CareMax, Inc.

Greetings and welcome to the CareMax Inc. Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan, Senior Vice President of the Equity Group. Thank you, Mr. Sullivan. You may begin.

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

Thank you, Devin. Good morning, and thank you all for joining us. I'm proud to report that we had a solid third quarter of continued revenue growth, sequential MER reduction, operational developments, and overall progress towards our 2022 new de novo goal. We believe our strong growth while still maintaining a best-in-class MER is a testament to our team and our model. By utilizing our whole person health clinical program and our deeply integrated proprietary-built point-of-care technology platform, Care Optimize, our physicians and care teams truly partner with our members to improve health outcomes and overall well-being. We do this by working in some of the most challenged neighborhoods, many of which are otherwise healthcare deserts, with patients with significant barriers to care. Our model truly does well by doing good. I would like to thank each and every one of our team members for their dedication to improving our patients' lives. For the third quarter of 2021, we achieved gap revenue of $105 million, up 330% from the third quarter of 2020. Pro forma for the acquisition of DNF from the beginning of the period, our revenue for the third quarter would have been $115 million or $460 million on an annualized basis. Our third quarter gap net loss was $2.9 million, bringing our year-to-date gap net loss to $8.9 million. Our adjusted EBITDA was $1.2 million for the third quarter and $9.1 million year-to-date, pro forma for the business combinations. Total membership as of September 30th, 2021 was about 68,500 and Medicare Advantage membership was approximately 26,500, up over 10 times and three times respectively, compared to September 30th, 2020. We are on track for our previously guided run rate performance metrics that Kevin will discuss. In September, we finalized the acquisition of DNF Medical Centers in Central Florida. DNF brought to the CareMax family approximately 4,000 Medicare Advantage patients across six high-end medical centers. We are well underway with unifying the brand, services, and operating model across all of our medical centers to continue to drive maximum outcomes and shareholder returns on these investments. Like many, we experienced a rise in COVID admissions among our Medicare patient base in the third quarter, which peaked in August 2017. fell in september and showed continued reduction in october however as you can see on page 10 of our posted slide presentation the peak in august was lower than in prior waves a testament to our ability to vaccinate our members instill good preventative practices and identify cases early to prevent hospitalizations we are encouraged that we are reaching the end of the delta wave variant of coven 19 and based on the publicly available data our core market of florida has now among the lowest case and positivity rates in the country. Despite the continued impact from COVID during the third quarter, our clinical model continues to perform well. For the quarter, we recorded a healthy 75.4% medical expense ratio or MER. Normalizing for direct impacts from COVID or MER would have been in line with historical levels. We also have line of sight to bringing newly acquired assets to this level of performance as well. In addition, our internal results show that the third quarter external provider costs in absolute dollars, PMPM, were in line with Q3 2020, and ex-COVID would have been down year over year and sequentially. If you recall from our investor day, we showed our ability to drive MER by a patient cohort down by 47 percentage points over three to four years. On page six of today's presentation, you can see that's not just a percentage of MER reduction, but also a roughly 40% medical cost PMPM reduction over that period, or a 14% average decline per year. We think these results are a powerful validation of our technology-enabled care delivery platform, which provides the ability to control dollar cost in the face of a pandemic by improving patient outcomes, and speaks to where our priorities are as a company. Fundamental to our clinical success is our whole person healthcare value-based care system and our homegrown and deeply integrated technology platform, Care Optimize. As I have discussed previously, our whole person health model goes beyond just the clinical needs of our members to solve problems arising from social determinants of health, such as education and access, isolation, and medication adherence. We do this through our highly coordinated care management program that uses data from across our members' encounters with our providers and provides our care teams with the tools to effectively coordinate the care and needs of our members in a truly differentiated manner, improving the well-being of our members and preventing highly acute hospital admissions. It is worth noting Care Optimize has been successfully commercialized outside of CareMax and is used by over 2,000 clients and more than 20,000 providers across the U.S. This broad market adoption of Care Optimizer speaks to the powerful tools it provides providers to practice medicine without undue administrative burdens and empowers them to make more informed clinical decisions. Next, I would like to provide an update on our operational initiatives. We have now captured about half of the previously announced combination synergies with IMC, primarily driven by SG&A savings and pharmacy utilizations. The SMA and DNF integrations are moving along smoothly and the team is moving ahead on executing our value creation strategy. Additionally, we're optimizing our platform for accelerated growth in 2022 to hit our de novo targets. And with that, we have brought in several key new management hires to lead our regional operations. We believe we have built the human capital foundation to execute on our growth plans and plan to continue to simultaneously add depth to our local and regional corporate teams to support further expansion. Similar to many other companies across the country, we are experiencing a tightening in the labor market at entry-level positions. While we are seeing some wage inflation, it remains limited to lower wage positions, and we have been able to successfully navigate through this. we continue to have a pipeline of physicians interested in joining our platform, as our differentiated care model is a big draw for professionals who want to make a holistic impact on patients' well-being. Moving to the additional strategic initiatives, as mentioned during our Invest Your Day in September, we have been impressed by the amount of inbound interest from those looking to collaborate with us to improve outcomes and efficiencies in the healthcare system. We have announced and highlighted two of these, the related companies, and Anthem. The related collaboration affords us the opportunity to work closely with one of the largest owner-operators of affordable housing in the US. Our vision is to bring CareMax's vertically integrated whole person healthcare model directly to affordable housing communities, providing convenient access to care to those seniors who need it the most. We have proven that this model of collaborating with affordable housing communities can be a mechanism for growth with one of our South Florida medical centers we opened in 2017. This center, that we opened in the ground floor of a retirement community, experienced the fastest ramp to membership maturity of any of our centers. Through our collaboration with Related, we plan to take this model to communities across the country to expand convenient access to value-based care. We also announced our strategic collaboration with Anthem to open up 50 new de novo medical centers across eight initial states. We are pleased to say that the collaboration is going smoothly and ahead of schedule. Anthem has long been a key partner for us, and we are excited to expand our relationship with them to provide quality care and superior outcomes for their members throughout the country. In addition to these two important strategic collaborations, we continue to work with our other payer partners to assist in our collective goal, bringing the best in class medical care to underserved communities. Our patient acquisition strategy is based on grassroots marketing through community events and our in-house sales and marketing team. Lastly, we announced in July our guidance of opening up at least 15 de novos in 2022, approximately 25 in 2023, and approximately 35 in 2024. We have already executed the leases for 12 locations across Florida, Tennessee, Louisiana, and New York, with five other leases nearing completion. Furthermore, we are reiterating our expectation to end the year with our previous run rate revenue and EBITDA guidance. Looking ahead to 2022, we expect lower COVID headwinds on the revenue and more normalized utilization. Now I will turn it over to Kevin to go more in-depth on our third quarter performance.