Growing Medicare Advantage Membership on Our Platform

Membership and revenue are tied to the number of members attributed to our physician network by our payors. We believe we have multiple avenues to serve additional members, including through:

Patients who are attributed to our physician network who (a) age into Medicare

? Adding new contracts (either payor contracts or physician contracts) in

? Adding new contracts (either payor contracts or physician contracts) in

The strength of our affiliate physician model and its multiple avenues of growth is evident by our growth from 2018 to December 31, 2021.

Growing Membership in Adjacent and New Markets

Growing Membership in Existing Markets

Growing Capitated Revenue Per Member

Effectively Managing Member Medical Expense

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:

At-risk membership represents the approximate number of Medicare Advantage members for whom we receive a fixed per member per month fee under capitation arrangements as of the end of a particular period.

Contracted primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of a particular period.

The key metric we utilize to measure our profitability and performance is Adjusted EBITDA.

See "-Critical Accounting Policies and Estimates-Capitated Revenue" for more information.

Sales and marketing expense. Sales and marketing expenses consist of costs related to patient and provider marketing and community outreach. These expenses capture all costs for both our local and enterprise sales and marketing efforts.

Amortization expense. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements and payor contracts.

Depreciation expense. Depreciation expense is associated with our property and equipment. Depreciation includes expenses associated with leasehold improvements, computer equipment and software, furniture and fixtures and internally developed software.

The following table sets forth our consolidated statements of operations data for the periods indicated (dollars in thousands):

Capitated revenue was $57.2 million in the Successor Period of 2021.

Capitated revenue was $567.8 million in the Predecessor Period of 2021.

Other patient service revenue was $1.5 million in the Successor Period of 2021.

Other patient service revenue of $10.9 million in the Predecessor Period of 2021.

Medical expense was $66.9 million in the Successor Period of 2021.

Medical expense was $592.5 million in the Predecessor Period of 2021.

Corporate, General and Administrative Expense

Corporate, general and administrative expenses was $ 17.0 million in the Successor Period of 2021.

Corporate, general and administrative expenses of $100.2 million in the Predecessor Period of 2021.

Sales and marketing expenses was $0.4 million in the Successor Period of 2021.

Sales and marketing expenses was $1.8 million in the Predecessor Period of 2021.

Depreciation expense was $0.2 million in the Successor Period of 2021.

Depreciation expense was $1.5 million in the Predecessor Period of 2021.

Premium deficiency reserve was $26.2 million in the Successor Period of 2021.

Premium deficiency reserve was $11.6 million in the Predecessor Period of 2021.

Interest expense, net, was $1.3 million in the Successor Period of 2021.

Interest expense, net, was $9.7 million in the Predecessor Period of 2021.

Other expense was $0.3 million for the year ended December 31, 2020, an increase of $0.4 million compared to other income of $0.1 million for the year ended December 31, 2019. The increase was primarily due to increased non-income related taxes.

The provision for income taxes was zero in the Successor Period of 2021 and the Predecessor Periods of 2021, 2020 and 2019.

Net loss was $57.9 million in the Successor Period of 2021.

Net loss was $146.4 million in the Predecessor Period of 2021.

Supplemental Unaudited Presentation of Consolidated Adjusted EBITDA

By definition, EBITDA consists of net income (loss) before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA, further adjusted to add back the effect of certain expenses, such as mark-to-market warrant expense, premium deficiency reserves, stock-based compensation expense and transaction expenses.

The following discussion of our cash flows is based on the consolidated statements of cash flows. The following table sets forth summarized cash flows for the periods indicated (dollars in thousands):

January 1, 2021 Year Ended Year Ended

Net cash used in operating activities of $15.3 million in the Successor Period of 2021.

Net cash used in operating activities was $51.1 million in the Predecessor Period of 2021.

a $172.9 million increase in our net loss from $31.4 million in 2020 to $204.3

million for the combined Successor and Predecessor periods of 2021, driven in

part by a $62.1 million increase in certain non-cash expenses including

depreciation, amortization, mark-to-market adjustments for warrants,

? stock-based compensation and premium deficiency reserves, $29.6 million of

transaction expenses incurred in connection with the Business Combinations and

$7.9 million of expenses for transaction related litigation fees; the net loss

also reflects the performance in our capitated contracts, as the total number

of at-risk members increased 32% from 50,600 at December 31, 2020 to 67,000 at

an increase in our claims payable for the year ended December 31, 2021 of $18.1

? million compared to an increase in our claims payable for the year ended

a decrease in our net health plan receivables for the year ended December 31,

? 2021 of $0.5 million compared to an increase in our net health plan receivables

increases in claims payable for the year ended December 31, 2020 of $37.1

? million compared to increases in claims payable for the year ended December 31,

2019 of $12.1 million, primarily driven by growth in at-risk members;

increases in accounts payable, accrued payroll and accrued interest for the

? year ended December 31, 2020 of $12.3 million compared to increases for the

year ended December 31, 2019 of $3.5 million, primarily driven by growth in the

increases in health plan payable for the year ended December 31, 2020 of $8.8

? million compared to increases in health plan payable for the year ended

December 31, 2019 of $1.9 million, primarily driven by growth in at-risk

offset by increases in health plan receivables for the year ended December 31,

? 2020 of $27.5 million compared to increases in health plan receivables for the

year ended December 31, 2019 of $9.7 million, primarily driven by growth in

offset by increases in other current assets for the year ended December 31,

? 2020 of $4.2 million compared to increase in other currents assets for the year

Net cash used in investing activities was $47.9 million in the Successor Period of 2021.

Net cash used in investing activities was $8.2 million in the Predecessor Period of 2021.

Net cash provided by financing activities was $198.7 million in the Successor Period of 2021.

Net cash provided by financing activities was $24.8 million in the Predecessor Period of 2021.

Net cash provided from financing activities was $34.8 million for the year ended December 31, 2020 compared to $63.6 million for the year ended December 31, 2019, a decrease of $28.8 million. The decline in financing activities was primarily a result of the decrease in units issued, partially offset by an increase in proceeds from long-term debt and a decrease in repayment of long-term debt.

Our principal commitments consist of repayments of unpaid claims, long-term debt on term loans, unsecured debt and operating leases for our facilities.

Healthcare Services Expense and Claims Payable (collectively, "Medical Expense")

Goodwill and Other Identified Intangible Assets

We account for uncertain tax positions by reporting a liability for unrecognizable tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

See Item 8, Note 5 "Recent Accounting Pronouncements Adopted" in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting standards issued and the anticipated effects on our consolidated financial statements.

© Edgar Online, source Glimpses