Sharecare (Nasdaq: SHCR), the digital health company that helps
people manage all their health in one place, today announced
financial results for the quarter ended March 31, 2024.
“As we report first quarter earnings, we are
thrilled that our purpose-built digital navigation
platform for Medicaid is launching on July 1, 2024, to
approximately 750,000 Medicaid members,” said Brent Layton, CEO of
Sharecare. “As we successfully expand into new markets leveraging
our assets, we remain committed to providing measurable value to
our customers and renewing long-term relationships while also
growing revenue across our three divisions – and I want to
reiterate that we remain confident in our business.”
First Quarter
2024 Financial Results All
comparisons, unless otherwise noted, are to the three months ended
March 31, 2023.
- Revenue of $90.9 million compared
to $116.3 million, a decrease of $25.4 million, or 22%.
- Net loss attributable to Sharecare
of $35.1 million compared to $34.7 million, an increase of $0.4
million. Net loss attributable to Sharecare in the first quarter of
2024 included $13.6 million in non-cash stock compensation; $2.2
million in non-operating, non-recurring costs; $3.3 million of
reorganizational and severance costs; and $2.7 million of other
non-cash or non-operational income. Excluding these amounts, the
adjusted net loss was $13.3 million in the current quarter.
- Adjusted EBITDA of $(2.7) million
compared to $0.6 million, a decrease to adjusted EBITDA of $3.3
million.
- Net loss per share of $0.10 for
both periods.
- Adjusted net loss per share, which
excludes the impact of non-cash and non-operational amounts, was
$0.04 compared to $0.03, an increase to adjusted net loss per share
of $0.01.
“While revenue was down in first quarter, it was
largely low margin business; and coupled with tight cost controls,
we were able to minimize the impact to adjusted EBITDA,” said
Justin Ferrero, president and chief financial officer of Sharecare.
“We will continue to drive meaningful cost savings while delivering
high-quality services, and carefully manage our balance sheet.”
Strategic ReviewUnder the
direction of Sharecare’s special committee of the Board of
Directors, with the support of the Company’s executive chairman and
senior management, Sharecare is in active discussions with multiple
bidders for a potential sale of the Company or other strategic
transaction. While Sharecare expects to bring the process to a
conclusion within 30 to 45 days and will communicate the result at
that time, there can be no assurance of that timing, or that a
transaction will result at all.
Layton added, “We are focused on maximizing
value for our shareholders. While I know many are eager to hear
about the Board’s decision on the strategic review, I want to
reinforce that our team remains laser focused on growth,
profitability, and delivering on our commitments to our clients and
the people they serve.”
Conference CallThe Company will
host a conference call to review the first quarter results today,
Thursday, May 9, 2024, at 4:30 p.m. EST. The call can be
accessed by dialing (833) 636-1352 for U.S. participants or (412)
902-4148 for international participants, and referencing the
Sharecare earnings call; or via live audio webcast, available
online at https://investors.sharecare.com/. A webcast replay of the
call will be available for on-demand listening at the same link and
will remain available for approximately 90 days.
Non-GAAP Financial MeasuresIn
addition to our financial results determined in accordance with
U.S. GAAP, we believe the non-GAAP measures adjusted EBITDA,
adjusted net loss, and adjusted loss per share are useful in
evaluating our operating performance. We use adjusted EBITDA,
adjusted net loss, and adjusted loss per share to evaluate our
ongoing operations and for internal planning and forecasting
purposes. We believe that these non-GAAP financial measures, when
taken together with the corresponding GAAP financial measures,
provide meaningful supplemental information regarding our
performance by excluding certain items that may not be indicative
of our business, results of operations, or outlook. In particular,
we believe that the use of these non-GAAP measures is helpful to
our investors as these metrics are used by management in assessing
the health of our business and our operating performance. However,
non-GAAP financial information is presented for supplemental
informational purposes only, has limitations as an analytical tool,
and should not be considered in isolation or as a substitute for
financial information presented in accordance with GAAP. In
addition, other companies, including companies in our industry, may
calculate similarly-titled non-GAAP measures differently or may use
other measures to evaluate their performance, all of which could
reduce the usefulness of our non-GAAP financial measures.
The calculations and reconciliations of
historical adjusted EBITDA, adjusted net loss, and adjusted loss
per share to net loss, the most directly comparable financial
measure stated in accordance with GAAP, are provided below and in
the accompanying financial tables. Investors are encouraged to
review the reconciliations and not to rely on any single financial
measure to evaluate our business.
We have not reconciled adjusted EBITDA guidance
to net loss because we do not provide guidance for net loss or for
items that we do not consider indicative of our ongoing
performance, including, but not limited to, the impact of
significant non-recurring items, as certain of these items are out
of our control and/or cannot be reasonably predicted. Accordingly,
reconciliations of adjusted EBITDA guidance to the corresponding
U.S. GAAP measures are not available without unreasonable
effort.
Adjusted EBITDAWe calculate
adjusted EBITDA as net loss adjusted to exclude
(i) depreciation and amortization, (ii) interest income,
(iii) interest expense, (iv) income tax (benefit) expense, (v)
other (income) expense (non-operating), (vi)
share-based compensation, (vii) warrants issued with revenue
contracts, (viii) amortization of non-cash payment for research and
development, (ix) non-operating, non-recurring costs, (x)
reorganizational and severance costs, and (xi) acquisition-related
costs. We do not view the items excluded as representative of
normal, recurring, cash operating expenses necessary to operate the
Company’s lines of business and services.
Non-operating, non-recurring costs for the three
months ended March 31, 2024 include costs related to legal
matters involving prior acquisitions and in connection with the
contractual obligation with a financially distressed vendor and are
recorded in general and administrative operating expense.
Non-operating, non-recurring costs for the three months ended
March 31, 2023 include costs of our ERP system implementation,
costs of contractual obligations associated with a financially
distressed vendor, and costs related to legal matters. The ERP and
legal matter costs are recorded in general and administrative
operating expense and the financially distressed vendor costs are
recorded in cost of revenue in the Consolidated Statement of
Operations and Comprehensive Loss for each respective period
presented.
Legal matter costs include attorney fees
associated with a dispute that arose from a prior acquisition,
attorney fees associated with the submission of an unsolicited
acquisition offer as filed in the Schedule 13D with the SEC on
October 11, 2023, and attorney fees related to contractual
obligations associated with a financially distressed vendor. These
matters have unique facts and circumstance that are not directly
related to our operations. We do not consider these costs to be
normal, recurring, cash operating expenses necessary to operate our
business.
The ERP implementation is viewed as a
transformational undertaking due to the extensive scope and
inherent change management involved to transition to a new
single-solution ERP system from the disparate legacy systems. These
costs consist of internal and third-party costs of the ERP
implementation and do not include capitalized costs, depreciation
and/or amortization, or costs to support or maintain software
applications or systems once they are in productive use. The ERP
system was fully implemented as planned in 2023, and such costs are
not expected to recur in the foreseeable future. We do not consider
these costs to be normal, recurring, cash operating expenses
necessary to operate our business.
Financially distressed vendor costs include
financial support from us to a vendor in response to the vendor’s
financial difficulties, which absent such support would have
resulted in an interruption of our service to our customers.
Because we are committed to providing uninterrupted service to our
customers, and to minimizing the risk of such a disruption, we made
additional, advance payments to the vendor beyond those that were
due to the vendor in association with services procured from the
vendor. We ceased procuring services from the vendor in Q2 2023 and
subsequent to that period no further amounts were paid. Because the
costs of the additional payments made to the vendor were
incremental to the costs incurred by us to deliver service to our
customers, we do not consider them to be normal, recurring, cash
operating expenses necessary to operate our business.
Reorganizational and severance costs are a
component of our Globalization Efforts and Cost Savings as
described in Key Factors and Trends Affecting our Operating
Performance. These costs are due to efforts to globalize and
centralize our workforce through the creation of the global shared
service center which is expected to be fully operational during the
first half of 2024. We have never had a global shared service
center and view this undertaking as outside the scope of normal
operations. Costs include salary, benefits, equity and bonus
compensation, and other employee costs for those who were
identified to be terminated. These costs were recorded in sales and
marketing, product and technology, and general and administrative
operating expenses in the Consolidated Statement of Operations and
Comprehensive Loss for the periods presented, based on the
employee’s respective job function. Because these costs are part of
a specific and unprecedented initiative, we do not consider these
expenses to be normal, recurring, cash operating expenses necessary
to operate our business.
Certain prior period adjusted EBITDA add-back
amounts have been reclassified to new add-back line items in order
to conform to the current period presentation and to more
accurately describe the nature of the amounts year-over-year. These
reclassifications had no effect on the previously reported adjusted
EBITDA totals.
In conformance with the SEC’s clarified guidance
around – and recent focus on – non-GAAP financial measures, our
adjusted EBITDA now includes costs related to an exited contract,
abandoned leases, and certain staff reorganization expenses, all of
which were previously disclosed but excluded from our historical
adjusted EBITDA calculations and guidance. Further details can be
found below in footnote (d) in the reconciliation table for
adjusted EBITDA.
Adjusted Net LossWe calculate
adjusted net loss as net loss attributable to Sharecare, Inc.
adjusted to exclude (i) amortization of acquired intangibles, (ii)
amortization of deferred financing fees, (iii) change in fair value
of warrant liability and contingent consideration, (iv) share-based
compensation, (v) warrants issued with revenue contracts, (vi)
amortization of non-cash payment for research and development,
(vii) non-operating, non-recurring costs, (viii) reorganizational
and severance costs, and (ix) acquisition-related costs. We do not
view the items excluded as representative of normal, recurring,
cash operating expenses necessary to operate our lines of business
and services.
Adjusted Loss Per ShareWe
calculate adjusted lost per share as adjusted net loss, as defined
above, divided by the number of weighted average common shares
outstanding - basic and diluted.
About Sharecare
Sharecare is a leading digital healthcare company that helps people
access, navigate and unify resources to improve their health and
well-being in one place, regardless of where they are in their
health journey. Our comprehensive and data-driven interoperable
ecosystem is designed to help people, providers, employers, health
plans, government organizations, and communities optimize
individual and population-wide well-being by enabling positive
behavior change. Driven by our philosophy that we are “all together
better,” at Sharecare, we are committed to supporting each
individual through the lens of their personal health and ensuring
high-quality care is more accessible and affordable for everyone.
To learn more, visit www.sharecare.com.
Important Notice Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 that are based on beliefs
and assumptions and on information currently available. In some
cases, you can identify forward-looking statements by the following
words: “outlook,” “target,” “reflect,” “on track,” “foresees,”
“future,” “may,” “deliver,” “will,” “shall,” “could,” “would,”
“should,” “expect,” “intend,” “plan,” “anticipate,” “believe,”
“estimate,” “predict,” “project,” “potential,” “continue,”
“ongoing” or the negative of these terms, other comparable
terminology (although not all forward-looking statements contain
these words), or by discussions of strategy, plans, or intentions.
These statements involve risks, uncertainties and other factors
that may cause actual results, levels of activity, performance or
achievements to be materially different from the information
expressed or implied by these forward-looking statements. Although
we believe that we have a reasonable basis for each forward-looking
statement contained in this press release, we caution you that
these statements are based on a combination of facts and factors
currently known by us and our projections of the future, about
which we cannot be certain.
Forward-looking statements in this press release
include, but are not limited to, statements regarding the strategic
review and timing related thereto, our long-term strategy and
positioning, growth, globalization and other strategic cost
optimization initiatives and the corresponding benefits, including
long-term growth, margin improvement and cash flow improvements,
and partnerships or other relationships with third parties or
customers, in each case on our future growth objectives and
statements regarding our future results and outlook.
We cannot assure you that the forward-looking
statements in this press release will prove to be accurate. These
forward-looking statements are subject to a number of significant
risks and uncertainties that could cause actual results to differ
materially from expected results. For example, the Company’s
Financial Outlook assumes business currently under contract and
satisfaction by our customers of their contractual obligations
under those agreements, which is not within the Company’s
control. If a customer fails to satisfy its contractual
obligations, actual revenue and Adjusted EBITDA could be negatively
impacted. Descriptions of some of the other factors that could
cause actual results to differ materially from these
forward-looking statements are discussed in more detail in our
filings with the U.S. Securities and Exchange Commission (the
"SEC"), including the Risk Factors section of the Company's Annual
Report on Form 10-K for the year ended December 31, 2023.
Furthermore, if the forward-looking statements prove to be
inaccurate, the inaccuracy may be material. In light of the
significant uncertainties in these forward-looking statements, you
should not regard these statements as a representation or warranty
by us or any other person that we will achieve our objectives and
plans in any specified time frame, or at all. The forward-looking
statements in this press release represent our views as of the date
of this press release. We anticipate that subsequent events and
developments will cause our views to change. However, while we may
elect to update these forward-looking statements at some point in
the future, we have no current intention of doing so except to the
extent required by applicable law. You should, therefore, not rely
on these forward-looking statements as representing our views as of
any date subsequent to the date of this press release.
Media
Relations:PR@sharecare.com
Investor
Relations:investors@sharecare.com
SHARECARE, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands, except
share and per share amounts) |
|
Three Months EndedMarch 31, |
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
90,861 |
|
|
$ |
116,295 |
|
Costs and operating
expenses: |
|
|
|
Costs of revenue (exclusive of
depreciation and amortization below) |
|
51,121 |
|
|
|
67,890 |
|
Sales and marketing |
|
13,558 |
|
|
|
15,348 |
|
Product and technology |
|
14,544 |
|
|
|
20,808 |
|
General and
administrative |
|
34,907 |
|
|
|
34,121 |
|
Depreciation and
amortization |
|
13,331 |
|
|
|
14,781 |
|
Total costs and operating expenses |
|
127,461 |
|
|
|
152,948 |
|
Loss from operations |
|
(36,600 |
) |
|
|
(36,653 |
) |
Other income: |
|
|
|
Interest income |
|
1,274 |
|
|
|
1,680 |
|
Interest expense |
|
(217 |
) |
|
|
(430 |
) |
Other income |
|
368 |
|
|
|
429 |
|
Total other income |
|
1,425 |
|
|
|
1,679 |
|
Loss before income tax benefit (expense) |
|
(35,175 |
) |
|
|
(34,974 |
) |
Income tax benefit
(expense) |
|
31 |
|
|
|
(31 |
) |
Net loss |
|
(35,144 |
) |
|
|
(35,005 |
) |
Net loss attributable to
noncontrolling interest in subsidiaries |
|
(57 |
) |
|
|
(346 |
) |
Net loss attributable to Sharecare, Inc. |
$ |
(35,087 |
) |
|
$ |
(34,659 |
) |
|
|
|
|
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.10 |
) |
|
$ |
(0.10 |
) |
Weighted-average common shares
outstanding, basic and diluted |
|
354,208,908 |
|
|
|
352,923,217 |
|
SHARECARE, INC.CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands, except
share and per share amounts) |
|
As of March 31,2024 |
|
As of December 31,2023 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
100,320 |
|
|
$ |
128,187 |
|
Accounts receivable, net (net of allowance for doubtful accounts of
$8,348 and $8,544, respectively) |
|
124,936 |
|
|
|
128,173 |
|
Other receivables |
|
2,213 |
|
|
|
2,262 |
|
Prepaid expenses |
|
9,875 |
|
|
|
6,007 |
|
Other current assets |
|
2,814 |
|
|
|
3,178 |
|
Total current assets |
|
240,158 |
|
|
|
267,807 |
|
Property and equipment, net |
|
2,751 |
|
|
|
3,375 |
|
Other long-term assets |
|
13,599 |
|
|
|
13,863 |
|
Intangible assets, net |
|
130,263 |
|
|
|
136,552 |
|
Goodwill |
|
191,860 |
|
|
|
192,037 |
|
Total assets |
$ |
578,631 |
|
|
$ |
613,634 |
|
Liabilities,
Redeemable Convertible Preferred Stock and Stockholders’
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
45,530 |
|
|
$ |
45,388 |
|
Accrued expenses and other current liabilities |
|
55,516 |
|
|
|
65,706 |
|
Deferred revenue |
|
5,735 |
|
|
|
5,517 |
|
Total current liabilities |
|
106,781 |
|
|
|
116,611 |
|
Warrant liabilities |
|
317 |
|
|
|
403 |
|
Long-term debt |
|
586 |
|
|
|
519 |
|
Other long-term liabilities |
|
7,171 |
|
|
|
8,032 |
|
Total liabilities |
|
114,855 |
|
|
|
125,565 |
|
Commitments and contingencies |
|
|
|
Series A convertible redeemable preferred shares, $0.0001 par
value; 5,000,000 shares authorized; 5,000,000 shares issued and
outstanding, aggregate liquidation preference of $50,000 as of
March 31, 2024 and December 31, 2023 |
|
58,205 |
|
|
|
58,205 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.0001 par value; 600,000,000 and 600,000,000 shares
authorized; 358,572,273 and 353,430,357 shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
36 |
|
|
|
35 |
|
Additional paid-in capital |
|
1,168,869 |
|
|
|
1,157,737 |
|
Accumulated other comprehensive loss |
|
(2,551 |
) |
|
|
(2,263 |
) |
Accumulated deficit |
|
(760,460 |
) |
|
|
(725,373 |
) |
Total Sharecare stockholders’ equity |
|
405,894 |
|
|
|
430,136 |
|
Noncontrolling interest in subsidiaries |
|
(323 |
) |
|
|
(272 |
) |
Total stockholders’ equity |
|
405,571 |
|
|
|
429,864 |
|
Total liabilities, redeemable convertible preferred stock and
stockholders’ equity |
$ |
578,631 |
|
|
$ |
613,634 |
|
SHARECARE, INC.RECONCILIATION OF GAAP NET LOSS TO
ADJUSTED EBITDA(Unaudited)(In
thousands) |
|
Three Months EndedMarch 31, |
|
|
2024 |
|
|
|
2023 |
|
Net loss |
$ |
(35,144 |
) |
|
$ |
(35,005 |
) |
Add: |
|
|
|
Depreciation and
amortization |
|
13,331 |
|
|
|
14,781 |
|
Interest income |
|
(1,274 |
) |
|
|
(1,680 |
) |
Interest expense |
|
217 |
|
|
|
430 |
|
Income tax (benefit)
expense |
|
(31 |
) |
|
|
31 |
|
Other income
(non-operating) |
|
(368 |
) |
|
|
(429 |
) |
Share-based compensation |
|
13,596 |
|
|
|
9,969 |
|
Warrants issued with revenue
contracts |
|
28 |
|
|
|
14 |
|
Amortization of non-cash
payment for research and development |
|
— |
|
|
|
1,190 |
|
Non-operating, non-recurring
costs(a) |
|
2,162 |
|
|
|
1,716 |
|
Reorganizational and severance
costs(b) |
|
3,345 |
|
|
|
9,030 |
|
Acquisition-related costs |
|
1,413 |
|
|
|
558 |
|
Adjusted EBITDA(c)(d) |
$ |
(2,725 |
) |
|
$ |
605 |
|
(a) |
|
For the three months ended March
31, 2024, primarily represents costs related to legal matters
involving prior acquisitions for $1.7 million and in connection
with the contractual obligation with a financially distressed
vendor of $0.4 million. For the three months ended March 31, 2023,
primarily represents costs related to the ERP implementation of
$0.4 million, contractual obligations with a financially distressed
vendor of $0.4 million, and legal matters of $0.2 million. |
(b) |
|
For the three months ended March
31, 2024, primarily represents costs related to globalizing the
Company's workforce of $2.9 million and severance of $0.4 million.
For the three months ended March 31, 2023, primarily represents
costs related to globalizing the Company's workforce of $8.3
million and severance of $0.8 million. |
(c) |
|
Includes non-cash amortization
associated with contract liabilities recorded in connection with
acquired businesses. |
(d) |
|
Effective September 30, 2023, we
no longer exclude costs associated with exiting a contract and
lease terminations from our computation of adjusted EBITDA. For the
three months ended March 31, 2023 these costs totaled $0.7 and $0.8
million, respectively. |
SHARECARE, INC.RECONCILIATION OF GAAP NET LOSS
ATTRIBUTABLE TO SHARECARE TO ADJUSTED NET LOSS AND
ADJUSTEDLOSS PER
SHARE(Unaudited)(In thousands,
except share and per share data) |
|
Three Months EndedMarch 31, |
|
|
2024 |
|
|
|
2023 |
|
Net loss attributable to
Sharecare, Inc. |
$ |
(35,087 |
) |
|
$ |
(34,659 |
) |
Add: |
|
|
|
Amortization of acquired
intangibles(a) |
|
1,599 |
|
|
|
1,632 |
|
Amortization of deferred
financing fees |
|
— |
|
|
|
31 |
|
Change in fair value of
warrant liability and contingent consideration |
|
(379 |
) |
|
|
(138 |
) |
Share-based compensation |
|
13,596 |
|
|
|
9,969 |
|
Warrants issued with revenue
contracts |
|
28 |
|
|
|
14 |
|
Amortization of non-cash
payment for research and development |
|
— |
|
|
|
1,190 |
|
Non-operating, non-recurring
costs(b) |
|
2,162 |
|
|
|
1,716 |
|
Reorganizational and severance
costs(c) |
|
3,345 |
|
|
|
9,030 |
|
Acquisition-related costs |
|
1,413 |
|
|
|
558 |
|
Adjusted net loss(d)(e) |
$ |
(13,323 |
) |
|
$ |
(10,657 |
) |
|
|
|
|
Weighted-average common shares
outstanding, basic and diluted |
|
354,208,908 |
|
|
|
352,923,217 |
|
|
|
|
|
Loss per share |
$ |
(0.10 |
) |
|
$ |
(0.10 |
) |
Adjusted loss per share |
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
(a) |
|
Represents non-cash expenses
related to the amortization of intangibles in connection with
acquired businesses. |
(b) |
|
For the three months ended March
31, 2024, primarily represents costs related to legal matters
involving prior acquisitions for $1.7 million and in connection
with the contractual obligation with a financially distressed
vendor of $0.4 million. For the three months ended March 31, 2023,
primarily represents costs related to the ERP implementation of
$0.4 million, contractual obligations with a financially distressed
vendor of $0.4 million, and legal matters of $0.2 million. |
(c) |
|
For the three months ended March
31, 2024, primarily represents costs related to globalizing the
Company's workforce of $2.9 million and severance of $0.4 million.
For the three months ended March 31, 2023, primarily represents
costs related to globalizing the Company's workforce of $8.3
million and severance of $0.8 million. |
(d) |
|
The income tax effect of the
Company’s non-GAAP reconciling items are offset by valuation
allowance adjustments of the same amount given the Company is in a
full valuation allowance position. |
(e) |
|
Effective September 30, 2023, we
no longer exclude costs associated with exiting a contract and
lease terminations from our computation of adjusted EBITDA. For the
three months ended March 31, 2023 these costs totaled $0.7 and $0.8
million, respectively. |
Sharecare (NASDAQ:SHCR)
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