CMAX - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the CareMax Incorporated First Quarter 2022 Financial Results Conference Call. [Operator Instructions] It is now my pleasure to turn today's call over to Samantha Swerdlin, Vice President of Investor Relations. Ma'am, Please go ahead.

Samantha Swerdlin

morning, good and you, everyone. Thank first Welcome earnings XXXX to CareMax' call. quarter Officer, Investor Swerdlin, de I'm Executive our Vice Samantha Relations, Financial Solo, Kevin Officer. Chief President Chief Carlos I'm by of and Wirges, morning joined our and this

discussing appropriate. call, made conditions, These like statements entitled results, assessments to forward-looking with forward-looking that the of from CareMax materially the forward-looking to assessments factors cause Important SEC, will remarks could current the over financial management A press the CareMax be turn other reconciliation and future to in based whether During made developments including their Factors. non-GAAP be revise call And company's otherwise. metrics made as business decisions certain described measures financial differ GAAP development I'd and a comparable section call most assumptions by management, statements in Risk of the new statements, in experience discussing trends, to are today metrics. that, are events and on now or With undertakes information. believe they result this the filings In expected morning's and found we are forward-looking today's future it be be we'll is release. and to by of such earnings the Carlos. actual the update these non-GAAP during to can information, statements of light duty of no factors or historical

Carlos de Solo

demonstrate effectiveness of estimated medical delivered XX.X%. the impacts results the had it model. been our Good today. you and a start exclude if you, consistency year XX.X%. for a to the morning, to of Samantha. we joining We thank quarter COVID, ratio and our of continue as expense would've And call Thank solid everyone, We our

with over Advantage the XX,XXX members. ended Additionally, Medicare we quarter

has our improve our Tennessee, centers and these model the excited first to York opportunity overall City. first our markets health X strong over we and call, to and few demand As We the recently opened We're centers seeing center the about last opportunity new those hard Memphis, all bring are had are by we mentioned New will we these communities. in done last we benefit outcomes at vision health new our whole-person bringing all our the that patients have team and and the to model X during our impressed to in of wellbeing to time work in extremely the transformative spend weeks most. in

now Turning to our performance.

For we quarter Notably, the the of XXXX, of to grew the year members saw during the over CareMax reimbursement to and continue return rates over and revenue see forma first $XXX pre-COVID to of million quarter X/X for pro our XX% business combination levels. prior IMC.

Our million. first GAAP quarter net loss was $XX.X

million adjusted in XXXX in Our was deliver quarter in $X excluding losses. $XX track on to range the which quarter, Despite $X approximately the million, roughly we we $XX EBITDA to EBITDA novo from COVID COVID-related remain million de adjusted first believe cost. of impacts included million

to terms us debt. novos, fundamentally the ever additional to Today, and solution inability have also with a Kevin growth sought returns de will our of accretive both pivot As Credit have novo our our new strategy. as and to as of knew in liquidity our of strategy fund flexibility entered de announced this novo this in significant in us a we on the current that support de standpoint augment pursue unit the give that to novo our additional those invest economics. we well novo strategy support debt would would morning, Later from as EBITDA initial facility. confident to course into to covenant provide tuck-ins remain from facility our presentation, Agreement long-term the financing We operating as M&A details the alter losses, refinance a de a opportunistic bank de existing provide

Our and duals Medicare our XX,XXX. to slower year. significant to end XX,XXX Advantage compared membership part throughout QX able in the of Typically was are to share quarter membership at over the over rest year, total the when in grows was enroll our membership of due who

affiliated our higher our continue or expect grassroots variant. and early our COVID to in marketing in first related continue hospitalizations own efforts, the de to in novo year. combination our Similar contribute strong quarter, that focus openings, We physician others growth to on industry, the to throughout with will experienced practices membership we Omicron

prior of stay Omicron. under virulence than variants, were of lengths paralleled in decrease lower which the However,

cost Our which continues about treatment. led of more COVID In medical plans to the staff outreach and for our has educating be diagnosis associated this diligent treatment with high early COVID. to effective members, helped some has mitigate the and turn,

of impacts a as Seasonality increased to quarter due a we Omicron. ratio. of both in higher be a first beginning to limits to basis pharmacy and For accessing [MERs] well insurance the also the fourth as health members recorded increase XXXX, tend XXX QX in the the as XX.X% of new calendar of driven plan quarter, number utilization was an stop-loss due the including factors, from year. primarily aforementioned the from from solid points expense the at This medical reset benefits, of factor reset

would no a in perform in also had otherwise well new have model providers the strong and at testament turnover We on greater QX Our provider market. side. results. to had it mission Kevin to this difficult and With markets over strong recruiting continues culture be our our CareMax. demand physician what detail that, to I a believe here first our provide is turn quarter will to labor in on We

Kevin Wirges

an be this good morning. a and headwinds off of impact cautiously Thanks, than start COVID good the less year last. be continue and to that to Carlos, We're to year optimistic will

had metrics, and of found of XXXX. CareMax be make discuss EBITDA, as of occurred can first to combination if an press Credit reconciliation XXXX in start it business the net give are a adjusted update release the to IMC like reminder, then references and and our All earnings a presentation. As metrics the our for and non-GAAP income GAAP I new forma quarter I will Agreement. at the on pro comparisons

First quarter fourth was meaningful quarter a step-up of million, million. from revenue $XXX $XXX revenue

outline some Let me key drivers.

XXXX headwinds able of our members our over depressed in our Despite XXXX risk XX% driven in the document as allowing our First, risk to COVID see was headwinds risk the and estimated in MPMs, last impacted March, This Medicare premium, to were fully we of XXXX. by million. year, disclosed their $XX.X COVID our to turn XXXX, we for affecting ability by which acuities in adjustment in members conditions, COVID those document XXXX. adjusted recover waves providers us revenues

members, to than Additionally, as of on seen of already our historical we putting of us track more X/X visitation QX levels by year-end. achieve alone, have

to Florida. these Second, in to and Medicare Coast platform our several patients from gained full and different we members the PMPM. non-risk upon a of of risk, December, the in thousand revenue entry here Tampa from of members skilled These new acquisitions end the closed XXXX and of important into and remember addition with levels It's our continue to couple markets range Space tuck-in marked additions markets. toward new

peaked costs still January. business admissions Omicron quickly impacted And volume COVID that MER the wave. Medicare unlock the wave, to However, that over continues ability that to and the we an combination still continue as level and risk Omicron embedded we the full in We expense XX.X% the time patients third, and well organically was members hospitalizations overall fourth Florida despite the QX. to medical convert our have estimate the significant underlying from our COVID grassroot of [cells] in providers. XX.X% due us. among margin. $X remainder prior perform with external XX% record from compared to through subsided and to believe below normalized to million range our and we X/X difference of grow a are in continue Medical seasonality assignments in QX and COVID collaborations And QX pleased our about came think is ratio of plans by performance for driving appropriate to about with the health provider quarter, in we to in of We

to ones immaterial stages see As members you QX platform presentation, to the out in profitability. absent prior levels centers million COVID, were recently at would've and Note healthy. our can count We opened. with historical effectively of and have a safe back contribution in never from keep been our estimate, believe recovery but compared our our quarters. to of earnings can includes over all our centers another April we adapted X,XXX to marking established wave, per $XX care most processes maturity, COVID we of meaningful in this $XX.X that more hospitalizations possibility million

our to nearly see continue Florida margins drive to or We time. in which higher XX% double membership, capacity over to platform could contribution centers current

adjustments In addition, quarter. frontline mentioned contribution the compensation phase we our first of platform last QX includes

patient QX we've expect care, basis, flat of ultimately those since those costs, have continuity relatively in an remaining changes form keeping general sales increases disciplined pay in over and of and better corporate, better dividends on turnover, experience. administrative, the We lower rolled and up in to marketing in and been On time the adjusted quarter-on-quarter.

and our new bolster corporate we grow expand view as intend profitability real operating still that we sources as shared to we platform in leverage cost our markets. While will these services to of capabilities, core business help invest in

one New York. of call, As Florida, announced opened QX outside first our on Memphis, Brooklyn, and our in clinics in two Tennessee, we've

real from the seeing attract are of whole-person leveraging to us We grassroots-oriented are help footprint local relationships to seniors. seniors, place dual CareMax' companies' estate health leveraging particularly eligibles have model. in community building care target we with related course, teams whose can And most benefit areas in and lives salesforce, underserved patients organizations

track supported our have in and year. XX way QX, on centers to a relationships opening health We the on plan centers this remain including of centers by total more

prior XX,XXX have to in million in and $XX XXXX Medicare EBITDA, novo we guidance de XX members $XXX to $XXX center XX XX,XXX by for million novo excluding advantage de results, our year-end; adjusted to these million openings. losses; million revenue; Following reiterated

back Medicare quarter, quarter of organic in the growth offset membership fairly consistent as year. half of in the to this phasing QX in to last quarter expect is year the by noted in As we revenue sequestration be

and expect we moderates elective reinsurance our we various year. coverage from limits, while beneficiaries course grow, MER the declining of deductible operating and expect hit will hit QX, continue the a expenses to Additionally, experience patients as over more utilization to

profitability, half. core de novo mostly year, approximately expect to the this we towards to weighted EBITDA million addition total In $XX back losses

are half the losses opened initial are and half Florida in of about and million related in QX, markets. last operating the to far reported novo to centers related new losses losses core $X XX So the of de in months,

facility, to which $XX rate million. The million. for the X% raise, expected cash mentioned, proceeds a of associated upon term credit SOFR, forma As XX% be facility, from spread the million at into agreement consisting facility today, million of new are expenses, loan a Pro After new would've approximately in of X-year end paid close, entered $XX of effective new a hand is we $XXX net announced interest of million. the delayed and the draw Carlos our be for we approximately a repayment agreement loan on on initial QX based initial credit approximately for total can the on $XXX existing of our our kind. and term $XXX been

for cost. Importantly, center, up to a operating to of of significant allows losses calculating opening months XX add the for well after ability novo us leverage de amount a purposes back as as novo pre-opening de ratios, facility of the

in our new novo an to these uncommitted Carlos to built the Between sources loss capital growth come. With facility in liquidity for de to fund base closing de our addbacks, turn and and back loan, and novo to ability it in feel we years permits. that, to flexibility facility add I'll remarks. the position incremental Additionally, if has revolver leverage of the an

Carlos de Solo

every Their hard Kevin. patients. contribution closing, In members. life and the commitment our to day quality of want overall work of I is of improving the continued recognize Thanks team our

who For need have what this deep up that to will most. for reason, it expand open I our The it takes questions. have operator model those communities conviction it now we to

Operator

the with Andrew question first from UBS. Your of Instructions] line [Operator Mok comes

Andrew Mok

a few it Adjusting from of closer a may capital, operations have on looks working timing differences to like of for some been cash deficit the million.

Just throughout is given target in cash operations a reasonable EBITDA positive for increases from for expectations year, the XXXX?

Kevin Wirges

able operations I will be produce to our flow. Yes, Kevin. that it's would Andrew, positive saying cash to respond by core that we believe Florida

will novo come half of operations in overall the in flow probably I the of due to at losses cash de think is funding year. last where a negative the those

Andrew Mok

it. Got

inflationary you're comment to do openings de impact seeing of Okay. year? as What you of this cost kind the some on on planned novo might relates Can you have it this pressures centers? suspect

Carlos de Solo

within baked place we're some target the XX complete respect to planning Yes, the to had margin that some ahead some I those additional to but had XX make hit confident model. ability these We in out, pressures our creative in to opening We've the already ordering everything of have With were We of the XXXX number think to we we're de on our to had expected. I goods, materials was buildouts centers into buildouts, of with that that our on still cost medical sure think get we of chain. for as novos in building supply time error. inflationary obviously of complete centers.

Andrew Mok

Got it.

helpful. slower mix, like sounds non-dual you we'll which of attributed higher the to a from of give growth us enroll MA XQ? the sequentially Can on to MA of the XQ duals, can see, the And sense That's year. you which membership then growth mix some it Okay. throughout

Carlos de Solo

about Yes, of growth most – XX% our members. dual from comes so of

non-duals. So about comes And all members generally XX% enroll from to those duals, long. year with you can XX% then

you open So after duals, an generally have period, of a large movement on enrollment some just after back coming some those push.

and It's second, what been we've really has generally fourth period. ramping business our growth business past in the XX us. then our for typical where slower this years that and QX enrollment up that stabilizing protecting grown open is of quarter So for growth And a quarter. over third

Andrew Mok

helpful. it. And Got That's for last one me.

retaining existing markets. positive and physicians success You what's the you're drive there you doing what help us in physicians expansion new there? mentioned in – recruiting results the to understand Can

Carlos de Solo

of that's here care. I look, provide using the testament quarterback CareMax, think and PCP at how culture the really of our him a ecosystem be Yes, allowing to that to we

I of think from best employee think in satisfaction, a we're So perspective satisfaction, physician class. I

is the able independent structured so program. even to or hospital because of also our way quarterbacking compared those I benefits lifting think that that patient's heavy physicians really of what on in physician, are model of we've to terms second the the falls systems, make, to much physician the care comp

successful very very, of because physicians in factors, those X and been happy those So we've I keeping very have think little turnover.

Operator

line the Josh from Nephron comes Raskin question next with Your of Research.

Joshua Raskin

the stay around the been interested bit curious member those on recruiting. markets And new then I'm just to help a in the have physician don't update like how with works, if City that And any sounds of I wanted the Anthem and York on local membership. and markets, New progress how a you maybe in has new new little and be there. us presence. the on situation that specifically it markets, I'd recruiting, lastly,

Carlos de Solo

finished New and year. those X earlier in confident Anthem I Yes, center before ribbon weeks York Brooklyn; in very growth we're a just so our to to both be are couple collaborations weeks in – we ago just We Memphis in in for the the that soon of in growth fairly the say we ability We those the strategic both in opening markets drive Tennessee. another soft a with markets. did center of building coming working membership due and our started specifically, should that With pipeline markets. could in on in our solid are area. cutting

other coming open allowing as with Related we've we groups ourselves different sites of closely centers Related of got collaboration in to us up several very New community that work the really with the soon York. all well. all and And in with we Additionally, on embed

Joshua Raskin

is as about Perfect. you And maybe existing year thinking within intermediate additional, or further next the, market then X, Carlos, next be sort going focus about think term we be to that of, year, or growing footprint? should entry

Carlos de Solo

calls. that gain Yes, us It's in lot markets. I a I've a said specific – on important for lot really density think to

many, to said, just flags I've markets. planting to not as we're going many be So be different in

that will we significant have So believe to time. period in has growth strategy a deliver short go a we of everywhere into

we will So Florida. we're again, other there current that those looking that to And collaborations that Tennessee, expanding other New But on market community in we then or markets as there are the groups. several payers today, focused part go are into. of will be markets into, be in we're several strategic again going with very be our are markets York, to but in going

Joshua Raskin

And XX.X%. one just a we I XQ half? XQ, the external and similar of me other etc., – the Perfect. then and should then impacts, of think we Should provider year? think COVID high slow a numbers, last start getting about numbers ramp-down tough little of the year-over-year second on Is stuff you the but I that loss know compare the costs. watermark think of, the benefit medical the and kind to cost the of for XQ, in or, for stop all external

Kevin Wirges

Kevin. it's Josh, think right. Yes, I that's

we've think historically high has of, seen yes, can obviously you without of, historically the quarter-on-quarter. so I a improvement, gradual kind been, COVID, steady that kind anticipate, kind watermark, QX, of,

Operator

Brian is line question with Jefferies. from next of Your the Tanquilut

Jack Slevin

just color throughout and Slevin to centers Jack phasing remaining bit that cost And how as year? add-on on Kevin, just year quarters? of in that to this there, an the we a throughout open we on should the you dynamics about wanted about Caroline XX plan came the maybe higher pacing for that, we the little think think touch were This is on, the than how Brian. expecting. I should Any

Kevin Wirges

Caroline includes of your a Yes, Great question. to cost few the so point, items.

item right? financial. a de loss novo the includes the of bottom discussed it's of we segmented historically, it the And as from boxes, a separate standpoint, cost towards the as So

those associated have essentially. include costs, does it no which to So revenue them

to return and it's addition our care ensure really for additional continuity best we be investment, getting of in patients. PCP to to believe specialists that, the that the on our of are it and ability In We we're to the the investing for care that the quarterback facilities. leads our

And clinics so specialists us. specialists those our for having more important having investing is really in and

patients of full coming standpoint, that are patients. not from in full components on And risk. revenue recognition a The that new are premiums we is recognizing piece that not our other those there's revenue are

into year the there. the will as move even contracts, And have so patients those we up premium side, the though and the progresses step from full get we those risk cost

So there's going geography cost some that the I critical. a of be financials. But to – from happening standpoint, bit really care of little that's that investment would on our is in

Jack Slevin

sense. really the of disease I diagnostics are it, have healthcare early to the Got interesting and out patients of, the out or lot guess, are, into [PCPs] has quarter. system call COVID, the gotten then can potential a guys more makes of to engaging on engagement from you that comments really in of that progression including know year? with discussion [indiscernible] patients pick in of reentering within high seen that I around And a you've what Anything haven't been your forefront the appreciate sort up I with on system the facilities. coming this happened. And maybe patients or lot with could healthcare

Carlos de Solo

This seen already Yes, close members. of to our is that I the members. great year our saw year think last of XX% thing XX% we've we model about our

COVID, even to of time, period our able we've throughout see members, been So them. throughout this

into So any headwinds we going of have don't to those expect XXXX.

think of don't through that that able today, their be but to other problem CareMax, have our model. not issues we a access going some just Some those been of members, groups for because expect to are I may

send members out able our in centers unable at homes, to or We the their have either to see them see in. if they're come to been somebody medical

there So benefit for I think there's a real us.

Operator

Your is Piper from of question the Sandler. line Tassan next Jessica with

Jessica Tassan

Tennessee? to each then to Tennessee we XQ start when see membership kind those of, with taking interested just associated at start centers So Brooklyn and Brooklyn centers to new of the the risk? or, do and include membership And know when should are numbers centers, members these going on

Carlos de Solo

already to risk. period risk, when we're respect those in any Yes, today. X-year centers With before a growing we'll trigger is time

sooner the individual trigger have watching closely we'll trigger of We we than risk agreements and these ability can centers to all be have that our based on that. we sooner so

we'll sure ratio members, So it'll depend acuity we the patients risk; of the full before medical by significantly understand risk. of trigger members we that. that could it [indiscernible] than what sooner that that But cohort X, at on be bringing in making the be is definitely these of and year

Jessica Tassan

it. Got

efforts net Brooklyn as adds reflect XQ Tennessee, and within to So base? from just XXX XQ the at as recruitment the well MA existing

Carlos de Solo

growth. total numbers Yes, weeks. our over There's final total are it's the I last believe, new couple XX, add-ons membership membership no, – the of

Jessica Tassan

year medical Got got normalized – is Okay. cost kind full or just XQ, for million COVID the COVID-related year, it. normalized guess, ratio the of, wave the then and of you've expenses that of the And the XX% that only $X I barring, for then XX% on in another exception million to XXXX? the barring $X

Kevin Wirges

Jessica, has believe Yes, medical contributed look our of, COVID. correct, you, the for expect point, That's the a kind full other million right. as to Kevin. waves, would loss way pre platform kind we and XX% that $X that's exactly related to That your COVID XX% at And it's MER year. barring have that's to COVID ratio, consistently any of, exclude We it.

Jessica Tassan

And it. said think in cost then just care. Got of I some you investments made you

[indiscernible] reflecting couple progress the full how that extent So step-up should of, Or, line investments? over that next we expect in quarters? in line of incremental, yes, an sort should the

Kevin Wirges

cost the below will those Pre-opening kind line, [and] they're to that line. are, state that into cost-of-care same right into EBITDA, open right costs probably to that centers cost-of-care will now. so the of and not we those now centers steady baked go seeing we're come the line they that Yes, new continue of, But as centers at increase, adjustment online, line.

expense strong investment patients. an leads better for ratios to makes component So for outcomes that would and yes, really believe – our medical and a us for that is we I obviously it's

not will that what steady investment there, see you're So but continue to QX to QX we the seeing range. a

Jessica Tassan

my Got guys you it. do typical a XX-center EBITDA when are target and tuck-in center? the just, is tuck-in at us, you then And the to membership can of, is for in adjusted of happens then year? you kind revenue And what that just what one remind cost last and considering tuck-ins

Kevin Wirges

Yes, we're looking at… always

Carlos de Solo

Yes, go ahead, Kevin.

Kevin Wirges

No, that's openings are was one sorry, the just I of just Tuck-ins the they're fits have to to – just a going are was it not kind – center say – does all. XX include to Those going of de Carlos, all to not tuck-ins. and novo going I be from a going range – unit size range economics.

tuck-ins, We've South Florida, seen contracts. full some are that with PCP of risk. be providers would Some specifically cap-only risk providers at the no here also in

seen of when range different one. And levels one, – from you've it really seen a so of multitude sophistication. They you've

Carlos de Solo

I What to opportunity to say was see going Yes. our is de novos. tuck-ins grow we as an

novo that's providers with extent the can or XXX and we small into one our centers, opportunity tuck-in that members de to fit we an on see advantage XXX what identify that. of that So take really

Operator

is [Operator Cowen. with next from Taylor Gary Instructions] question Your

Gary Taylor

questions. Couple

start all know there's that Agreement trailing, the First, anticipating you'll paying be an The sure interest? I And that opportunity, level? to that of like, new go-forward XX%, $X but thinking are million. wanted go would interest said to statement, headed just you rate that X% been about trying just the closer with correctly. a I the we're cash? make Credit XX% numbers and income the cash be towards from think ['XX], it's about Is interest we're capitalization, – you expense

Kevin Wirges

to, from cash de out novo now, right at redeploy internally [pick] conserve looking of, we're think option I your Yes, a kind that and standpoint. point to

So that's right.

Gary Taylor

the GAAP interest the then of at though, that regardless XX% still level, right? decision be And would expense

Kevin Wirges

correct. That's

Gary Taylor

thing understand. Okay. then other make sure to the And I wanted just I

insight de the I of It's in there's year excluding on all the you're guidance kind million. million, the still the for Can just what's us and, little lot of trailing million basis. over on other million quarter. But that So that? of $XX $XX the $X.XXX a that a it year? give was expenses non-recurring trajectory $X Is That novo you of of, losses. this course excludes cash what's know

Kevin Wirges

the I'll associated a so component. QX there's start Yes, Gary. costs to with of the the, of, [de-SPAC] lot kind Thanks range, XX, trailing the in

So continue. you see QX QX. Obviously don't can there's expect to from to meaningful a stepdown that

cash, items in QX in initiatives. the some us quarter year, with For big did with to it's non-cash there firm strategic not we biggest there. that is [indiscernible] operational item had though this assist all The are consulting there for we some engage a

So started the QX, middle QX. or a kind engagement mid consulting that, early ended of, of

we there was up that onetime have a that so And about fee in delta. that makes that's probably of half

Gary Taylor

Okay.

we're So through it to sequentially, but running down mean, some anticipating the should coming will items that degree be there back then, in be I still half?

Kevin Wirges

end north we off is in remaining a there's of, based roll falling XX% Yes, internal QX. in kind there's of that And still those of items – to, estimates off we XX% say off slowly of probably XX% I'd today, anticipate our of year. running through there the the the back What or half. are throughout

Operator

back over to time. Mr. no questions are the I turn at call Solo. de Carlos now There will further this

Carlos de Solo

all our to and joining you continuing the support call for Thank today company.

execute. you year updating the As you had forward team look can start We've continues our year. to we the will We our and the see, remainder for on a progress, you. thank solid to momentum to continue remain and that the confident of

Operator

you thank today's gentlemen, participation. your call. and This conference Ladies concludes for

now may disconnect. You

CareMax (CMAXQ) 14 May 222022 Q1 Earnings call transcript