EX-99.1 2 ex991_brighthealthgroupinc.htm EX-99.1 Document


Exhibit 99.1
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BRIGHT HEALTH GROUP REPORTS SECOND QUARTER 2023 RESULTS

•Q2’23 Revenue from Continuing Business of $298.0 million, up 100% year over year
•Value-Based Consumers served of 371,000, an increase of 214% on a comparable basis from last year on strong growth in Care Delivery
•Q2’23 Net Loss from Continuing Business of $31.7 million; Positive Adjusted EBITDA of $6.4 million in Q2’23, positive Operating Income in Care Delivery and Care Solutions segments
•Maintaining expectation for 2023 consolidated Adjusted EBITDA profitability†

MINNEAPOLIS, MN (August 9, 2023) (BUSINESSWIRE) – Bright Health Group, Inc. (“Bright Health” or the “Company”) (NYSE: BHG), the technology enabled, value-driven healthcare company serving aging and underserved consumers with unmet clinical needs, today reported financial results for its second quarter ended June 30, 2023.

“Bright Health showed continued strong performance in the Second Quarter, including reporting our first quarter with positive Adjusted EBITDA. Our Care Delivery and Care Solutions operating segments both performed well, with each generating positive Operating Income in the quarter,” said Mike Mikan, President and CEO of Bright Health. “Additionally, we expect the sale of our California Medicare Advantage announced at the end of the Second Quarter will bolster our Balance Sheet to continue on our path to long-term profitable growth.”

Key Metrics
As of June 30,
20232022
Consumer and Patient Metrics
Value-Based Consumers served1
371,000 118,000 

1The value-based care consumers at June 30, 2022 have been recast for comparability to exclude approximately 384,000 consumers attributable to our Bright HealthCare- Commercial business that we exited beginning in 2023.


Three Months EndedSix Months Ended
($ in thousands)June 30June 30
2023202220232022
Financial Metrics
Revenue$297,982$149,340$598,532$330,104
Net Loss from Continuing Operations$(31,692)$(74,762)$(85,610)$(196,340)
Adjusted EBITDA (non-GAAP)
$6,413$(23,277)$670$(44,758)

See the table at the end of this release for additional information and a reconciliation of the non-GAAP measures used in the table above.





Financial Outlook

For full year 2023, Bright Health is providing the following guidance and commentary:

Bright Health is revising its 2023 financial outlook to reflect the movement of our California Medicare Advantage business to Held for Sale accounting.

•Bright Health’s Enterprise Revenue is expected to be between $1.15 billion and $1.2 billion
•On a segment basis, Care Solutions Revenue is expected to be between $900 million and $925 million, while Care Delivery Revenue is expected to be between $250 million and $275 million
•Enterprise Adjusted Operating Cost Ratio is expected to be between 17.5% and 18.5%†
•Bright Health expects to be Adjusted EBITDA profitable in 2023†

† Reconciliations of projected Adjusted EBITDA and projected Adjusted Operating Cost Ratio to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. With respect to Adjusted EBITDA, these GAAP measures may include the impact of such items as interest expense, income tax expense, transaction costs, depreciation and amortization, share-based compensation expense, impairment of goodwill or intangible assets, restructuring costs, contract termination costs, changes in the fair value of contingent consideration, changes in the fair value of equity securities; and the tax effect of all such items. Historically, the Company has excluded these items from non-GAAP financial measures. With respect to Adjusted Operating Cost Ratio, these GAAP measures may include the impact of such items as share-based compensation and the impact of investment income. The Company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments, such as a decision to exit part of the business, are inherently unpredictable as to if or when they may occur. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Earnings Conference Call

As previously announced, Bright Health Group will discuss the Company’s results, strategy, and outlook on a conference call with investors at 8:00 a.m. Eastern Time today. Bright Health Group will host a live webcast of this conference call which can be accessed from the Investor Relations page of the company’s website (investors.brighthealthgroup.com). Following the call, a webcast replay will be available on the same site. This earnings release and the Form 8-K filed August 9, 2023 can be accessed on the Investor Relations page of the Company’s website. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website. Accordingly, investors should monitor this portion of our website, in addition to following our press releases, U.S. Securities and Exchange Commission (“SEC”) filings and public conference calls and webcasts.

About Bright Health Group

Bright Health Group is a technology enabled, value-driven healthcare company that organizes and operates networks of affiliate care providers to be successful at managing population risk. We focus on serving aging and underserved consumers that have unmet clinical needs through our Fully Aligned Care Model in Florida, Texas and California, some of the largest markets in healthcare where 26% of the U.S. aging population call home. We believe everyone should have access to personal, affordable, and high-quality healthcare. Our mission is to Make healthcare right. Together. For more information, visit www.brighthealthgroup.com.

Forward-Looking Statements

Statements made in this release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “projections,” “outlook,” “ensure,” and other similar expressions. These forward-looking statements include any statements



regarding our plans and expectations with respect to Bright Health Group, Inc. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: our ability to continue as a going concern; our ability to comply with the terms of our credit facilities, including financial covenants, both during and after any applicable waiver period, and/or obtain any additional waivers of any terms of our credit facilities to the extent required; our ability to sell our Medicare Advantage business in California on acceptable terms, including our ability to receive the proceeds thereof in a manner that would alleviate our current financial position; the failure to satisfy or obtain any waiver, if applicable, of any closing condition in our agreement to sell our Medicare Advantage business in California to Molina (the “Purchase Agreement”); our ability to comply with the terms of the Purchase Agreement; whether our new credit facility will satisfy our working capital needs pending the closing of our sale of our Medicare Advantage business in California; our ability to obtain any additional short or long term debt or equity financing needed to operate our business; our ability to quickly and efficiently wind down our IFP businesses and MA businesses outside of California, including by satisfying liabilities of those businesses when due and payable; ; potential disruptions to our business due to our corporate restructuring and resulting headcount reduction; our ability to accurately estimate and effectively manage the costs relating to changes in our businesses offerings and models; a delay or inability to withdraw regulated capital from our subsidiaries; a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and add new consumers; our and our Care Partner’s abilities to obtain and accurately assess, code, and report risk adjustment factor scores; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate our medical expenses, effectively manage our costs and claims liabilities or appropriately price our products and charge premiums; our ability to obtain claims information timely and accurately; the impact of the ongoing COVID-19 pandemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; our ability to manage the growth of our business; our ability to operate, update or implement our technology platform and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; our ability to comply with requirements to maintain effective internal controls; our ability to adapt to the new risks associated with our expansion into ACO REACH; and the other factors set forth under the heading “Risk Factors” in the Company’s reports on Form 10-K, Form 10-Q, and Form 8-K (including all amendments to those reports) and our other filings with the SEC. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or changes in our expectations.


###

Investor Contact:
Stephen Hagan
IR@brighthealthgroup.com

Media Contact:
media@brighthealthgroup.com



Bright Health Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
June 30,
2023		December 31,
2022
Assets
Current assets:
Cash and cash equivalents$107,660$217,006
Short-term investments$156869
Accounts receivable, net of allowance of $7,653 and $6,098, respectively$27,63319,576
ACO REACH performance year receivable$623,60999,181
Current assets of discontinued operations (Note 14)$3,030,8703,187,464
Prepaids and other current assets61,19846,538
Total current assets3,851,1263,570,634
Other assets:
Long-term investments$3445,401
Property, equipment and capitalized software, net$18,47421,298
Goodwill$401,385401,385
Intangible assets, net$99,084104,952
Long-term assets of discontinued operations (Note 14)$—529,117
Other non-current assets22,74032,265
Total other assets542,0271,094,418
Total assets$4,393,153$4,665,052
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Equity (Deficit)
Current liabilities:
Medical costs payable$179,855$116,021
Accounts payable$18,47618,714
ACO REACH performance year obligation$474,700—
Short-term borrowings$303,947303,947
Current liabilities of discontinued operations (Note 14)$2,584,8903,157,236
Other current liabilities73,22197,241
Total current liabilities3,635,0893,693,159
Other liabilities28,79232,208
Total liabilities3,663,8813,725,367
Commitments and contingencies (Note 9)
Redeemable noncontrolling interests$244,561219,758
Redeemable Series A preferred stock, $0.0001 par value;750,000 shares authorized in 2023 and 2022; 750,000 shares issued and outstanding in 2023 and 2022$747,481747,481
Redeemable Series B preferred stock, $0.0001 par value; 175,000 shares authorized in 2023 and 2022; 175,000 shares issued and outstanding in 2023 and 2022$172,936172,936
Shareholders’ equity (deficit):
Common stock, $0.0001 par value; 3,000,000,000 shares authorized in 2023 and 2022; 7,972,033 and 7,878,394 shares issued and outstanding in 2023 and 2022*, respectively$11
Additional paid-in capital$3,021,4302,972,333
Accumulated deficit$(3,444,238)(3,156,395)
Accumulated other comprehensive loss$(899)(4,429)
Treasury Stock, at cost, 31,526 shares at June 30, 2023, and December 31, 2022*, respectively(12,000)(12,000)
Total shareholders’ equity (deficit)(435,706)(200,490)
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ equity (deficit)$4,393,153$4,665,052
*Shares have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 80 reverse stock split



Bright Health Group, Inc. and Subsidiaries
Consolidated Statements of Income (Loss)
(in thousands, except share and per share data)
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Revenue:
Capitated revenue$49,764$17,641$99,312$46,289
ACO REACH revenue236,994137,205476,801320,002
Service revenue
11,22210,73222,40920,962
Investment income (loss)
2(16,238)10(57,149)
Total revenue
297,982149,340598,532330,104
Operating expenses:
Medical costs
245,160130,793505,280310,249
Operating costs
70,28078,997149,798175,785
Restructuring charges1,2852,7931,5869,657
Depreciation and amortization
4,6718,27610,15416,336
Total operating expenses
321,396220,859666,818512,027
Operating loss
(23,414)(71,519)(68,286)(181,923)
Interest expense9,17033716,9571,530
Other income—2—2
Loss from continuing operations before income taxes(32,584)(71,858)(85,243)(183,455)
Income tax expense(892)2,90436712,885
Net loss from continuing operations(31,692)(74,762)(85,610)(196,340)
Loss from discontinued operations, net of tax (Note 14)(56,935)(176,568)(172,478)(235,619)
Net Loss(88,627)(251,330)(258,088)(431,959)
Net earnings from continuing operations attributable to noncontrolling interests(24,205)(23,336)(29,755)(37,941)
Series A preferred stock dividend accrued(9,942)(9,461)(19,656)(18,399)
Series B preferred stock dividend accrued(2,231)—(4,411)—
Net loss attributable to Bright Health Group, Inc. common shareholders$(125,005)$(284,127)$(311,910)$(488,299)
Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders
Continuing operations$(8.55)$(13.68)$(17.59)$(32.14)
Discontinued operations(7.15)(22.45)(21.76)(29.97)
Basic and diluted loss per share(15.70)(36.13)(39.35)(62.11)
Basic and diluted weighted-average common shares outstanding*7,9627,8657,9287,862
*Shares have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 80 reverse stock split



Bright Health Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net loss$(258,088)$(431,959)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization16,02626,270
Impairment of intangible assets—6,720
Share-based compensation49,09553,141
Deferred income taxes8731,154
Unrealized loss on equity securities—57,151
Amortization of investments(14,173)2,748
Other, net3,8911,834
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable6,284(31,404)
ACO REACH performance year receivable(524,428)(396,104)
Other assets57,846(60,991)
Medical cost payable(567,932)231,899
Risk adjustment payable10,925916,713
Accounts payable and other liabilities(111,174)35,312
Unearned revenue132,1293,577
ACO REACH performance year obligation474,700310,603
Net cash (used in) provided by operating activities(724,026)726,664
Cash flows from investing activities:
Purchases of investments(828,546)(1,140,896)
Proceeds from sales, paydown, and maturities of investments988,749204,775
Purchases of property and equipment(2,394)(15,154)
Business divestitures, net of cash disposed of(682)—
Business acquisitions, net of cash acquired—(310)
Net cash provided by (used in) investing activities157,127(951,585)
Cash flows from financing activities:
Repayments of short-term borrowings—(155,000)
Proceeds from issuance of preferred stock—747,481
Proceeds from issuance of common stock2672
Distributions to noncontrolling interest holders(4,952)(1,894)
Net cash (used in) provided by financing activities(4,950)591,259
Net increase (decrease) in cash and cash equivalents(571,849)366,338
Cash and cash equivalents – beginning of year1,932,2901,061,179
Cash and cash equivalents – end of period$1,360,441$1,427,517
Supplemental disclosures of cash flow information:
Changes in unrealized loss on available-for-sale securities in OCI$3,530$(47,051)
Cash paid for interest7,7001,168



Bright Health Group, Inc. and Subsidiaries
Segment Information
(in thousands)
(Unaudited)

Care Delivery
($ in thousands)Three Months Ended
June 30,		Six Months Ended
June 30,
Statement of income (loss) and operating data:2023202220232022
Revenue:
Capitated revenue$49,764$17,641$99,312$46,289
Service revenue10,53010,69121,46620,910
Total unaffiliated revenue60,29428,332120,77867,199
Affiliated revenue5,774204,2717,969572,391
Total segment revenue66,068232,603128,747639,590
Operating expenses
Medical Costs19,720194,53143,442585,998
Operating Costs32,13932,40161,32863,596
Depreciation and amortization3,1786,3696,31012,745
Total operating expenses55,037233,301111,080662,339
Operating Income (Loss)$11,031$(698)$17,667$(22,749)



Care Solutions
($ in thousands)Three Months Ended
June 30,		Six Months Ended
June 30,
Statement of income (loss) and operating data:2023202220232022
Revenue:
ACO REACH Revenue236,994137,205476,801320,002
Service revenue6924194352
Total segment revenue237,686137,246477,744320,054
Operating expenses
Medical Costs231,279134,274469,874310,908
Operating Costs3,4112,1476,3834,157
Total operating expenses234,690136,421476,257315,065
Operating Income$2,996$825$1,487$4,989




Bright Health Group, Inc. and Subsidiaries
Historical Financials
Recast Income Statement(1)
(in thousands)

($ in thousands)
Three Months EndedYear Ended
Consolidated Statements of Income (loss) and operating data:March 31,June 30,September 30,December 31,December 31,
20222022202220222022
Revenue:
Capitated revenue$28,648 $17,641 $33,006 $33,609 $112,904 
ACO REACH revenue182,797 137,205 145,433 188,652 654,087 
Service revenue10,230 10,732 10,076 8,563 39,601 
Investment income (loss)(40,911)(16,238)4,848 (3,128)(55,429)
Total revenue180,764 149,340 193,363 227,696 751,163 
Operating costs
Medical costs179,456 130,793 152,150 200,573 662,972 
Operating costs96,788 78,997 85,577 93,044 354,406 
Restructuring charges6,864 2,793 5 19,559 29,221 
Intangibles impairment— — 42,611 — 42,611 
Depreciation and amortization8,060 8,276 8,947 5,427 30,710 
Total operating costs291,168 220,859 289,290 318,603 1,119,920 
Operating Income (Loss)(110,404)(71,519)(95,927)(90,907)(368,757)
Interest expense1,193 337 4,905 6,387 12,822 
Other income— 2 (2)— — 
Loss from continuing operations before income taxes(111,597)(71,858)(100,830)(97,294)(381,579)
Income tax expense (benefit)9,981 2,904 3,401 (12,622)3,664 
Net loss from continuing operations(121,578)(74,762)(104,231)(84,672)(385,243)
Loss from discontinued operations, net of tax (Note 2)(59,051)(176,568)(155,129)(583,890)(974,638)
Net loss(180,629)(251,330)(259,360)(668,562)(1,359,881)
Net earnings from continuing operations attributable to noncontrolling interests(14,605)(23,336)(46,711)(11,012)(95,664)
Series A preferred stock dividend accrued(8,938)(9,461)(9,684)(9,806)(37,889)
Series B preferred stock dividend accrued— — — (1,798)(1,798)
Net loss attributable to Bright Health
Group, Inc. common shareholders
$(204,172)$(284,127)$(315,755)$(691,178)$(1,495,232)
Operating Cost Ratio53.5 %52.9 %44.3 %40.9 %47.2 %

(1)The 2022 quarterly Statements of Income (Loss) have been recast to reflect the move of the IFP, MA Legacy and California MA business to discontinued operations as well as to correct the accounting for gross versus net revenue recognition conclusion from certain value-based care arrangements and an error identified in the data to account for our risk adjustment factor.




Bright Health Group, Inc. and Subsidiaries
Historical Financials
Recast Income Statement(1)
(in thousands)

($ in thousands)
Three Months Ended
Consolidated Statements of Income (loss) and operating data:March 31,June 30,
20232023
Revenue:
Capitated revenue$49,548 $49,764 
ACO REACH revenue239,807 236,994 
Service revenue11,187 11,222 
Investment income8 2 
Total revenue300,550 297,982 
Operating costs
Medical costs260,120 245,160 
Operating costs79,518 70,280 
Restructuring charges301 1,285 
Depreciation and amortization5,483 4,671 
Total operating costs345,422 321,396 
Operating Income (Loss)(44,872)(23,414)
Interest expense7,787 9,170 
Loss from continuing operations before income taxes(52,659)(32,584)
Income tax expense (benefit)1,259 (892)
Net loss from continuing operations(53,918)(31,692)
Loss from discontinued operations, net of tax(115,543)(56,935)
Net loss(169,461)(88,627)
Net earnings from continuing operations attributable to noncontrolling interests(5,550)(24,205)
Series A preferred stock dividend accrued(9,714)(9,942)
Series B preferred stock dividend accrued(2,180)(2,231)
Net loss attributable to Bright Health
Group, Inc. common shareholders
$(186,905)$(125,005)
Operating Cost Ratio26.5 %23.6 %

(1)The 2023 quarterly Statement of Income (Loss) have been recast to reflect the move of the IFP, MA Legacy and California MA business to discontinued operations as well as to correct the accounting for gross versus net revenue recognition conclusion from certain value-based care arrangements and an error identified in the data to account for our risk adjustment factor.



Bright Health Group, Inc. and Subsidiaries
Historical Financials
Recast Segment Information (1)
(in thousands)
(Unaudited)
Care Delivery
($ in thousands)
Three Months EndedYear Ended
March 31,June 30,September 30,December 31,December 31,
Statement of income (loss) and operating data:20222022202220222022
Revenue:
Capitated revenue$28,648$17,641$33,006$33,609$112,904
Service revenue10,21910,69110,0508,52739,487
Total unaffiliated revenue38,86728,33243,05642,136152,391
Affiliated revenue368,120204,271257,707209,5221,039,620
Total segment revenue406,987232,603300,763251,6581,192,011
Operating expenses
Medical Costs391,467194,531264,013367,7311,217,742
Operating Costs31,19532,40130,39230,797124,785
Intangible Asset Impairment——42,611—42,611
Depreciation and amortization6,3766,3696,3743,11522,234
Total operating expenses429,038233,301343,390401,6431,407,372
Operating loss$(22,051)$(698)$(42,627)$(149,985)$(215,361)

Care Delivery
($ in thousands)
Three Months Ended
March 31,June 30,
Statement of income (loss) and operating data:20232023
Revenue:
Capitated revenue$49,548$49,764
Service revenue10,93610,530
Total unaffiliated revenue60,48460,294
Affiliated revenue2,1955,774
Total segment revenue62,67966,068
Operating expenses
Medical Costs23,72219,720
Operating Costs29,18932,139
Depreciation and amortization3,1323,178
Total operating expenses56,04355,037
Operating income$6,636$11,031

(1)The segment financials have been recast to reflect the change in our reportable segments and the move of the IFP, MA Legacy and California MA business to discontinued operations as well as to correct the accounting for gross versus net revenue recognition conclusion from certain value-based care arrangements.





Bright Health Group, Inc. and Subsidiaries
Historical Financials
Recast Segment Information (1)
(in thousands)
(Unaudited)
Care Solutions
($ in thousands)
Three Months EndedYear Ended
March 31,June 30,September 30,December 31,December 31,
Statement of income (loss) and operating data:20222022202220222022
Revenue:
ACO REACH Revenue182,797137,205145,433188,652654,087
Service revenue11412636114
Total segment revenue182,808137,246145,459188,688654,201
Operating expenses
Medical Costs176,634134,274146,253187,108644,269
Operating Costs2,0102,1472,3212,0308,508
Total operating expenses178,644136,421148,574189,138652,777
Operating income (loss)$4,164$825$(3,115)$(450)$1,424

Care Solutions
($ in thousands)
Three Months Ended
March 31,June 30,
Statement of income (loss) and operating data:20222023
Revenue:
ACO REACH Revenue239,807236,994
Service revenue251692
Total segment revenue240,058237,686
Operating expenses
Medical Costs238,595231,279
Operating Costs2,9723,411
Total operating expenses241,567234,690
Operating income (loss)$(1,509)$2,996

(1)The segment financials have been recast to reflect the change in our reportable segments and the move of the IFP, MA Legacy and California MA business to discontinued operations as well as to correct the accounting for gross versus net revenue recognition conclusion from certain value-based care arrangements.



Non-GAAP Financial Measures

We use the non-GAAP financial measures Adjusted EBITDA and Adjusted Operating Cost Ratio. We define Adjusted EBITDA as Net Loss excluding loss from discontinued operations, interest expense, income taxes, transaction costs, depreciation and amortization, share-based compensation expense, restructuring costs, contract termination costs, changes in the fair value of contingent consideration, and changes in the fair value of equity securities. We define Adjusted Operating Cost Ratio as Operating Cost Ratio excluding share-based compensation expense. These non-GAAP measures have been presented in this quarterly Earnings Release as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding and including items that we do not believe are indicative of our core operating performance. Management believes these measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA and Adjusted Operating Cost Ratio to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to Net Income (Loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

Adjusted Operating Cost Ratio is not a recognized term under GAAP and should not be considered as an alternative to Operating Cost Ratio as a measure of financial performance or any other performance measure derived in accordance with GAAP. The presentation of Adjusted Operating Cost Ratio has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.




The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
($ in thousands)2023202220232022
Net loss$(88,627)$(251,330)$(258,088)$(431,959)
Loss from Discontinued Operations (a)
56,935 176,568 172,478 235,619 
EBITDA adjustments from continuing operations
Interest expense9,170 337 16,957 1,530 
Income tax benefit (expense)(892)2,904 367 12,885 
Transaction costs (b)
8,096 271 9,948 382 
Depreciation and amortization4,671 8,276 10,154 16,336 
Share-based compensation expense (c)
15,775 20,220 49,095 53,141 
Restructuring costs (d)
1,285 2,793 1,586 9,657 
Contract termination costs (e)
— 500 — 500 
Change in fair value of contingent consideration (f)
— — (1,827)— 
Change in fair value of equity securities— 16,184 — 57,151 
EBITDA adjustments from continuing operations $38,105 $51,485 $86,280 $151,582 
Adjusted EBITDA$6,413 $(23,277)$670 $(44,758)

(a)Beginning in the fourth quarter of 2022, Adjusted EBITDA excludes the impact of discontinued operations. The comparable period in 2022 has been recast to exclude these impacts. Represents losses associated with the Commercial business segment and MA Legacy operations that we exited at the end of 2022 and the California Medicare Advantage business classified as held for sale.
(b)Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to financing initiatives. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business.
(c)Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on a number of factors, including the timing, quantity and grant date fair value of the awards.
(d)Restructuring costs represent severance costs as part of a workforce reduction and impairment of certain long-lived assets relating to our decision to exit the Commercial business for the 2023 plan year.
(e)Represents amounts paid for early termination of existing vendor contracts and leases. Beginning in the second quarter of 2023, this amount excludes the impact of MA legacy operations that we exited at the end of 2022 as these amounts are now included in the Loss from Discontinued Operations. The adjustment in the comparable period in 2022 has been recast to include these impacts.
(f)Represents the non-cash change in fair value of contingent consideration from business combinations, which is remeasured at fair value each reporting period.


The following table provides a reconciliation of Adjusted Operating Cost Ratio for the periods presented:

Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Operating Cost Ratio23.6%52.9%25.0%53.3%
Impact of share-based compensation expense (a)
(5.3)%(13.5)%(8.2)%(16.1)%
Adjusted Operating Cost Ratio (b)
18.3%39.4%16.8%37.2%

(a)Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on a number of factors, including the timing, quantity and grant date fair value of the awards.
(b)The Three Months Ended June 30 and the Six Months Ended June 30 are higher by 3.9% and 5.5%, respectively, due to the impacts of income (loss) driven from unrealized gains and losses on equity securities and realized gains and losses on sales of investments