs' primary beneficiary, the Company considered whether it has i)(i) the power to direct the activities of PCs and Care Optical that most significantly impacts their economic performance and ~~ii)~~(ii) the obligation to absorb losses of the PCs and Care Optical or the right to receive benefits from the PCs and Care Optical that could potentially be significant to them. The Company

(23)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(unaudited)

concluded that the ~~shareholder~~member and employees of the PCs and Care Optical have no individual power to direct activities of the PCs and Care Optical that most significantly impact their economic performance. Under the ASAs, the Company is responsible for providing services that impact the growth of the patient population of the PCs and Care Optical, the management of that population's healthcare needs, the provision of required healthcare services to those patients, and the PCs' and Care Optical's ability to receive revenue from health plans. In addition, the Company's variable interest in the PCs and Care Optical provides the Company with the right to receive benefits that could potentially be significant to them. The single ~~member~~members of the PCs ~~is an employee~~and Care Optical are employees of the Company. Based on this analysis, the Company concluded that it is the primary beneficiary of the PCs and Care Optical and therefore consolidates the balance sheet, results of operations and cash ~~flow~~flows of the ~~PCs.~~PCs and Care Optical.

~~Assets and liabilities~~Furthermore, as a direct result of nominal initial equity contributions by the single members of the PCs ~~were as follows~~and Care Optical, the financial support CareMax provides to the PCs and Care Optical (e.g. loans) and the provisions of the arrangements described above, the interest held by the single member lacks economic substance and does not provide the member with the ability to participate in the residual profits or losses generated by the PCs and Care Optical. Therefore, all income and expenses recognized by the PCs and Care Optical are allocated to CareMax.

The following tables summarize the financial position and operations of the PCs and Care Optical (in thousands):


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Total assets	$	1,500	$	-	$	2,381	$	1,097
Total liabilities	$	1,500	$	-	$	5,725	$	2,961


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Revenues	$	417	$	-
Operating expenses	$	1,714	$	-

No ~~revenues or expenses have been generated or incurred by the PCs during the three months ended March 31, 2022.~~

NOTE ~~15.~~17. SUBSEQUENT EVENTS

~~On May 10, 2022 (the “Credit Agreement Closing Date”),~~In April 2023, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, certain of the Company’s subsidiaries as guarantors (the “Subsidiary Guarantors”), Jefferies Finance LLC, as Administrative Agent, Collateral Agent, Sole Lead Arranger and Bookrunner, BlackRock Financial Management (as defined in the Credit Agreement), as Lead Manager, Crestline Direct Finance, L.P., as Documentation Agent, and certain other banks and financial institutions serving as lenders (collectively with their successors and assigns, the “Lenders”). The Credit Agreement provides for an aggregate of up todrew $~~300.0~~ ~~million in term loans, comprised of (i) initial term loans in an aggregate principal amount of $190.0~~ ~~million (the “Initial Term Loans”), which will be fully drawn on the Credit Agreement Closing Date and (ii) a delayed draw term loan facility in an aggregate principal amount of $110.0~~ ~~million (the “Delayed Draw Term Loans” and together with the Initial Term Loans, the “Term Loans”), which will be available to be drawn in up to five (~~5) borrowings from and after the Credit Agreement Closing Date until the eighteen (18) month anniversary of the Credit Agreement Closing Date under certain circumstances to finance permitted acquisitions and similar permitted investments, de novo center growth and optimization of de novo centers and management services organization performance, as set forth in the Credit Agreement. The Credit Agreement provides that it may be amended to provide for a $~~30.0~~ ~~million revolving credit facility, of which up to $5.0~~ ~~million may be used for revolving loans for general corporate purposes and up to $30.0~~ million may be used to issue letters of credit (the “Revolving Facility” and, together with the Term Loans, the “Credit Facilities”). The Credit Agreement also provides for certain uncommitted incremental facilities.

~~The Company is using approximately $120.3~~35.0 million of the net proceeds of the Initial Term Loans to repay its outstanding obligations under that certain credit agreement, dated June 8, 2021, as amended (the “Existing Credit Agreement”). During the second quarter 2022, the Company expects to recognize estimated debt extinguishment loss of $~~6.3~~ ~~million related to early repayment of the Existing Credit Agreement.~~

~~At the Company’s option, borrowings under the Credit Agreement bear interest at: (i) the Alternate Base Rate (defined as the highest of (a) the U.S. Prime Lending Rate as published in~~ ~~The Wall Street Journal, (b) the Federal Funds Rate plus~~ ~~0.50% and (c) Term SOFR for an interest period of one month, subject to a floor of~~ ~~1.00%, plus~~ ~~1.00%), plus an applicable margin rate of~~ ~~8.00%; or (ii) Term SOFR (calculated as the Secured Overnight Financing Rate published on the Federal Reserve Bank of New York’s website, plus a spread adjustment of~~ ~~0.114~~%, ~~0.262% or~~ ~~0.428%, depending on if the Company selects a one-month, three-month or six-month interest period, respectively), plus an applicable margin rate of~~ ~~9.00%. The Company may, at its option, elect to capitalize up to~~ ~~4.00% of the interest as principal amount on the outstanding Term Loans, provided that in such case the applicable margin rate will be increased by~~ ~~0.50~~%. Accrued and unpaid interest is payable (x) with respect to Alternate Base Rate loans, quarterly on the last business day of each of March, June, September and December (each, a “Quarterly Payment Date”), with any remaining accrued and unpaid interest paid upon the Maturity Date (as defined below), (y) with respect to Term SOFR loans, on the last day of interest period as selected by the Company and, in the case of any Term SOFR loan with an interest period greater than three months, each day that is the three-month anniversary of such Term SOFR loan, with any remaining accrued and unpaid interest paid upon the Maturity Date and (z) for loans under the Revolving Facility, upon the Maturity Date.

~~Amortization payments with respect to the Initial Term Loans will be payable in quarterly installments, commencing on March 31, 2024, in aggregate principal amounts equal to~~ ~~0.25% of the original aggregate principal amount of the Initial Term Loans, and amortization with respect to any~~ Delayed Draw Term ~~Loans will be payable in quarterly installments, commencing on March 31, 2024, in aggregate principal amounts equal to~~ ~~0.25~~% of the original aggregate principal amount of each funded Delayed Draw Term Loan. In addition, the Credit Agreement provides for certain mandatory prepayments based on the Company’s secured leverage ratio or upon any asset sale and provides for prepayment penalties of up to ~~3.00~~% in certain circumstances. All amounts owed under the Credit Facilities are due and payable on the five-year anniversary of the Credit Agreement Closing Date (the "Maturity Date"), or earlier following a change in control or an event of default, unless otherwise extended in accordance with the terms of the Credit Agreement.

~~(17)~~

~~CAREMAX, inc.~~

~~NOTES TO condensed consolidated FINANCIAL STATEMENTS~~

(u~~naudited~~)

~~the calculation of such ratio for up to 36 months after the opening of a de novo center, which maximum total leverage ratio will initially be~~ ~~8.5~~ ~~to 1 and is subject to a series of step-downs. For the fiscal quarters ending September 30, 2026 and thereafter the Company must maintain a maximum total leverage ratio no greater than~~ ~~5.50~~ ~~to 1.00.~~Loans.

All obligations under the Credit Agreement are guaranteed by the Company and the Subsidiary Guarantors, and all obligations under the Credit Agreement, including the guarantees of those obligations, are secured by substantially all of the assets of the Company and the Subsidiary Guarantors subject to customary exceptions and qualifications. The Credit Agreement contains customary events of default, with default interest of 2~~% in excess of the non-default rate, and also includes cure rights for the Company upon certain events of default.~~

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

Unless the context otherwise requires, references in this section to “CareMax,” “we,” “us,” “our,” and the “Company” ~~refers~~refer to CareMax, Inc. together with its consolidated subsidiaries. The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form ~~10-Q/A~~10-Q (the “Report”).

This Report contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. The words “anticipate,” “believe,” “plan,” “expect,” “may,” “could,” “should,” “project,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement inis not forward-looking. Actual results could differ materially from those discussed in these forward-looking statements due to a variety of risks and uncertainties and other factors, including but not limited to those contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“Annual Report”~~"Annual Report"), which was filed with the Securities and Exchange Commission (the ~~“SEC”~~"SEC") on March ~~16, 2022,~~30, 2023, under the caption ~~“Risk Factors”~~"Risk Factors" and, the following:

Due to the uncertain nature of these factors, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Any forward-looking statement speaks only as of the date on which statement is made, and we undertake no obligation to update any of these statements or circumstances occurring after the date of this Report. New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects.

As of March 31, 2023, CareMax ~~currently operates 48~~operated 62 centers in Florida, Tennessee, ~~and~~ New York and ~~plans to open 15 de novo centers during 2022, inclusive of the three opened in the first quarter of 2022.~~Texas. CareMax offers a comprehensive range of medical services, including primary and preventative care, specialist services, diagnostic testing, chronic disease management and dental and optometry services under global capitation contracts.

CareMax’s comprehensive, high touch approach to health care delivery is powered by its CareOptimize technology platform. CareOptimize is a ~~proprietary~~purpose built end-to-end technology platform that aggregates data and analyzes that data using proprietary algorithms and machine learning to support more informed care delivery decisions and to focus care decisions on preventative chronic disease management and the social determinants of health. CareMax believes that CareOptimize is designed to drive better outcomes and lower costs. CareMax has shifted from selling the CareOptimize platform to new outside customers for a software subscription fee and is instead focused on providing the software to affiliated practices of its managed services organization ~~("MSO"~~(“MSO”) to further improve financial, clinical and quality outcomes from the affiliated providers. ~~As of March 31, 2022, this MSO serviced more than 100 independent physician associations ("IPAs").~~

~~CarMax’s~~CareMax’s centers offer 24/7 access to care through employed providers and provide a comprehensive suite of high-touch health care and social services to its patients, including primary care, specialty care, telemedicine, health & wellness, optometry, dental, pharmacy and transportation. CareMax’s differentiated healthcare delivery model is focused on care coordination with vertically integrated ambulatory care and community-centric services. The goal of CareMax is to intercede as early as possible to manage chronic conditions for its patient members in a proactive, holistic, and tailored manner to provide a positive influence on patient outcomes and a reduction in overall healthcare costs. CareMax ~~specifically~~ focuses on providing access to high quality care in underserved communities, with approximately 61% of its MA patients being dual-eligible (meaning eligible for both Medicare and Medicaid) and low-income subsidy eligible as of March 31, 2022 (60% as of December 31, 2021).communities.

While CareMax’s primary focus is providing care to Medicare eligible seniors who are mostly 65+ (approximately ~~79%~~76% and ~~100%~~79% of revenue for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, came from these patients), we also provide services to children and adults through Medicaid programs as well as through commercial insurance plans. Substantially all of ~~CareMax’s~~the Medicare patients cared for in CareMax's centers are enrolled in MA plans which are run by private insurance companies and are approved by and under contract with Medicare. With MA, patients get all of the same coverage as original Medicare, including emergency care, and most plans also include prescription drug coverage. In many cases, MA plans offer more benefits than original Medicare, including dental, vision, hearing and wellness programs. We contract with nearly all national and most regional, local Medicare Advantage plans.

~~We believe~~In addition to Medicare Advantage contracts, through our MSO we ~~can translate the above premium services into economic benefits. By focusing on interventions that keep our~~service other Medicare patients ~~healthy, we can capture the cost savings that our care model creates~~through a variety of value-based contracts, such as Medicare Shared Savings Program (“MSSP”) and reinvest them further in our care model. We believe these investments lead to better outcomes and improved patient experiences, which will drive further cost savings, power patient retention and enable us to attract new patients. We believe increasing cost savings over a growing patient population will deliver an even greater surplus to the organization, enabling us to reinvest to scale and fund new centers, progress our care model and enhance our technology.ACO Reach.

As discussed above, ~~CareMax~~the Company partners with ~~MA,~~Medicare, Medicaid, and commercial insurance plans. While CareMax currently services mostly MAMedicare patients, we also accept Medicare ~~Fee-for-Service~~fee-for-service patients. The chart below shows a breakdown of our current membership on a pro forma basis. This pro forma view assumes the Business Combination with IMC occurred on January 1, ~~2020~~2021, and is based upon estimates which we believe are ~~reasonable:~~reasonable. Given the close proximity of the closing of the acquisition of the Medicare value-based care business of Steward Health Care System (the "Steward Acquisition") on November 10, 2022 to our year-end December 31, 2022, we did not calculate pro forma adjustments related to this acquisition.

Because CareMax accepts multiple insurance types, it uses a Medicare-Equivalent Member (“MCREM”) value in reviewing key factors of its performance. To determine the Medicare-Equivalent, CareMax ~~calculates~~estimates the amount of support typically

received by one Medicare patient as equivalent to the level of support received by three Medicaid or Commercial patients. This is due to Medicare patients on average having significantly higher levels of chronic and acute conditions that need higher levels of care. Due to this dynamic, a 3:1 ratio is applied ~~when normalizing membership statistics~~to make year over ~~year.~~year comparisons of total membership more comparable. The breakdown of membership on a pro forma basis using MCREM is below:

As of March 31, ~~2022,~~2023, CareMax had approximately ~~34,000~~95,500 MA patients of which ~~86%~~98% were in value-based ~~or risk-based,~~agreements. Approximately 37% of patients in the Medicare Advantage value-based care agreements were in full-risk contracts. This means CareMax has been selected as the patient’s primary care provider and is financially responsible for some or all of the patient’s medical costs. ~~For these patients~~ CareMax is attributed an agreed percentage of the premium the MAMedicare plan receives from the Centers for Medicare and Medicaid Services (“CMS”) (typically a substantial majority of such premium given the risk assumed by ~~CareMax)~~the Company). A reconciliation is performed periodically and if premiums exceed medical costs paid by the MA plan, CareMax receives payment from the MAMedicare plan. If medical costs paid by the MAMedicare plan exceed premiums, CareMax is responsible to reimburse the MAMedicare plan.

As of March 31, 2023, CareMax had approximately 107,000 patients enrolled in Medicare Government VBC Programs, of which 92% were in the Medicare Shared Savings Program ("MSSP") and 8% were in the ACO REACH program. The MSSP is sponsored by the CMS. The MSSP allows participating Accountable Care Organizations ("ACOs") to receive a share of cost savings they generate in connection with the management of costs and quality of medical services rendered to Medicare beneficiaries. Payments to the ACO participants, if any, are calculated annually and paid once a year by CMS on cost savings generated by the ACO participant relative to the ACO participants’ CMS benchmark. Under the MSSP, the ACO must meet certain qualifications to receive the full amount of its allocable cost savings or they either receive nothing or are responsible for shared losses. The MSSP rules require CMS to develop a benchmark for savings to be achieved by each participant if the participant is to receive shared savings. An ACO that meets the MSSP’s quality performance standards will be eligible to receive a share of the savings to the extent its assigned beneficiary medical expenditures are below the medical expenditure benchmark provided by CMS. A Minimum Savings Rate (“MSR”), which varies depending on the number of beneficiaries assigned to the ACO, must be achieved before the ACO can receive up to 75% of share of the savings if quality performance standards are met; the ACO is also responsible for 40% of the deficit. Once the MSR is surpassed, all the savings below the benchmark provided by CMS will be shared with the ACO.

As of March 31, ~~2022,~~2023, CareMax had approximately ~~28,500~~33,500 Medicaid patients of which ~~approximately 92%~~100% were in value-based agreements. Approximately 91% of patients in the Medicaid value-based care agreements were in full-risk contracts. Using the MCREM metric, the level of support required to manage these Medicaid patients equates to that of approximately ~~9,400~~11,200 Medicare patients. In Florida, most Medicaid recipients are enrolled in the Statewide Medicaid Managed Care program.

Similar to the risk it takes with Medicare, CareMax is attributed an agreed percentage of the premium the Medicaid plan receives from Florida’s Agency for Health Care Administration (“AHCA”) (typically a substantial majority of such premium given the risk assumed by ~~CareMax)~~the Company). A reconciliation is performed periodically and if premiums exceed medical costs paid by the Medicaid plan, CareMax receives payment from the Medicaid plan. If medical costs paid by the Medicaid plan exceed premiums, we are responsible to reimburse the Medicaid plan.

As of March 31, ~~2022,~~2023, CareMax managed approximately ~~21,500~~34,500 commercial patients of which ~~approximately 30%~~97% were under a value-based ~~contracts~~agreement that provided upside-only financial incentives for quality and utilization performance. Using the MCREM metric, the level of support required to manage these commercial patients equates to that of approximately ~~7,200~~11,400 Medicare patients.

CareMax cares for a number of commercial patients ~~(approximately 15%~~(less than 1% of ~~CareMax's~~the Company's total patients) for whom it is reimbursed on a fee-for-service basis via their health plan in situations where it does not have a capitation relationship with that particular health plan.

CareMax fee for-service revenue, received directly from commercial plans, on a per patient basis is typically lower than its per patient revenue for at-risk patients ~~basis~~based in part because its fee-for-service revenue covers only the primary care services that it directly provides to the patient, while the risk revenue is intended to compensate it for the services directly performed by itCareMax as well as the financial risk that it assumes related to the third-party medical expenses of at-risk patients.

Our economic model relies on its capitated partnerships with payors which manage and market MAMedicare plans across the United States. CareMax has established strategic value-based relationships with ~~eleven~~a number of different payors for Medicare Advantage patients, ~~four different payors for~~ Medicaid patients, and ~~one payor for Affordable Care Act ("ACA")~~ACA patients. Our three largest

payor relationships were ~~Anthem, Humana~~Payor A, Payor C and ~~Centene,~~Payor E, which generated ~~35%~~31%, ~~17%~~22% and ~~16%~~20% of our revenue, respectively, during the three months ended March 31, ~~2022, respectively, and 49%, 4%, and 18% of our revenue on a pro forma basis, assuming the Business Combination with IMC occurred on January 1, 2020, during~~2023. During the three months ended March 31, ~~2021, respectively.~~2022 our three largest payor relationships were Payor A, Payor C, and Payor D, which generated 35%, 17%, and 16% of our revenue. These existing contracts and relationships with our ~~partners’~~national partners and their understanding of the value of the CareMax model reduces the risk of entering into new markets as CareMax typically ~~has~~seeks to have payor contracts in place before entering a new market. Maintaining, supporting, and growing these relationships, particularly as CareMax enters new markets, isare critical to our long-term success. We believe CareMax’s model is well-aligned with its payor partners —- to drive better health outcomes for their patients, ~~enhancing~~enhance patient satisfaction, ~~while driving~~and drive incremental patient and revenue growth. This alignment of interests helps ~~ensures~~ensure our continued success with our payor partners.

The capitated nature of our contracting with payors requires us to prudently manage the medical expense of our patients. Our external provider costs are our largest expense category, representing 39% of our total operating expenses for the three months ended March 31, 2023 and 63% of our total operating expenses for the three months ended March 31, ~~2022 and 70% of our total operating expenses for the three months ended March 31, 2021.~~2022. Our care model focuses on leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as acute hospital admissions. Our patients retain the freedom to seek care at ~~ERs~~emergency rooms or hospitals; we do not restrict their access to care. Therefore, we could be liable for potentially large medical claims should we not effectively manage our patients’ health. We utilize stop-loss insurance for our patients, protecting us ~~for~~from medical claims ~~per episode~~ in excess of certain levels.

We endeavor to expand our number of centers and number of patients at each center over time. Due to the significant fixed costs associated with operating and managing our centers, we generate significantly better center-level contribution margins as the patient base within our centers increases and our costs decrease as a percentage of revenue. As a result, the value of a center to our business increases over time when the number of patients at a center expands.

Due to the large number of dual-eligible patients (meaning eligible for both Medicare and Medicaid) we serve, the annual enrollment period does not materially affect our growth during the year. We typically see large increases in ACA patients during the first quarter as a result of the ACA annual enrollment period (October to December). However, this is not a large portion of our business.

Our operational and financial results will experience some variability depending upon the time of year in which they are measured. This variability is most notable in the following areas:

The revenue derived from our at-risk patients is a function of the percentage of premium we have negotiated with our payor partners, as well as our ability to accurately and appropriately document the acuity of a patient. We experience some seasonality with respect to our per-patient revenue, as it will generally decline over the course of the year. In January of each year, CMS revises the risk adjustment factor for each patient based upon health conditions documented in the prior year, leading to changes in per-patient revenue. As the year progresses, our per-patient revenue declines as new patients join us, typically with less

complete or accurate documentation (and therefore lower risk-adjustment scores), and patient mortality disproportionately impacts our higher-risk (and therefore greater revenue) patients.

External Provider Costs will vary seasonally depending on a number of factors, but most significantly the weather. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which can result in an increase in medical expenses during these time periods. We would therefore expect to see higher levels of per-patient medical costs in the first and fourth quarters. Medical costs also depend upon the number of business days in a period. Shorter periods will have lesser medical costs due to fewer business days. Business days can also create year-over-year comparability issues if one year has a different number of business days compared to another. We would also expect to experience an impact in the future should there be another pandemic such as COVID-19, which may result in increased or decreased total medical costs depending

upon the severity of the infection, the duration of the infection and the impact to the supply and availability of healthcare services for our patients.

As it relates to our MSSP contracts, settlements from the prior year from the CMS typically take place during the fourth quarter of each year, which results in variability of our accounts receivable, cash flow from operations, and cash balances throughout the year.

We expect to continue to focus on long-term growth through investments in our centers, MSO, platform, care model and marketing. In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth and ~~because of additional~~ costs to operate as a public company, including expenses related to compliance with the rules and regulations of the SEC, Sarbanes Oxley Act compliance, the stock exchange listing standards, additional corporate and director and officer insurance expenses, greater investor relations expenses and increased legal, audit and consulting fees. company.

As we have communicated, we plan to invest in openings of new de novo centers both within and outside of Florida over the next several years. ~~Historically, de~~De novo centers require upfront capital and operating expenditures, which ~~may~~typically are not be fully offset by ~~additional~~ revenues in the near-term, ~~and~~as a result of which we ~~similarly~~ expect a period of unprofitability in our ~~future~~ de novo centers before they break even. Costs we incur prior to opening of a de novo center include (1) incremental payroll costs from employees specifically associated with the operational, contractual, physical, or regulatory infrastructure for de novo centers, prior to their opening; (2) legal costs incurred directly associated with the de novo centers, prior to their opening, which includes services such as execution of leases, health plan contracts and other agreements; (3) other expenses related to diligence, design, permitting, and other “soft costs” at new sites; and (4) rent and facility expenses prior to center opening. Once a de novo center opens, we incur post-opening losses, which consist of center-level operating losses recognized at a de novo center until the center breaks even, up to 18 months after opening. The de novo post-opening losses consist of revenue, external provider costs and cost of care allocated to the de novo center. During the three months ended March 31, 2023 and 2022, we incurred de novo pre-opening costs and post-opening losses, on a combined basis, of $6.4 million and $2.1 million, respectively.

While our net income (loss) may decrease in the future because of these activities, we plan to balance these investments in future growth with a continued focus on managing our results of operations and generating positive income from our core centers and scaled acquisitions. In the longer term, we anticipate that these investments will positively impact our business and results of operations.

In addition to our financial information which conforms with generally accepted accounting principles in the United States of America (“GAAP”), management reviews a number of operating and financial metrics, including the following key metrics, to evaluate its business, measure its performance, identify trends affecting its business, formulate business plans, and make strategic decisions.

Certain financial information and data contained in this Report is unaudited and does not conform to Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in, or may be presented differently in, any periodic filing, information or proxy statement, or prospectus or registration statement to be filed by the Company with the

SEC. Some of the financial information and data contained in this Report, such as Adjusted EBITDA and margin thereof, and Platform Contribution and margin thereof have not been prepared in accordance with GAAP. These non-GAAP measures of financial results are not GAAP measures of our financial results or liquidity and should not be considered as an alternative to net income (loss) as a measure of financial results, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses these non-GAAP measures for trend analyses and for budgeting and planning purposes.

The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing the Company’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of ~~judgments~~judgment by management about which expense and income are excluded or included in determining these ~~non-GAAP financial measures. For this reason, these non-GAAP measures may not be comparable to other companies' similarly labeled~~ non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. You should review the Company’s audited financial statements, ~~contained~~which are included in ~~the Annual~~this Report.

~~Management defines “EBITDA”~~Adjusted EBITDA is defined as net income or ~~net~~ loss before interest expense, depreciation and amortization, remeasurement of warrant and contingent earnout liabilities, goodwill impairment, stock-based compensation, acquisition and integration related costs, Business Combination integration costs, income tax provision ~~depreciation and amortization, change in fair value of warrant liabilities, and gain~~ or loss on extinguishment of debt. “Adjusted EBITDA” is defined as EBITDA adjusted for special items such as duplicative costs, non-recurring legal, consulting, and professional fees, stock based compensation, de novo costs for the first 18 months after opening, discontinued operations, acquisition costsbenefit, and other ~~costs~~income or expenses that are considered one-time in nature as determined by management. ~~Additionally, Adjusted EBITDA presented on a pro forma basis gives effect to the acquisitions of IMC and Care Holdings Group, LLC ("Care Holdings"), which owned~~

Care Optimize LLC, as if they had occurred in historical periods, which does not necessarily reflect what the Company’s Adjusted EBITDA would have been had the acquisitions occurred on the dates indicated. Adjusted EBITDA is intended to be used as a supplemental measure of our performance that is neither required by, nor presented in accordance with GAAP. Management believes that the use of Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measure with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentations of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

Due to these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on the GAAP results and using Adjusted EBITDA on a supplemental basis. Please review the reconciliation of net (loss) income to EBITDA and Adjusted EBITDA below and do not rely on any single financial measure to evaluate the Company’s business:

~~(1) Pro Forma figures give effect~~Reconciliation to ~~the Business Combinations of IMC and Care Holdings as if they had occurred in historical periods.~~Adjusted EBITDA

We define platform contribution as revenue less the sum of (i) external provider costs and (ii) cost of care. We believe this metric best reflects the economics of our care model as it includes all medical claims expense associated with our patients’ care as well as the costs we incur to care for our patients via the CareMax System. As a center matures, we expect the platform contribution from that center to increase both in terms of absolute dollars as well as a percentage of capitated revenue. This increase will be driven by improving patient contribution economics over time, as well as our ability to generate operating leverage on the costs of our centers. Our aggregate platform contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers. We would expect to experience minimal seasonality in platform contribution due to minimal seasonality in our patient contribution.

(a) Includes payments to our third-party transaction advisory firm associated with transaction contracts, including the Steward transaction that was closed in November 2022. Also, costs include legal and accounting fees directly associated with contemplated or closed transactions.
(b) Includes incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions.

(a) Represents consulting and legal costs directly associated with efforts related to integration of the two privately held companies that were combined in the Business Combination.

(b) Represents incremental compensation expense directly associated with efforts related to integration of the two privately held companies that were combined in the Business Combination.

(c) Represents primarily vendor expenses identified as temporary or duplicative and/or expenses outside the ordinary course of business and not necessary to run the Company's business.

In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. The chart below is a pro forma view of our operations. This pro forma view was calculated in a manner consistent with the concepts of Article 8 of Regulation S-X, assumes the Business Combination occurred on January 1, ~~2020,~~2021, and ~~are~~is based upon estimates which we believe are reasonable.

~~Non-GAAP~~ Operating Metrics and Non-GAAP Platform Contribution and Pro Forma Platform Contribution

The following metrics are as of the end of the indicated period, except for Platform Contribution, which is for the indicated period ended:

We define our centers as those primary care centers open for business and ~~capable~~open for enrollment of ~~attending to~~ patients at the end of a particular period.

MCREM patients includes both at-risk MA patients (those patients for whom we are financially responsible for their total healthcare costs) as well as risk and non-risk, non-MA patients. We define our total at-risk patients as ~~at-risk~~ patients who have selected us as their provider of primary care medical services as of the end of a particular ~~period. We define our total fee-for-service patients as fee-for-service patients who come to one of our centers~~period and for ~~medical care~~whom we take responsibility for at least ~~once per year. A fee-for-service and at-risk~~some degree of downside risk in capitated contracts. At-risk patient remains active in our system until we are informed by the health plan the patient is no longer active. As discussed above, CareMax calculates the amount of support typically received by one Medicare patient as equivalent to the level of support received by three Medicaid or Commercial patients.

We define Platform Contribution as gross profit plus depreciation and amortization, share-based compensation recognized within cost of care and other adjustments, as disclosed below. Gross profit is defined as revenue less the sum of (i) external provider costs; (ii) cost of care, including share-based compensation, and (iii) depreciation and amortization expense. We believe this metric best reflects the economics of our care model as it includes all medical claims expense associated with our patients’ care as well as the costs we incur to care for our patients at our centers. As a center matures, we expect the Platform Contribution from that center to increase both in terms of absolute dollars as well as a percentage of revenue. This increase will be driven by improving patient contribution economics over time, as well as our ability to generate operating leverage on the costs of our centers. Our aggregate Platform Contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers.

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to Pro Forma Platform Contribution and Platform Contribution:

The rapid spread of COVID-19 around the world and throughout the United States altered the behavior of businesses and people, with significant negative effects on federal, state and local economies. The virus disproportionately impacts older adults, especially those with chronic illnesses, which describes many of our patients.

We estimate the impact of direct COVID-19 costs had a negligible negative impact on our performance for the three months ended March 31, ~~2022 has been negatively impacted by~~2023 and an approximately ~~$1.0~~$1 million ~~of direct COVID-19 costs.~~

negative impact on our performance for the three months ended March 31, 2022. Management cannot accurately predict the future impacts of COVID-19 due to the uncertainty surrounding future spikes in COVID-19 cases or new variants that may emerge in the future.

Medicare ~~risk-based revenue~~Risk-Based Revenue and Medicaid ~~risk-based revenue.~~Risk-Based Revenue. Our ~~capitated~~Medicare and Medicaid risk-based revenue consists primarily of capitation fees for medical services provided by us or managed by our MSO under a global capitation arrangement made directly with various MA payors. Capitation is a fixed amount of money per patient per month paid in advance for the delivery of health care services, whereby we are generally liable for medical costs in excess of the fixed payment and are able to retain any surplus created if medical costs are less than the fixed payment. A portion of our capitated revenues are typically prepaid monthly to us based on the number of MA patients selecting us as their primary care provider. Our capitated rates are determined as a percentage of the premium the MA plan receives from CMS for our at-risk members. Those premiums are determined via a competitive bidding process with CMS and are based upon the cost of care in a local market and the average utilization of services by the patients enrolled. Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient. Payors with higher acuity patients receive more in premium, and those with lower acuity patients receive less in premium. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data

submitted for the preceding year and is adjusted in subsequent periods after the final data is compiled. As premiums are adjusted via this risk adjustment model, our capitation payments will ~~change in unison~~correlate with how our payor partners’ premiums change with CMS. Risk adjustment in future periods may be impacted by COVID-19 and our inability to accurately document the health needs of our patients, ~~in a compliant manner,~~ which may have an adverse impact on our revenue.

For Medicaid, premiums are determined by Florida’s AHCA and ~~based~~base rates are adjusted annually using historical utilization data projected forward by a third-party actuarial firm. The rates are established based on specific cohorts by age and sex and geographical location. AHCA uses a “zero sum” risk adjustment model that establishes acuity for certain cohorts of patients quarterly, and depending on the scoring of that acuity, ~~and~~ may periodically shift premiums from health plans with lower acuity members to health plans with higher acuity members.

Government Value-Based Care Revenue. Government Value-Based Care Revenue consists primarily of revenue derived from the Medicare Shared Savings Program (“MSSP”). The MSSP is sponsored by the Center for Medicare and Medicaid Services (“CMS”). The MSSP allows accountable care organizations (“ACOs”) to receive a share in cost savings they generate in connection with the managing of costs and quality of medical services rendered to Medicare beneficiaries. Payments to ACO participants, if any, are calculated annually and paid once a year by CMS on cost savings generated by the ACO participant relative to the ACO participants’ CMS benchmark. Under the MSSP, an ACO must meet certain qualifications to receive the full amount of its allocable cost savings or they either receive nothing or are responsible for shared losses. The MSSP rules require CMS to develop a benchmark for savings to be achieved by each ACO if the ACO is to receive shared savings. An ACO that meets the MSSP’s quality performance standards will be eligible to receive a share of the savings to the extent its assigned beneficiary medical expenditures are below the medical expenditure benchmark provided by CMS. A Minimum Savings Rate (“MSR”) must be achieved before the ACO can receive a share of the savings. Once the MSR is surpassed, all the savings below the benchmark provided by CMS will be shared at a certain percentage with the ACO. The MSR varies depending on the number of beneficiaries assigned to the ACO.

Other ~~revenue.~~Revenue. Other revenue ~~includes~~consists primarily of professional capitation ~~payments.~~payments and pharmacy revenue. These revenues are a fixed amount of money per patient per month paid in advance for the delivery of primary care services only, whereby CareMax is not liable for medical costs in excess of the fixed payment. Capitated revenues are typically ~~prepaid~~paid monthly to CareMax based on the number of patients selecting us as their primary care provider. Our capitated rates are fixed, contractual rates. Incentive payments for Healthcare Effectiveness Data and Information Set (“HEDIS”) and any services paid on a ~~fee for service~~fee-for-service basis by a health plan are also included in other revenue. Other revenue also includes ancillary fees earned under

contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether those patients receive their care from our affiliated medical groups. Revenue for primary care service for patients in a partial risk or ~~up-side only~~upside-only contracts, pharmacy revenue and revenue generated from CareOptimize are reported in other revenue.

~~We expect capitated revenue will increase as a percentage of total revenues over time because of the greater revenue economics associated with at-risk patients compared to fee-for-service patients.~~

~~Medicare and Medicaid external provider costs.~~External Provider Costs. External provider costs include ~~all~~ services at-risk patients ~~utilize.~~utilize that are rendered by providers other than CareMax. These include claims paid by the health plan and estimates for unpaid claims. The estimated reserve for incurred but not paid claims is included inas a reduction to accounts receivable as we do not pay medical claims. Actual claims expense will differ from the estimated liability due to ~~factors~~differences in estimated and actual patient utilization of health care services, the amount of charges, and other factors. We typically reconcile our medical claims expense with our payor partners on a monthly basis and adjust our estimate of incurred but not paid claims if necessary. To the extent we revise our estimates of incurred but not paid claims for prior periods up or down, there would be a correspondingly favorable or unfavorable effect on our current period results that may or may not reflect changes in long term trends in our performance. We expect our medical claims expenses to increase in both absolute dollar terms as well as on a ~~per patient per month ("PPPM")~~PMPM basis given the healthcare spending trends within the Medicare population and the increasing disease burden of patients as they age.

Cost of ~~care.~~Care. Cost of care includes the costs of additional medical services we provide to patients that are not paid by the plan. These services include patient transportation, medical supplies, auto insurance and other specialty costs, like dental or vision. In some instances, we have negotiated better rates than the health plans for these health plan covered services. In addition, cost of care includes rent, utilities and facilities costs required to maintain and operate our ~~centers.~~centers, and compensation of the clinic and support staff.

Cost of care also includes distributions to affiliate IPA physicians and physician groups. Expenses from our physician groups that contract with our MSO are consolidated with other clinical and MSO expenses to determine profitability for our at-risk and fee-for-service arrangements. Physician group economics are not evaluated on ~~a stand-alone~~an individual provider basis, as ~~certain non-clinical~~MSO related medical expenses ~~need to be~~are consolidated ~~to consider profitability.~~at the contract level.

We measure the incremental cost of our capitation agreements by starting with our center-level expenses, which are calculated based upon actual expenses incurred at a specific center for a given period of time and expenses that are incurred centrally and allocated to centers on a ratable basis. These expenses are allocated to our at-risk patients based upon the number of visit slots these patients utilized compared to the total slots utilized by all of our patients. All visits, however, are not identical and do not require the same level of effort and expense on our part. Certain types of visits are more time and resource intensive and therefore result in higher expenses for services provided internally. Generally, patients who are earlier in their tenure with CareMax utilize a higher percentage of these more intensive visits, as we get to know the patient and properly assess and document such patient’s health condition.

~~Selling and marketing expenses.~~ ~~Selling~~Sales and marketing expenses represent employee-related expenses, such as salaries, commissions and related benefits, including stock-based compensation for sales and marketing departments. These expenses also include ~~the cost of our sales~~marketing and community relations ~~team, including salaries and commissions,~~related costs, such as radio and television advertising, events and promotional items.

Corporate, ~~general~~General and ~~administrative expenses.~~Administrative Expenses. Corporate, general, and administrative expenses ~~include~~represent employee-related expenses, ~~including~~such as salaries and related ~~costs and~~benefits, including stock-based compensation ~~technology infrastructure, operations, clinical and quality~~for support functions like finance, legal, human resources, and business ~~development departments.~~developments. In addition, ~~corporate general and administrative~~these expenses include corporate technology, third party professional services and corporate occupancy costs. We expect these expenses to increase over time due to the additional legal, accounting, insurance, investor relations and other costs that we will incur as a public company, as well as other costs associated with continuing to grow our business. We also expect our corporate, general and administrative expenses to increase in absolute dollars in the foreseeable future. However, we anticipate corporate, general and administrative expenses to decrease as a percentage of revenue over the long term, although they may fluctuate as a percentage of revenue from period to period due to the timing and amount of these expenses.

Depreciation and ~~amortization.~~Amortization. Depreciation and amortization expenses are primarily attributable to our capital investments and consist of fixed asset depreciation and amortization of intangibles considered to have definite ~~lives, and amortization of capitalized internal-use software costs.~~lives.

Interest ~~expense.~~expense, net. Interest expense, net, consists primarily of interest payments, paid-in-kind interest, amortization of debt issuance costs and debt discount on our outstanding ~~borrowings.~~borrowings, offset by interest income on cash equivalents.

Change in fair value of derivative warrant liabilities. Change in fair value of derivative warrant liabilities consists of changes in fair value of the PublicWarrants and Private Placement Warrants.

Gain (loss) on remeasurement of contingent earnout liabilities. Gain (loss) on remeasurement of contingent earnout liabilities consists of changes in the fairvalue of contingent earnout liabilities.

Other income (expense), net. Other income (expense), net, ~~includes research~~consists of miscellaneous non-operating corporate expenses and ~~development costs, franchise tax payments and other miscellaneous corporate expenses.~~

~~Acquisition related costs.~~ ~~Acquisition related costs consist of legal and other transaction-related expenses.~~gains.

Three Months Ended March 31, ~~2022~~2023 compared to Three Months Ended March 31, ~~2021~~2022

The following table sets forth our condensed consolidated statements of operations data for the periods indicated:


	Three Months Ended March 31,												Three Months Ended March 31,
($ in thousands)	2022			2021			$ Change			% Change			2023			2022			$ Change			% Change
Revenue
Medicare risk-based revenue	$	107,747		$	27,816		$	79,931			287.4	%	$	121,593		$	107,747		$	13,847			12.9	%
Medicaid risk-based revenue		20,165			-			20,165			100.0	%		25,626			20,165			5,460			27.1	%
Government value-based care revenue														10,010			-			10,010			100.0	%
Other revenue		9,008			102			8,906			8,731.8	%		15,754			9,008			6,746			74.9	%
Total revenue		136,920			27,918			109,002			390.4	%		172,983			136,920			36,063			26.3	%
Operating expense
Operating expenses
External provider costs		92,856			18,159			74,697			411.3	%		110,673			92,856			17,818			19.2	%
Cost of care		27,349			5,353			21,996			410.9	%		38,627			27,349			11,278			41.2	%
Sales and marketing		3,301			291			3,010			1,034.4	%		3,765			3,301			464			14.1	%
Corporate, general and administrative		18,978			1,795			17,183			957.3	%		23,945			18,978			4,967			26.2	%
Depreciation and amortization		5,062			514			4,548			884.7	%		6,576			5,062			1,515			29.9	%
Goodwill impairment														98,000			-			98,000			100.0	%
Acquisition related costs		266			-			266			100.0	%		20			266			(246	)		(92.6	%)
Total costs and expenses		147,811			26,112			121,699			466.1	%		281,606			147,811			133,795			90.5	%
Operating (loss) income	$	(10,890	)	$	1,806		$	(12,696	)		(703.0	%)
Operating loss														(108,623	)		(10,890	)		(97,733	)		897.4	%
Nonoperating income (expense)
Interest expense, net														(10,458	)		(1,728	)		(8,730	)		505.3	%
Change in fair value of derivative warrant liabilities														1,107			(3,536	)		4,643			(131.3	%)
Gain (loss) on remeasurement of contingent earnout liabilities														36,136			-			36,136			100.0	%
Other income (expense), net														(66	)		(462	)		396			(85.6	%)
														26,718			(5,726	)		32,444			(566.6	%)
Interest expense		(1,728	)		(504	)		(1,224	)		242.8	%
Loss on remeasurement of warrant liabilities		(3,536	)		-			(3,536	)		(100.0	%)
Other expenses		(462	)		-			(462	)		(100.0	%)
(Loss) income before income taxes	$	(16,616	)	$	1,302		$	(17,918	)		(1,376.2	%)
Income tax provision		(181	)		-			(181	)		(100.0	%)
Net (loss) income	$	(16,797	)	$	1,302		$	(18,099	)		(1,390.1	%)
Loss before income tax														(81,904	)		(16,616	)		(65,289	)		392.9	%
Income tax expense														(177	)		(181	)		4			(2.0	%)
Net loss													$	(82,082	)	$	(16,797	)	$	(65,285	)		388.7	%

Medicare risk-based revenue. Medicare risk-based revenue was $121.6 million for the three months ended March 31, 2023, an increase of $13.8 million, or 12.9%, compared to $107.7 million for the three months ended March 31, ~~2022, an increase of $79.9 million compared to $27.8 million for the three months ended March 31, 2021.~~2022. This increase was driven primarily by a ~~345%~~14% increase in the total number of at-risk patients, ~~from the acquisitions of IMC, SMA, and DNF,~~ partially offset by a ~~13% reduction~~1% net decrease in rates, driven by member ~~mix.~~mix, and the impact of the net prior period development. Medicare-risk based revenue was negatively impacted by the prior period development in the amount of $25.0 million.

Medicaid risk-based revenue. Medicaid risk-based revenue was $25.6 million for the three months ended March 31, 2023, an increase of $5.5 million, or 27%, compared to $20.2 million for the three months ended March 31, 2022. ~~Medicaid risk-based~~This increase was driven primarily by the 64% increase in patients, partially offset by a 22% decrease in rates, driven by member mix and the impact of the net prior period development. Medicaid-risk based revenue ~~relates entirely to patients that were acquired from~~was negatively impacted by the ~~Business Combination with IMC.~~prior period development in the amount of $1.9 million.

Government value-based care revenue. Government value-based care revenue was $10.0 million for the three months ended March 31, 2023. This increase is a result of the Steward Acquisition.

Other revenue. Other revenue was $15.8 million for the three months ended March 31, 2023, an increase of $6.7 million, or 74.9%, compared to $9.0 million for the three months ended March 31, ~~2022, an increase of $8.9 million compared to $102,000 for the three months ended March 31, 2021.~~2022. The increase is related to ~~fee-for-service and~~the growth in pharmacy revenues ~~acquired in various acquisitions.~~due to enhanced service offerings, such as home delivery, and higher other partial risk surplus payments.

External provider costs. External provider costs were $110.7 million for the three months ended March 31, 2023, an increase of $17.8 million, or 19.2%, compared to $92.9 million for the three months ended March 31, ~~2022, an~~2022. The increase was mostly driven by incremental costs to support the 22% increase in full-risk revenue over the same period, and due to the impact of ~~$74.7 million compared to $18.2~~the net prior period development. External provider costs were negatively impacted by the prior period development in the amount of $12.4 million.

Cost of care. Cost of care expenses were $38.6 million for the three months ended March 31, ~~2021. The~~2023, an increase ~~was primarily due~~of $11.3 million, or 41%, compared to ~~a 452% increase in at-risk patients from the acquisitions of IMC, SMA and DNF, partially offset by a 7% decrease in PPPM rates, driven by member mix.~~

~~Cost of care expenses. Cost of care expenses were~~ $27.3 million for the three months ended March 31, ~~2022, an increase of $22.0 million compared to $5.3 million for the three months ended March 31, 2021.~~2022. The increase was due to ~~membership growth from acquisitions~~increases in headcount, medical supplies, and other related costs to support and operate the higher number of ~~IMC, SMA,~~centers, including de novo centers, and ~~DNF.~~members in the current period, as compared to the prior period.

Sales and marketing expenses. Sales and marketing expenses were $3.8 million for the three months ended March 31, 2023, an increase of $0.5 million, or 14.1%, compared to $3.3 million for the three months ended March 31, ~~2022, an~~2022. The increase was primarily due to expanding our sales staff and marketing efforts to increase membership levels in our centers, as we have grown the number of ~~$3.0 million~~centers, including de novo centers, we operate in 2023 as compared to ~~$291,000~~2022.

Corporate, general and administrative expenses. Corporate, general and administrative expenses were $23.9 million for the three months ended March 31, ~~2021. The~~2023, an increase ~~was primarily due~~of $5.0 million, or 26.2%, compared to ~~the increase in sales staff and marketing efforts resulting from acquisitions.~~

~~Corporate, general & administrative.~~ ~~Corporate, general & administrative expense was~~ $19.0 million for the three months ended March 31, ~~2022, an increase of $17.2 million compared to $1.8 million for the three months ended March 31, 2021.~~2022. The increase was primarily from ~~the acquired overhead related~~higher salaries, wages and professional fees as we grow our corporate infrastructure to ~~IMC, SMA, DNF, BIX and Advantis, as well as costs associated with becoming a publicly traded company.~~support our operational growth.

Depreciation and amortization. Depreciation and amortization expense was ~~$5.0~~$6.6 million for the three months ended March 31, ~~2022,~~2023, an increase of ~~$4.5~~$1.5 million, or 29.9%, compared to ~~$514,000~~$5.1 million for the three months ended March 31, ~~2021.~~2022. This ~~was due to~~increase is primarily driven by the amortization of ~~intangible assets purchased in~~intangibles acquired as part of the ~~IMC, SMA, and DNF acquisitions.~~Steward Acquisition.

Goodwill impairment. During the three months ended March 31, 2023, we recognized goodwill impairment of $98.0 million, mainly driven by the reduction of the market value of our quoted stock price. No goodwill impairment charges were recognized during the three months ended March 31, 2022.

Acquisition related costs. Acquisition related costs were ~~$266,000~~less than $0.1 million for the three months ended March 31, 2023, a decrease of $0.2 million, or 92.6%, compared to $0.3 million during for the three months ended March 31, 2022.

Interest expense, net. Interest expense, net, was $10.5 million for the three months ended March 31, 2023, an increase of $8.7 million, or 505.3%, compared to $1.7 million for the three months ended March 31, 2022. This ~~cost relates primarily to the acquisition of DNF and Advantis.~~

~~Interest expense. Interest expense was $1.7 million for the three months ended March 31, 2022, an~~ increase ~~of $1.2 million compared to $504,000 for the three months ended March 31, 2021. This~~ was due to the increased borrowings ~~under~~and higher weighted-average interest rate. Refer to Note 7, Debt, for further information on the ~~Existing Credit Agreement.~~borrowings outstanding as of March 31, 2023.

Change in fair value of derivative warrant liabilities. We ~~have~~ recorded a ~~loss~~gain of ~~$3.5~~$1.1 million during the three months ended March 31, ~~2022, as a result of~~2023, an increase ~~in the fair value~~ of ~~derivative warrant liabilities. There were no warrant liabilities as~~$4.6 million, or 131%, compared to a loss of ~~March 31, 2021.~~

~~Other expenses.~~ ~~Other expenses were $456,000~~$3.5 million for the three months ended March 31, ~~2022~~2022. This decrease is primarily driven by the decrease in CareMax's stock price during the three months ended March 31, 2023, as compared to $0the increase in CareMax's stock price during the three months ended March 31, 2022.

Gain (loss) on remeasurement of contingent earnout liabilities. We recorded a gain on remeasurement of contingent earnout liabilities related to the Steward Acquisition of $36.1 million during the three months ended March 31, 2023 driven by the decrease in the market value of the Company's Class A Common Stock since December 31, 2022.

Other income (expenses), net. Other expenses were $0.1 million for the three months ended March 31, ~~2021. The increase is driven by miscellaneous corporate expenses.~~2023, a decrease of $0.4 million, or 85.6%, as compared to other expenses of $0.5 million for the three months ended March 31, 2022.

As of March 31, ~~2022,~~2023, we had cash and cash equivalents on hand of ~~$32.7~~$44.2 million. In addition, as of March 31, 2023, we had $95.0 million in availability under our Credit Agreement (as defined below) to draw term loans under certain circumstances to finance permitted acquisitions and similar permitted investments, de novo center growth and optimization of de novo centers and management services organization performance. In April 2023, we drew $35 million of the Delayed Draw Term Loans (as defined below).

Our principal sources of liquidity have been cash generated by our ~~operating cash flows,~~centers and MSO operations, borrowings under our ~~Existing Credit Agreement~~credit facilities and proceeds from equity issuances. We have used these funds to meet our capital requirements, which consist of salaries, labor, benefits and other employee-related costs, product and supply costs, third-party customer service, billing and collections and logistics costs, capital expenditures including patient equipment, center and office lease expenses, insurance premiums, acquisitions, and debt service.

Our future capital ~~expenditure requirements~~expenditures will depend on many factors, including the pace and scale of our expansion in new and existing markets, any future acquisitions, patient volume, and revenue growth rates. Many of our capital expenditures are made in advance of patients beginning service. Certainoperating costs are incurred at the beginning of the equipment service period and during initial patient set up. We also expect to incur costs related to acquisitions and de novo growth through the opening of new centers, which we expect to require significant capital expenditures, including lease and construction expenses. We may be required to seek additional equity or

debt financing, in addition to cash on hand and borrowings under our ~~Credit Facilities~~credit facilities in connection with our business growth, including debt financing that may be available to us from certain health plans for each new center that we open under the terms of our agreements with those health plans. In the event that additional financing is required from outside sources, we may not be able to raise it on acceptable terms or at all. If additional capital is unavailable when desired, our business, results of operations, and financial condition would be materially and adversely affected. We believe that our ~~expected operating cash flows, together with our~~ existing cash, ~~cash equivalents,~~ amounts available under our Credit ~~Facilities,~~Agreement, and amounts available to us under our agreement with ~~Anthem,~~Elevance Health, each as described below, will continue to be sufficient to fund our operations and growth strategies for at least the next 12 ~~months.~~months from the issuance date of this report. As of March 31, 2023, we were in compliance, in all material respects, with all covenants under our credit facilities.

~~As further detailed above in “Impact of COVID-19~~”, we estimate our performance during the three months ended March 31, 2022 has been impacted by approximately $1.0 million of direct COVID-19 costs. While it is impossible to predict the scope or duration of COVID-19 or the future impact on our liquidity and capital resources, COVID-19 could materially affect our liquidity and operating cash flows in future periods.

In May 2022, the ~~Credit Agreement Closing Date, we~~Company entered into ~~the Credit Agreement, which provides~~a credit agreement (the “Credit Agreement”) that provided for an aggregate of up to ~~$300.0~~$300 million in term loans, comprised of (i) ~~Initial Term Loans~~initial term loans in an aggregate principal amount of ~~$190.0~~$190 million ~~which will be fully drawn on the Credit Agreement Closing Date~~(the “Initial Term Loans”) and (ii) ~~Delayed Term Loans~~a delayed term loan facility in anthe aggregate principal amount of ~~$110.0~~$110 million which will be available to be drawn in up to five (5) borrowings from and after the Credit Agreement Closing Date until the eighteen (18) month anniversary of the Credit Agreement Closing Date under certain circumstances to finance permitted acquisitions and similar permitted investments, de novo center growth and optimization of de novo centers and management services organization performance, as set forth in the Credit Agreement.(the “Delayed Draw Term Loans”). The Credit Agreement ~~provides that it may be amended~~permits the Company to ~~provide for~~enter into certain incremental facilities subject to compliance with the ~~$30.0~~terms, conditions and covenants set forth therein. In May 2022, the Company drew $190 million Revolving Facility, of which up to $5.0 million may be used for revolving loans for general corporate purposes and up to $30.0 million may be used to issue letters of credit. The Credit Agreement also provides for certain uncommitted incremental facilities.

The Company is using approximately $120.3 million of the net proceeds of the Initial Term Loans to repay our outstanding obligations under the Existing Credit Agreement. We intend to use the remaining net proceeds of the Initial Term Loans and ~~other funds available~~used approximately $121 million of the net proceeds from this borrowing to repay its outstanding obligations under the credit agreement dated June 8, 2021, as amended (the "Existing Credit ~~Agreement to fund our de novo growth strategy, for working capital~~Agreement”) and ~~for other permitted corporate purposes.~~recognized related debt extinguishment losses of $6.2 million. In November 2022, March 2023 and April 2023, the Company drew $45 million, $30 million and $35 million of the Delayed Draw Term Loans, respectively.

~~At our option,~~Based on the elections made by the Company, as of December 31, 2022, borrowings under the Credit Agreement ~~bear~~bore interest ~~at: (i) the Alternate Base Rate (defined as the highest~~ of ~~(a) the U.S. Prime Lending Rate as published in~~ ~~The Wall Street Journal, (b) the Federal Funds Rate plus 0.50% and (c) Term SOFR for an interest period of one month, subject to a floor of 1.00%, plus 1.00%), plus an applicable margin rate of 8.00%; or (ii)~~ Term SOFR (calculated as the Secured Overnight Financing Rate published on the Federal Reserve Bank of New York’s website, plus athe applicable credit spread adjustment ~~of 0.114%, 0.262% or 0.428%, depending~~based on ~~if we select a one-month, three-month or six-month~~the elected interest ~~period, respectively),~~period) plus an applicable margin rate of 9.00%. ~~We may, at our option, elect~~As permitted under the Credit Agreement, the Company elected to capitalize ~~up to~~ 4.00% of the interest as principal ~~amount on~~amount. As a result of this election, the ~~outstanding Term Loans, provided that in such case~~cash interest component of the applicable margin ~~rate will be~~ increased by 0.50%. Accrued and unpaid interest is payable (x) with respect to Alternate Base Rate loans, quarterly on the last business day of each of March, June, September and December (each, a “Quarterly Payment Date”), with any remaining accrued and unpaid interest paid upon the Maturity Date, (y) with respect to Term SOFR loans, on the last day of interest period as selected by the Company and , in the case of any Term SOFR loan with an interest period greater than three months, each day that is the three-month anniversary of such Term SOFR loan, with any remaining accrued and unpaid interest paid upon the Maturity Date, and (z) for loansAmortization payments under the ~~Revolving Facility, upon the Maturity Date.~~

~~Amortization payments with respect to the Initial Term Loans will be~~Credit Agreement are payable in quarterly installments, commencing on ~~March~~May 31, ~~2024,~~2025, in aggregate principal amounts equal to 0.25% of the ~~original~~ aggregate outstanding principal amount of ~~the~~ Initial Term Loans and ~~amortization with respect to any~~ Delayed Draw Term Loans will be payable in quarterly installments, commencing on March 31, 2024, in aggregate principal amounts equal to 0.25% of the original aggregate principal amount of each funded Delayed Term Loan. In addition, the Credit Agreement provides for certain mandatory prepayments based on our secured leverage ratio or upon any asset sale and provides for prepayment penalties of up to 3.00% in certain circumstances.Loans. All amounts owed under the Credit ~~Facilities~~Agreement are due ~~and payable on~~in May 2027.

On March 8, 2023 (the “Amendment Closing Date”), the ~~Maturity Date, or earlier following~~Company entered into a ~~change in control or an event of default, unless otherwise extended in accordance with the terms of~~Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment amended the Credit Agreement to, among other things, (i) provide for a new incremental delayed draw term loan B facility in an aggregate principal amount of $60.0 million; (ii) revise

the commitment expiration date for the Company’s existing $110.0 million Delayed Draw Term Loan to forty-five days following the Amendment Closing Date, (iii) extend the commencement of amortization payments on loans under the Credit Agreement from March 31, 2024 to May 31, 2025;(iv) reduce the amount of interest that the Company may elect to capitalize from 4.00% to 3.50% beginning on the second anniversary of the execution date of the Credit Agreement, 3.00% beginning on the third anniversary of the execution date of the Credit Agreement, and 1.50% beginning on December 10, 2025; (v) increase the amount of the super-priority revolving credit facility that is permitted to be added to the Credit Agreement to $45.0 million and provide that the entirety of such facility may be used for general corporate purposes; and (vi) amend the prepayment provisions of the Credit Agreement, including to have such provisions run as of the Amendment Closing Date.

The Credit Agreement contains certain covenants that limit, among other things, the ability of usthe Company and ~~our~~its subsidiaries to incur additional indebtedness, liens or encumbrances, to make certain investments, to enter into sale-leaseback transactions or sell certain assets, to make certain restricted payments or pay dividends, to enter into consolidations, to transact with affiliates and to amend certain agreements, subject in each case to the exceptions and other qualifications as provided in the Credit Agreement. The Credit Agreement also contains covenants that require usthe Company to satisfy a minimum liquidity requirement of $50.0 million, which may be decreased to $25.0 million if ~~we achieve~~the Company achieves a certain adjusted EBITDA, and maintain a maximum total net leverage ratio based on ~~our adjusted~~the Company’s consolidated EBITDA, as defined in the Credit Agreement, with de novo losses excluded from the calculation of such ratio for up to 36 months after the opening of a de novo center, which maximum total leverage ratio will initially be ~~8.5~~8.50 to 11.00, commencing with the fiscal quarter ended September 30, 2022 and is subject to a series of step-downs. For the fiscal quarters ending September 30, 2026 and thereafter the Company must maintain a maximum total net leverage ratio no greater than 5.50 to 1.00.

In November 2022, the ~~Credit~~Company entered into a Loan and Security Agreement ~~are guaranteed~~(the “Loan and Security Agreement”), by us and ~~the Subsidiary Guarantors,~~among Sparta Merger Sub I Inc., a Delaware corporation and ~~all obligations under the Credit Agreement, including the guarantees of those obligations, are secured by substantially all~~wholly-owned subsidiary of the ~~assets~~Company, Sparta Merger Sub II Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Sparta Merger Sub I LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger LLC I”), Sparta Merger Sub II LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (together with Merger LLC I, the “Guarantors”), Steward Accountable Care Network, Inc. (n/k/a as Steward Accountable Care Network, LLC) and Steward National Care Network, Inc. (n/k/a Steward National Care Network, LLC), as borrowers (the “Borrowers”), CAJ Lending LLC (“CAJ”) and Deerfield Partners L.P., as lenders (the “Lenders”), and CAJ, as administrative agent and collateral agent (in such capacity, the “Agent”). Mr. Carlos A. de Solo, a director of the Company and the ~~Subsidiary Guarantors subject~~Company’s President and Chief Executive Officer, Mr. Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

Pursuant to ~~customary exceptions~~the Loan and ~~qualifications.~~Security Agreement, the Lenders provided the Borrowers a term loan (the “Term Loan”) in the aggregate principal amount of approximately $35.5 million. The ~~Credit~~Company used the proceeds of the Term Loan to fund the Financed Net Pre-Closing Medicare AR acquired in connection with the Steward Acquisition.

The Term Loan bears interest at 12.0% per annum. In addition, the Borrowers paid a facility fee equal to 3.0% of the aggregate principal amount of the Term Loan. Any additional interest (if applicable) accrued and owing during the term of the Loan and Security Agreement will be paid in kind and capitalized to principal monthly in arrears. From and after the occurrence and during the continuance of an event of default, the Term Loan will bear interest at a rate equal to 4.0% above the interest rate applicable immediately prior to the occurrence of the event of default. If Mr. Carlos de Solo is no longer serving as the Chief Executive Officer of the Company under certain circumstances and, following a request from CAJ, the Borrowers are unable to refinance the portion of the Term Loan advanced by CAJ, then the interest rate applicable to such portion may be increased by 5.0%.

The Loan and Security Agreement contains customary ~~events of default, with default interest of 2% in excess of the non-default rate,~~representations, warranties, affirmative covenants, negative covenants and ~~also includes cure rights for us upon certain~~ events of default. The Loan and Security Agreement is secured by the Borrowers’ rights in the 2022 Medicare Shared Savings Receivables (as defined in the Loan and Security Agreement) and any and all proceeds thereof. The Loan and Security Agreement is subordinated in right of payment to the Credit Agreement.

In connection with our collaboration agreement with ~~Anthem,~~Elevance Health, which was announced in August of 2021, we plan to open ~~approximately 50~~ centers across ~~eight~~a number of priority states as part of our de novo strategy to open new ~~centers in additional markets. Anthem~~centers. Elevance Health has agreed to provide debt financing of up to $1 million for each new center opened in partnership with ~~Anthem.~~Elevance Health. We intend to use such funds to partially offset the costs of opening new centers in connection with our de novo growth strategy.

In October 2022, in connection with the Elevance Health Collaboration Agreement we entered into a promissory note for an amount of $1.0 million due in October 2032. Funds received from Elevance Health pursuant to the aforementioned promissory note will be used to finance costs of one new center that was opened in partnership with Elevance Health.

Operating Activities. Net cash used in operating activities for the three months ended March 31, ~~2022~~2023 was ~~$12.1~~$21.7 million, ~~decrease~~an increase of ~~$15.5~~$9.6 million, as compared to ~~$3.4~~$12.1 million ~~provided by~~used in operating activities ~~for~~during the three months ended March 31, ~~2021.~~2022. This ~~decrease~~increase is ~~partially due to net change~~primarily the result of ~~$(8.3)~~an increase of $9.7 million in ~~net loss and non-cash charges, primarily due to the net loss from operations of $16.8 million reported for the three~~MSSP accounts receivable with expected collection cycle greater than 12 months ended March 31, 2022 compared to the net income from operations of $1.3 million reported for the three months ended March 31, 2021, offset by an increase to depreciation and amortization and loss realized on remeasurement of warrant liabilities. In addition, there was a net change of $(7.1) million to the Company's operating assets and liabilities, mostly driven by the timing of collections and payments and the growthincluded in ~~the number of patients.~~Other assets.

Investing Activities. Net cash used in investing activities ~~for the three months ended March 31, 2022~~ was ~~$1.5~~$2.3 million ~~compared to $1.7~~and $1.5 million for the three months ended March 31, ~~2021~~2023 and ~~during both periods consisted of~~2022, respectively, driven by purchases of ~~property and equipment, primarily~~ leasehold improvements at and medical equipment for our ~~various~~ centers.

Financing ~~Activities:~~Activities. Net cash ~~used in~~provided by financing activities ~~for the three months ended March 31, 2022~~ was ~~$1.6 million compared to $0.2~~$26.6 million during the three months ended March 31, ~~2021~~2023, driven by the $30.0 million drawn on our Delayed Draw Term Facility, partially offset by the related discounts and issuance costs. Net cash used in financing activities was $1.6 million during ~~both periods consisted of~~the three months ended March 31, 2022 and represented scheduled principal payments ~~of our~~on debt.

Our principal commitments consist of obligations under ~~our~~the Credit ~~Facilities and other long-term debt~~Agreement and operating leases for our centers.

We did not have any off-balance sheet arrangements as of March 31, ~~2022~~2023 or December 31, ~~2021~~2022, other than operating ~~leases.~~leases which have not yet commenced.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, as an emerging growth company, we can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our consolidated financial statements with a public company which is neither an emerging growth company, nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

There have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, which was filed with the SEC on March ~~16, 2022.~~30, 2023.

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity ("VIE"). These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available historical information, among other factors. The Company considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

~~See~~Refer to Note 2 to our condensed consolidated financial statements “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” included in this Report for more information.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Under ~~the~~ supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of March 31, ~~2022.~~2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weaknesses described below, our ~~disclosure controls were~~internal control over financial reporting was not effective as of March 31, ~~2022, based on the material weaknesses identified below.~~2023.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses we identified include that we lack a sufficient complement of professionals with the appropriate level of knowledge, training and experience to appropriately analyze, record and disclose accounting matters commensurate with our accounting and reporting requirements as a public company. This material weakness contributed to the Company not designing and maintaining formal controls to analyze, account for and disclose complex transactions, including the accounting for financial instruments and contingent earnout liabilities. These material weaknesses resulted in:

Additionally, these material weaknesses could result in misstatements of substantially all accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

In response to the aforementioned material weaknesses, management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation of material weaknesses in internal control over financial reporting. In 2021, management engaged an external advisor to assist in evaluating and documenting the design and operating effectiveness of our internal control over financial reporting, and their work is ongoing. Additionally, ~~management has developed and started to execute a remediation plan, which included~~in 2022, the ~~hiring of~~Company hired a Vice President of Financial Reporting and Technical Accounting and a Chief Accounting Officer, both with technical public company accounting and financial reporting ~~experience during the first quarter of 2022.~~experience. Our plan also includes providing enhanced access to accounting training, literature, research materials and documents and implementation of controls to review and evaluate conclusions regarding accounting for complex ~~transactions.~~transactions, including the accounting for financial instruments and contingent earnout liabilities, which management has begun to implement. The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Management believes that the remediation measures described above will be implemented in a manner such that the controls can be tested and the identified material weaknesses can be determined to be remediated, however, no assurance can be made that such remediation will occur or that additional material weaknesses will not be identified.

~~As described above, there~~There were no changes in our internal control over financial reporting during the ~~Company's first quarter of 2022~~three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

From time to time, CareMax 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, CareMax is not currently a party to any legal proceedings the outcome of which, if determined adversely to CareMax, are believed to, either individually or taken together, have a material adverse effect on CareMax’s business, operating results, cash flows or financial condition. Regardless of the outcome, litigation has the potential to have an adverse impact on CareMax because of defense and settlement costs, diversion of management resources, and other factors.

There have been no material changes to the principal risks that we believe to be material to our business, results of operations and financial condition, from the ~~Risk Factors except as~~risk factors previously disclosed in ~~Part 1, Item 1A, of Amendment No. 2 to~~ our Annual Report on Form ~~10-K/A~~10-K for the ~~fiscal~~ year ended December 31, ~~2021, filed with the Securities and Exchange Commission on March 29, 2023.~~2022.

The following exhibits are filed as part of, or incorporated by reference into, this Report.

+ Certain portions of this exhibit have been omitted pursuant to Regulation S-K, Item (601)(b)(10).
† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

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


Delaware	85-0992224
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1000 NW 5757th Court, Suite 400 Miami, FL,	33126
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	CMAX	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share	CMAXW	The Nasdaq Stock Market LLC


PART I. FINANCIAL INFORMATION
	Item 1	Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Changes in Stockholders'/Members' Equity	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1925
	Item 3.	Quantitative and Qualitative ~~Disclosure~~Disclosures About Market Risk	3241
	Item 4.	Controls and Procedures	3342
PART II. OTHER INFORMATION			3444
	Item 1.	Legal Proceedings	3444
	Item 1A.	Risk Factors	3444
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3444
	Item 3.	Defaults Upon Senior Securities	3444
	Item 4.	Mine Safety Disclosures	3444
	Item 5.	Other Information	3444
	Item 6.	~~Exhibits~~	34Exhibits	44


	Three Months Ended March 31,			Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)/Income	$	(16,797	)	$	1,302
Adjustments to reconcile net (loss)/income to net cash
Depreciation and amortization expense		5,062			514
Amortization of debt issuance costs		378			35
Stock compensation expense		1,087			-
Loss on remeasurement of warrant liabilities		3,536			-
Other non-cash, net		202			-
Changes in operating assets and liabilities:
Accounts receivable		(10,992	)		639
Inventory		(152	)		(1	)
Prepaid expenses		(475	)		15
Risk settlements due from/due to providers		(84	)		(281	)
Due to/from related parties		-			(392	)
Other assets		(52	)		(205	)
Accounts payable		1,470			1,160
Accrued expenses		3,675			(134	)
Other liabilities		1,002			720
Net Cash (Used In)/Provided by Operating Activities		(12,139	)		3,372

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(1,467	)		(1,690	)
Net Cash Used in Investing Activities		(1,467	)		(1,690	)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt		(1,570	)		(181	)
Net Cash Used In Financing Activities		(1,570	)		(181	)

NET (DECREASE)/INCREASE IN CASH		(15,176	)		1,501
Cash - Beginning of Period		47,917			4,934
CASH - END OF PERIOD	$	32,740		$	6,435


	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(82,082	)	$	(16,797	)
Adjustments to reconcile net loss to net cash and cash equivalents
Depreciation and amortization expense		6,576			5,062
Amortization of debt issuance costs and discounts		1,839			378
Stock-based compensation expense		2,298			1,087
Income tax provision		177			181
Change in fair value of derivative warrant liabilities		(1,107	)		3,536
Loss (gain) on remeasurement of contingent earnout liabilities		(36,136	)		-
Payment-in-kind interest expense		2,453			-
Provision for credit losses		(104	)		-
Goodwill impairment		98,000			-
Other non-cash, net		1,080			21
Changes in operating assets and liabilities:
Accounts receivable		(7,850	)		(10,992	)
Other current assets		(1,961	)		(627	)
Risk settlement assets and liabilities		(454	)		(84	)
Other assets		(9,735	)		(52	)
Operating lease assets and liabilities		1,445			-
Accounts payable		(500	)		1,470
Accrued expenses		(29	)		3,675
Other liabilities		4,343			1,002
Net cash used in operating activities		(21,746	)		(12,139	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(2,286	)		(1,467	)
Net cash used in investing activities		(2,286	)		(1,467	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings on long-term debt, net		27,000			-
Principal payments of debt		(25	)		(1,570	)
Payments of debt issuance costs		(348	)		-
Net cash provided by (used in) financing activities		26,627			(1,570	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,596			(15,176	)
Cash and cash equivalents - beginning of period		41,626			47,917
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	44,222		$	32,740


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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


	Class A Common Stock				Preferred		Additional									Total
	Shares		Amount		Stock		Paid-in-capital		Members' units		Member's Equity		Retained Earnings (Deficit)			Equity
BALANCE - DECEMBER 31, 2020		-	$	-	$	-	$	-	$	223	$	6,504	$	-		$	6,727
Net income		-		-		-		-		-		1,302		-			1,302
BALANCE- MARCH 31, 2021		-	$	-	$	-	$	-	$	223	$	7,805	$	-		$	8,028

BALANCE - DECEMBER 31, 2021		87,367,972	$	9	$	-	$	505,327	$	-	$	-	$	33		$	505,370
Stock compensation expense		-		-		-		1,087		-		-		-			1,087
Vesting of Series B Warrants under Advisory Agreement		-		-		-		2,530		-		-		-			2,530
Net loss		-		-		-		-		-		-		(16,797	)		(16,797	)
BALANCE- MARCH 31, 2022		87,367,972	$	9	$	-	$	508,945	$	-	$	-	$	(16,763	)	$	492,190


	Three Months Ended March 31, 2023 and 2022
	Class A Common Stock				Preferred		Additional		Retained Earnings			Total
	Shares		Amount		Stock		Paid-in-capital		(Deficit)			Equity
BALANCE - DECEMBER 31, 2022		111,332,584	$	11	$	-	$	657,126	$	(37,590	)	$	619,547
Stock-based compensation expense		-		-		-		2,298		-			2,298
Issuance of shares upon vesting of stock-based compensation awards		28,218		-		-		-		-			-
Net loss		-		-		-		-		(82,082	)		(82,082	)
BALANCE - MARCH 31, 2023		111,360,802	$	11	$	-	$	659,424	$	(119,672	)	$	539,763

BALANCE - DECEMBER 31, 2021		87,367,972	$	9	$	-	$	505,327	$	33			505,369
Stock-based compensation expense		-		-		-		1,087		-			1,087
Vesting of Series B Warrants under Advisory Agreement		-		-		-		2,530		-			2,530
Net loss		-		-		-		-		(16,797	)		(16,797	)
BALANCE - MARCH 31, 2022		87,367,972	$	9	$	-	$	508,945	$	(16,763	)	$	492,190


	Three Months Ended March 31,		Three Months Ended March 31,
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:	2022		2021
Vesting of Series B Warrants under Advisory Agreement		2,530		—
Additions to construction in progress funded through accounts payable		585		—
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		1,353		504


(in thousands)	As Originally Reported		Adjustment			As Restated
ASSETS

Affected financial statement line items
Prepaid expenses		20,045		(15,215	)		4,829
Total Current Assets	$	107,723	$	(15,215	)	$	92,508

Other assets		2,738		15,215			17,953


Cash consideration	$	25,000
Initial Share Consideration (1)		134,420
Earnout Share Consideration (2)		212,355
Other consideration, net (3)		27,219
Total Steward Acquisition consideration	$	398,994

(1) Represents issuance of 23.5 million shares of Class A Common Stock of the Company using the closing price as of the date of the the Steward Closing of $5.72 per share.
(2) Calculated as the 37.5 million shares of Class A Common Stock the Company estimates that it will be obligated to issue to the Seller Parties upon achievement of certain milestones as Earnout Share Consideration, multiplied by CareMax's closing stock price as of the date of the Steward Closing of $5.72 per share and the estimated probability of payout of 99%.
(3) Represents funding of the Financed Net Pre-Closing Medicare AR of $35.5 million, offset by the Sellers' reimbursement to the Company of the interest and original issue discount of $6.8 million related to the Loan and Security Agreement (as defined in Note 7 of these consolidated financial statements) and by non-cash purchase price adjustment of $1.5 million.


Accounts receivable	$	43,060
Other working capital adjustments		(21,584	)
Distribution liabilities		(7,032	)
Intangible asset - Risk contracts		37,500
Intangible asset - Provider network		42,900
Net Assets Acquired (a)		94,844
Purchase Consideration (b)		398,994
Goodwill (b) - (a)	$	304,150


	Carrying Amount
Balance at December 31, 2021	$	464,566
Measurement period adjustments		(302	)
Balance at March 31, 2022	$	464,264


	March 31, 2022			December 31, 2021
Secured term loans	$	120,313		$	121,875
Other		58			65
Unamortized debt issuance costs		(4,438	)		(4,704	)
		115,932			117,236
Current portion		(6,272	)		(6,275	)
Long-term portion	$	109,660		$	110,960


	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Leasehold improvements	$	7,648		$	7,516		$	10,775		$	10,661
Vehicles		3,711			3,711			3,743			3,743
Furniture and equipment		5,509			5,470			9,455			8,871
Software		3,465			2,950			3,745			3,725
Construction in progress		3,523			2,254			6,786			4,621
Total		23,856			21,902			34,504			31,620
Less: Accumulated depreciation		(6,961	)		(5,909	)		(11,778	)		(10,614	)
Total Property and equipment, net	$	16,895		$	15,993		$	22,726		$	21,006


																			Pro forma
Patient Count as of*	Mar 31, 2020		Jun 30, 2020		Sep 30, 2020		Dec 31, 2020		Mar 31, 2021		Jun 30, 2021		Sep 30, 2021		Dec 31, 2021		Mar 31, 2022		Mar 31, 2021		Jun 30, 2021		Sep 30, 2021		Dec 31, 2021		Mar 31, 2022		Jun 30, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023
Medicare		15,500		15,500		16,500		16,500		16,500		21,500		26,500		33,500		34,000
Medicare Advantage																				16,500		21,500		26,500		33,500		34,000		37,000		39,500		93,500		95,500
Medicare Government VBC																				—		—		—		—		—		—		—		109,500		107,000
Medicaid		12,500		22,500		22,500		21,000		23,000		23,500		24,500		28,000		28,500		23,000		23,500		24,500		28,000		28,500		29,500		31,500		33,500		33,500
Commercial		15,500		13,500		15,000		14,500		15,000		17,500		17,500		21,500		21,500		15,000		17,500		17,500		21,500		21,500		21,500		22,000		22,000		34,500
Total Count		43,000		51,500		54,000		52,000		54,500		62,500		68,500		83,500		84,000		54,500		62,500		68,500		83,500		84,000		88,000		93,000		258,500		271,000


																			Pro forma
MCREM Count as of*	Mar 31, 2020		Jun 30, 2020		Sep 30, 2020		Dec 31, 2020		Mar 31, 2021		Jun 30, 2021		Sep 30, 2021		Dec 31, 2021		Mar 31, 2022		Mar 31, 2021		Jun 30, 2021		Sep 30, 2021		Dec 31, 2021		Mar 31, 2022		Jun 20, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023
Medicare		15,500		15,500		16,500		16,500		16,500		21,500		26,500		33,500		34,000
Medicare Advantage																				16,500		21,500		26,500		33,500		34,000		37,000		39,500		93,500		95,500
Medicare Government VBC																				—		—		—		—		—		—		—		109,500		107,000
Medicaid		4,200		7,400		7,500		7,000		7,600		7,900		8,100		9,400		9,400		7,600		7,900		8,100		9,400		9,400		9,900		10,600		11,100		11,200
Commercial		5,100		4,600		5,000		4,900		5,100		5,900		5,800		7,200		7,200		5,100		5,900		5,800		7,200		7,200		7,100		7,300		7,400		11,400
Total MCREM		24,800		27,500		29,000		28,400		29,200		35,300		40,400		50,100		50,600
Total Count																				29,200		35,300		40,400		50,100		50,600		54,000		57,400		221,500		225,100


Patient & Platform Contribution	Mar 31, 2020			Jun 30, 2020			Sep 30, 2020			Dec 31, 2020			Mar 31, 2021			Jun 30, 2021			Sep 30, 2021			Dec 31, 2021			Mar 31, 2022
Centers		21			21			22			24			24			34			40			45			48
Markets		1			1			1			1			1			2			3			4			6
Patients (MCREM)		24,800			27,500			29,000			28,400			29,200			35,300			40,400			50,100			50,600
At-risk		84.8	%		86.7	%		85.6	%		87.7	%		87.0	%		84.1	%		87.2	%		79.3	%		79.8	%
Platform Contribution ($, Millions)	$	14.1		$	18.1		$	15.5		$	17.9		$	14.7		$	8.2		$	11.0		$	16.0		$	17.3


	Pro Forma**
Non-GAAP Operating Metrics	Mar 31, 2021			Jun 30, 2021			Sep 30, 2021			Dec 31, 2021			Mar 31, 2022			Jun 30, 2022			Sep 30, 2022			Dec 31, 2022			Mar 31, 2023
Centers		24			34			40			45			48			48			51			62			62
Markets		1			2			3			4			6			6			7			7			7
Patients (MCREM)*		29,200			35,300			40,400			50,100			50,600			54,000			57,400			221,500			225,100
Patients in value-based care arrangements (MCREM)		87.0	%		84.1	%		87.2	%		79.3	%		79.8	%		81.0	%		78.2	%		97.6	%		99.0	%
Platform Contribution ($, millions)**	$	14.7		$	8.2		$	11.0		$	16.0		$	17.2		$	21.6		$	20.7		$	25.6		$	24.7
* MCREM defined as Medicare Equivalent Members, which assumes the level of support received by a Medicare patient is equivalent to that received by three Medicaid or Commercial patients.
** For periods prior to and including June 30, 2021, the measure was calculated in a manner consistent with the concepts of Article 8 of Regulation S-X and represents Pro Forma Platform Contribution.


(in millions)	Mar 31, 2021		Jun 30, 2021		Sep 30, 2021		Dec 31, 2021		Mar 31, 2022		Jun 30, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023
Gross profit (a)	$	3.9	$	0.1	$	4.5	$	9.6	$	11.2	$	15.4	$	14.8	$	17.2	$	17.1
Depreciation and amortization		0.6		1.4		5.2		6.1		5.1		4.9		4.6		7.2		6.6
Share-based compensation		-		-		-		0.1		0.4		1.3		1.2		1.2		1.0
Pro forma adjustments (b)		10.3		6.7		-		-		-		-		-		-		-
Other adjustments (c)		-		-		1.3		0.2		0.5		0.1		0.1		-		-
Pro forma Platform Contribution	$	14.7	$	8.2	n/a		n/a		n/a		n/a		n/a		n/a		n/a
Platform Contribution	n/a		n/a		$	11.0	$	16.0		17.2	$	21.7	$	20.7	$	25.6	$	24.7

(a) Gross profit reflects the reclassification of stock compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.1 million during the three months ended December 31, 2021, $0.4 million during the three months ended March 31, 2022, $1.3 million during the three months ended June 30, 2022, $1.2 million during the three months ended September 30, 2022, and $1.2 million during the three months ended December 31, 2022.
(b) Pro Forma adjustments are computed in a manner consistent with the concepts of Article 8 of Regulation S-X and give effect to the Business Combinations of IMC and Care Holdings as if they had occurred on January 1, 2021. Components of the pro forma adjustments were as follows:

	Three Months Ended March 31, 2021								Three Months Ended June 30, 2021
(in thousands)	IMC		Care Holdings		Total				IMC		Care Holdings		Total
Gross profit prior to Business Combination	$	8,326	$	913	$	9,239			$	4,682	$	932	$	5,614
Depreciation and amortization prior to Business Combination		1,066		2		1,068				1,066		1		1,067
Pro forma adjustment	$	9,392	$	915	$	10,307			$	5,748	$	933	$	6,681

(c) Other adjustments include incremental costs primarily related to post-Business Combination integration initiatives. Other adjustments reflected during the three months ended September 30, 2021 include $0.6 million of incremental costs relating to one-time operational projects and $0.3 million of non-cash true-up of deferred rent expense. Other adjustments reflected during the three months ended March 31, 2022 include $0.3 million of costs for a pilot project regarding outsourcing of certain costs.


No.		Description of Exhibit
10.1*+†		Second Amendment to Credit Agreement, dated as of March 8, 2023, by and among the Company, certain of the Company’s subsidiaries as guarantors, Jefferies Finance LLC, as Administrative Agent, Collateral Agent, Sole Lead Arranger and Bookrunner, BlackRock Financial Management, as Lead Manager, Crestline Direct Finance, L.P., as Documentation Agent, and certain other banks and financial institutions serving as lenders.
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal 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 Principal 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*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	CareMax Inc.

Date: ~~March 29,~~May 10, 2023		/s/ Carlos A. de Solo
	Name:	Carlos A. de Solo
	Title:	President, Chief Executive Officer, and Director (Principal Executive Officer)

Date: ~~March 29,~~May 10, 2023		/s/ Kevin Wirges
	Name:	Kevin Wirges
	Title:	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer)