Sharecare announces second quarter 2022 financial results and operational highlights
08/10/2022 - 07:00 AM
ATLANTA Aug. 10, 2022 $50 million May 12, 2022 , remains in place.
"Sharecare delivered solid second quarter results exceeding revenue and EBITDA guidance with continued progress on deploying our digital first strategy to drive enhanced engagement, increased access, and improved outcomes for our clients," said Jeff Arnold , chairman and CEO of Sharecare. "We remain confident in our ability to execute on our strategy given the continued demand and momentum in new business opportunities and client wins along with retaining our current customer base, which will support accelerated revenue growth and operating performance in 2023."
Mr. Arnold added, "Sharecare provides a comprehensive digital health navigation platform supporting a significant number of top payors and employers to deliver value to more than 11 million members every day. We are committed to continuing to improve operating performance while advancing innovative solutions for our customers. One example of the value Sharecare continues to bring to its customers is the successful launch of Sharecare+, a digital first advocacy platform developed in partnership with Elevance Health. Our partnership with Carelon will be the next step in driving significant scale of our solution."
Second Quarter 2022 Financial Results All comparisons, unless otherwise noted, are to the three months ended June 30, 2021.
Revenue of $103.8 million $98.5 million $5.3 million 5% . Net loss attributable to Sharecare of $29.0 million $20.2 million $8.8 million $6.8 million $3.6 million Adjusted EBITDA of $2.1 million $6.6 million $4.5 million Net loss per share of $0.08 $0.09 $0.01 Adjusted loss per share of $0.02 There is no definitive timeline for the company's strategic review, nor has the board of directors made any decisions related to any actions or potential strategic alternatives to fully unlock value of the company's assets and potential that are not fully reflected in the market today; therefore, the company does not intend to comment further until it determines that additional disclosure is appropriate or necessary.
Financial Outlook In light of a delayed start date for a large enterprise client, the initiation of the strategic review, changing macro-economic environment affecting life sciences, and certain cost initiatives being undertaken by the company, Sharecare is suspending financial guidance for 2022. The company will hold an analyst day in Q4 2022.
Conference Call The company will host a conference call to review the second quarter results today, Wednesday August 10, 2022, at 8:00 a.m. EDT . The conference call can be accessed by dialing (833) 636-1352 for U.S. participants, or (412) 902-4148 for international participants, and referencing the Sharecare call; or via live audio webcast, also 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 Measures In addition to our financial results determined in accordance with U.S. GAAP, we believe the non-GAAP measures adjusted EBITDA, adjusted net income (loss), and adjusted earnings (loss) per share ("adjusted EPS") are useful in evaluating our operating performance. We use adjusted EBITDA, adjusted net income (loss), and adjusted EPS 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 historic adjusted EBITDA, adjusted net income (loss), and adjusted EPS to net income (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 income (loss) because we do not provide guidance for net income (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 EBITDA We calculate adjusted EBITDA as net income (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) severance, (viii) warrants issued with revenue contracts, (ix) net costs associated with exiting contracts, and (x) transaction and closing costs. We do not view the items excluded as representative of our ongoing operations.
Adjusted Net Income (Loss) We calculate adjusted net income (loss) as net income (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) severance, (vi) warrants issued with revenue contracts, (vii) net costs associated with exiting contracts, (viii) transaction and closing costs, and (ix) the related income tax adjustments. We do not view the items excluded as representative of our ongoing operations.
Adjusted Earnings (Loss) Per Share We calculate adjusted EPS as adjusted net income (loss), as defined above, divided by the number of weighted average common shares outstanding - basic and diluted.
About Sharecare www.sharecare.com .
Important Notice Regarding Forward-Looking Statements This 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 a potential strategic review, our ability to realize the expected benefits of partnerships or other relationships with third parties or customers on our future growth objectives, our use of the share repurchase program and the statements under the caption "Financial 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. Descriptions of some of the 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 of Form 10-K filed with the SEC on March 31, 2022 . 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: Jen Martin Hall jen@sharecare.com
Investor Relations: Evan Smith , CFAevan.smith@sharecare.com
SHARECARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Revenue
$ 103,823
$ 98,459
$ 204,533
$ 188,661
Costs and operating expenses:
Costs of revenue (exclusive of depreciation and amortization below)
53,238
48,634
104,730
93,028
Sales and marketing
14,155
12,046
28,666
23,556
Product and technology
17,680
15,812
37,101
36,266
General and administrative
43,491
19,197
99,489
38,752
Depreciation and amortization
10,901
7,167
20,778
13,850
Total costs and operating expenses
139,465
102,856
290,764
205,452
Loss from operations
(35,642)
(4,397)
(86,231)
(16,791)
Other income (expense):
Interest income
102
21
131
29
Interest expense
(539)
(7,095)
(1,031)
(14,105)
Other income (expense)
6,827
(8,851)
19,672
(20,730)
Total other income (expense)
6,390
(15,925)
18,772
(34,806)
Loss before income tax benefit (expense)
(29,252)
(20,322)
(67,459)
(51,597)
Income tax benefit (expense)
(269)
98
(361)
14
Net loss
(29,521)
(20,224)
(67,820)
(51,583)
Net (loss) income attributable to noncontrolling interest in subsidiaries
(496)
24
(594)
(82)
Net loss attributable to Sharecare, Inc.
$ (29,025)
$ (20,248)
$ (67,226)
$ (51,501)
Net loss per share attributable to common stockholders, basic and diluted (1)
$ (0.08)
$ (0.09)
$ (0.19)
$ (0.23)
Weighted-average common shares outstanding, basic and diluted (1)
347,334,401
228,721,591
346,122,333
225,493,435
(1)
Retroactively restated for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2 of the 10-Q
SHARECARE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
As of June 30, 2022
As of December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$ 211,574
$ 271,105
Accounts receivable, net (net of allowance for doubtful accounts of $7,812 and $6,212 , respectively)
98,717
103,256
Other receivables
2,810
5,327
Prepaid expenses
12,330
8,819
Other current assets
2,472
2,459
Total current assets
327,903
390,966
Property and equipment, net
4,924
4,534
Other long-term assets
20,433
12,173
Intangible assets, net
156,509
155,086
Goodwill
191,294
192,442
Total assets
$ 701,063
$ 755,201
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable
$ 21,203
$ 27,155
Accrued expenses and other current liabilities
41,054
51,653
Deferred revenue
11,209
11,655
Contract liabilities, current
2,518
4,597
Debt, current
774
—
Total current liabilities
76,758
95,060
Contract liabilities, noncurrent
768
1,745
Warrant liabilities
3,330
10,820
Long-term debt
—
419
Other long-term liabilities
9,353
24,116
Total liabilities
90,209
132,160
Commitments and contingencies
Series A convertible redeemable preferred shares, $0.00 01 par value; 5,000,000 shares authorized; 5,000,000 shares issued and outstanding, aggregate liquidation preference of $50,000 as of June 30, 2022 and December 31, 2021
58,205
58,205
Stockholders' equity:
Common stock, $0.00 01 par value; 600,000,000 and 600,000,000 shares authorized; 351,926,366 and 345,788,707 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
35
35
Additional paid-in capital
1,098,772
1,042,164
Accumulated other comprehensive loss
(3,170)
(2,061)
Accumulated deficit
(544,339)
(477,113)
Total Sharecare stockholders' equity
551,298
563,025
Noncontrolling interest in subsidiaries
1,351
1,811
Total stockholders' equity
552,649
564,836
Total liabilities, redeemable convertible preferred stock and stockholders' equity
$ 701,063
$ 755,201
SHARECARE, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(Unaudited)
(In thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Net loss
$ (29,521)
$ (20,224)
$ (67,820)
$ (51,583)
Add:
Depreciation and amortization
10,901
7,167
20,778
13,850
Interest income
(102)
(21)
(131)
(29)
Interest expense
539
7,095
1,031
14,105
Income tax (benefit) expense
269
(98)
361
(14)
Other (income) expense
(6,827)
8,851
(19,672)
20,730
Share-based compensation
18,177
2,360
51,287
14,386
Severance
411
200
770
265
Warrants issued with revenue contracts(a)
14
(1)
34
38
Net costs associated with exiting contracts(b)
1,249
—
2,923
—
Transaction and closing costs(c)(d)
7,025
1,319
14,397
2,022
Adjusted EBITDA(e)
$ 2,135
$ 6,648
$ 3,958
$ 13,770
(a)
Represents the non-cash value of warrants issued to clients for meeting specific revenue thresholds.
(b)
For the six months ended June 30, 2022, previously undisclosed first quarter net costs were included for comparability purposes and to display trends associated with exiting contracts during the period.
(c)
For the three months ended June 30, 2022, represents costs related to the Business Combination, transaction and post-closing costs related to acquisitions, and other non-operating, non-recurring costs including $2.7 million of other non-operating, non-recurring costs, $3.1 million of reorganizational costs, and $1.2 million of acquisition-related expense.
(d)
For the six months ended June 30, 2022, represents costs related to the Business Combination, transaction and post-closing costs related to acquisitions, and other non-operating, non-recurring costs including $5.9 million of other non-operating, non-recurring costs, $5.3 million of reorganizational costs, and $3.2 million of acquisition-related expense.
(e)
Includes non-cash amortization associated with contract liabilities recorded in connection with acquired businesses.
SHARECARE, INC.
RECONCILIATION OF GAAP NET LOSS ATTRIBUTABLE TO SHARECARE TO ADJUSTED NET LOSS AND ADJUSTED LOSS PER SHARE
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Net loss attributable to Sharecare, Inc.
$ (29,025)
$ (20,248)
$ (67,226)
$ (51,501)
Add:
Amortization of acquired intangibles(a)
1,631
1,160
3,263
2,228
Amortization of deferred financing fees
70
1,656
138
3,331
Change in fair value of warrant liability and contingent consideration
(6,374)
9,908
(18,742)
21,656
Share-based compensation
18,177
2,360
51,287
14,386
Severance
411
200
770
265
Warrants issued with revenue contracts(b)
14
(1)
34
38
Net costs associated with exiting contracts(c)
1,249
—
2,923
—
Transaction and closing costs(d)(e)
7,025
1,319
14,397
2,022
Adjusted net loss(f)
$ (6,822)
$ (3,646)
$ (13,156)
$ (7,575)
Weighted-average common shares outstanding, basic and diluted
347,334,401
228,721,591
346,122,333
225,493,435
Loss per share
$ (0.08)
$ (0.09)
$ (0.19)
$ (0.23)
Adjusted loss per share
$ (0.02)
$ (0.02)
$ (0.04)
$ (0.03)
(a)
Represents non-cash expenses related to the amortization of intangibles in connection with acquired businesses.
(b)
Represents the non-cash value of warrants issued to clients for meeting specific revenue thresholds.
(c)
For the six months ended June 30, 2022, previously undisclosed first quarter net costs were included for comparability purposes and to display trends associated with exiting contracts during the period.
(d)
For the three months ended June 30, 2022, represents costs related to the Business Combination, transaction and post-closing costs related to acquisitions, and other non-operating, non-recurring costs including $2.7 million of other non-operating, non-recurring costs, $3.1 million of reorganizational costs, and $1.2 million of acquisition-related expense.
(e)
For the six months ended June 30, 2022, represents costs related to the Business Combination, transaction and post-closing costs related to acquisitions, and other non-operating, non-recurring costs including $5.9 million of other non-operating, non-recurring costs, $5.3 million of reorganizational costs, and $3.2 million of acquisition-related expense.
(f)
The income tax effect of the Company's non-GAAP reconciling items are offset by valuation allowance adjustments of the same amount given that the Company was in a full valuation allowance position for the periods presented.
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SOURCE Sharecare
