FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2023

ASC 820, "Fair Value Measurements and Disclosures" provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The 3 levels of the fair value hierarchy under the accounting standard are described as follows:

•Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical

assets or liabilities in active markets that the Company has the ability to access.

•Level 2 Inputs to the valuation methodology include:

•quoted prices for similar assets or liabilities in active markets;

•quoted prices for identical or similar assets or liabilities in inactive markets;

•inputs other than quoted prices that are observable for the asset or liability;

•inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (i.e., contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•Level 3 Inputs to the valuation methodology are unobservable and significant to the fair

value measurement.

The fair value measurement level of the assets or liabilities within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The carrying amounts of financial instruments including cash, accounts receivable, accounts payable, accrued liabilities, due to sellers, short-term borrowings and equity investments approximate fair value due to the short maturities of such instruments. The fair value of the Company’s debt using Level 2 inputs was approximately $483.9 million and $745.9 million as of December 31, 2023 and December 31, 2022, respectively.

The Company’s long-lived assets, intangible assets and goodwill are not required to be measured at fair value on a recurring basis, however, if certain triggering events occur or if an annual impairment test is performed, the Company is required to evaluate such assets for impairment. An asset impairment requires that the asset be recorded at its fair value. In 2023, the Company recorded impairment charges related to goodwill of $442.9 million (see Note 8, “Goodwill”), where the fair value of the reporting unit was estimated using inputs that are considered Level 3.

Publicly traded equity securities: All publicly traded equity securities are reported at fair value as of each reporting date. The measurement of the asset is based on quoted prices for identical assets on active market exchanges. Gains and losses from changes in the fair value of these securities are recorded within other income (expense), net on the consolidated statement of operations. At December 31, 2023, the Company held 8.0 million shares of MSP Class A common stock with an estimated fair value of $18.2 million under the caption "Equity securities at fair value" in the consolidated balance sheets.

Share amounts below have been restated to reflect the 1-for-100 Reverse Stock Split that the Company completed on November 3, 2023, as discussed in Note 1, "Nature of Business and Operations".

Due to seller: On August 11, 2021, the Company issued 27,210 shares of its Class A Common Stock (the “escrowed shares”) to the escrow agent, on behalf of the seller, as part of the consideration in connection with an acquisition. The amount of shares was based on a $30.0 million purchase price divided by the average share price of the Company's Class A Common Stock during the 20 consecutive trading days preceding the closing date of the transaction. The shares were deposited in escrow and the purchase agreement provided that such shares would be released to the seller upon the satisfaction of certain performance metrics in 2022 and 2023. The final number of escrowed shares will be calculated by multiplying the initial share amount by an earned share percentage ranging from 0% to 100% in accordance with the purchase agreement and subtracting any forfeited indemnity shares. The fair value of this contingent consideration is determined using a Monte-Carlo simulation model. These inputs are used to calculate the pay-off amount per the purchase agreement which is then discounted to present value using the risk-free rate and the Company’s cost of debt. As of September 30, 2023, the seller had met the performance metrics to earn a 100% payout and the liability is classified in current portion due to sellers on the consolidated balance sheet. The liability will continue to be fair valued until paid, as the applicable purchase agreement provided that it would be settled in shares of the Company's Class A Common Stock. Due to the Chapter 11 Cases, the Bankruptcy Court may reject the applicable purchase agreement and discharge the Company’s payment obligations under such agreement or the Company's remaining payment obligations under the applicable purchase agreement will be treated as an unsecured creditor claim.

On December 9, 2022, the Company entered into an asset acquisition agreement (a copy of which has been included as an exhibit hereto) requiring future payments in shares of the Company's Class A Common Stock. The sellers under such agreement included Mark Kent who became the Company’s Interim CEO in June 2023 and permanent CEO and director in August 2023. See Note 17, “Related Party Transactions.” As of December 31, 2023, $17.1 million of the liability was classified as current due to sellers in the consolidated balance sheet. The applicable purchase agreement provides that the liability is to be settled in a variable amount of shares of the Company's Class A Common Stock. The liability will continue to be fair valued until paid, as the applicable purchase agreement provided that it would be settled in a variable amount of shares of the Company's Class A Common Stock. Additionally, if the Company’s Class A Common Stock is no longer listed on the NYSE on January 31, 2024, then the applicable purchase agreement provides that the Total Health Sellers would be entitled to receive the value of any remaining Total Health Consideration in cash. Due to the Chapter 11 Cases, the Bankruptcy Court may reject the applicable purchase agreement and discharge the Company’s payment obligations under such agreement or the Company's remaining payment obligations under the applicable purchase agreement will be treated as an unsecured creditor claim. The Company issued 97,000 shares of Class A Common Stock to the sellers on January 31, 2023 to settle a portion of the purchase price.

Contingent consideration: On August 5, 2022, the Company entered into a purchase agreement in connection with an acquisition. The transaction was financed, in part, through the issuance of shares of the Company's Class A Common Stock and various contingent consideration arrangements. The contingent consideration is valued based on the future performance of two acquired payor contracts using Monte-Carlo simulations. As of December 31, 2023, after the balance sheet date, the contingency was resolved as a result of conditions present at the balance sheet date pertaining to probability of collection in the valuation model and the fair value of the asset was adjusted to zero through change in fair value of contingent consideration in the accompanying consolidated statement of operations.

There was a $2.8 million decrease in the fair value of the contingent consideration during the year ended December 31, 2023, which was recorded in change in fair value of contingent consideration in the consolidated statement of operations. This amount represents net gains that were recorded related to the acquisition which was completed on August 5, 2022, as described above. The net gains resulted from changes in the fair value and contingencies being resolved of the assets acquired.

Warrant Liabilities: As of June 3, 2021, the Closing Date of the Business Combination, and as of December 31, 2023, there were 0.2 million public warrants ("Public Warrants") and 0.1 million private placement warrants ("Private Placement Warrants") outstanding. The Company accounts for the Public Warrants and Private Placement Warrants in accordance with the guidance contained in ASC 815, "Derivatives and Hedges," under which the Public Warrants and the Private Placement Warrants do not meet the criteria for equity treatment and therefore must be recorded as liabilities. Accordingly, the Company classifies the Public Warrants and the Private Placement Warrants as liabilities and adjusts them to fair value at each reporting period. This liability is subject to remeasurement at each balance sheet date until exercised, and any changes in the fair value of the warrant liabilities is recognized in the Company’s consolidated statements of operations. Due to the delisting of the Public Warrants during the fourth quarter of 2023, the Company transferred the Public Warrants and Private Placement Warrants from Level 1 to Level 3 in the Fair Value hierarchy as of December 31, 2023 and determined the fair value of the Public Warrants and Private

Placement Warrants to be equal to zero. As of December 31, 2022, the Company’s valuation of the warrant liabilities utilize a binomial lattice in a risk-neutral framework (a special case of the Income Approach). The fair value of the Public Warrants and Private Placement Warrants utilized Level 1 and 3 inputs, respectively. The Private Placement Warrants were based on significant inputs not observable in the market as of December 31, 2022.

As discussed in Note 14, "Debt," the Company granted the lenders to the 2023 Term Loan warrants to purchase, in the aggregate, up to 0.3 million shares of the Company’s Class A Common Stock at an exercise price of $0.01 per share. The warrants meet the criteria for equity classification and are presented in the warrant debt discount line in the statement of shareholders' equity. The warrants were recorded at fair value upon issuance using the closing price of shares of the Company's Class A Common Stock on the issuance date of February 24, 2023, less the per share exercise price $0.01. 0.2 million of these warrants were exercised in March 2023 and the remaining warrants were exercised in April 2023.

The preceding methods described may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table provides quantitative information regarding the Level 3 inputs used for the fair value measurements of the warrant liabilities:

As of

Unobservable Input

December 31, 2022

Exercise price

$11.50

Stock price

$1.37

Term (years)

3.4

Risk free interest rate

4.1%

Dividend yield

None

Public warrant price

$22.00

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value on a recurring basis as of December 31, 2023:


(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured at fair value on a recurring basis:
Equity securities with readily determinable fair value	$	18,160	18,160		$	—	$	—
Total assets measured at fair value	$	18,160	$	18,160	$	—	$	—

The following table sets forth by level, within the fair value hierarchy, the Company’s liabilities measured at fair value on a recurring basis as of December 31, 2023:


(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities measured at fair value on a recurring basis:


Due to sellers liabilities	17,130		17,130		—		—


Total liabilities measured at fair value	$	17,130	$	17,130	$	—	$	—

There was a decrease of $5.1 million in the fair value of the Public Warrant Liabilities during the year ended December 31, 2023, and a decrease of $2.3 million in the fair value of the Private Placement Warrant Liabilities during the year ended December 31, 2023. The change in fair value of the warrant liabilities is reflected in our consolidated statements of operations under the caption change in fair value of warrant liabilities.

The following table sets forth by level, within the fair value hierarchy, the Company’s liabilities measured at fair value on a recurring basis as of December 31, 2022:


(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Items (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities and assets measured at fair value on a recurring basis:
Contingent consideration liability	$	2,800	$	—		—		$	2,800
Due to sellers liabilities	56,940		56,940			—		—
Public Warrant Liabilities	5,060		5,060			—		—
Private Placement Warrant Liabilities	2,313		—			—		2,313
Total liabilities and assets measured at fair value	$	67,113	$	62,000	$	—	$	$	5,113

The following table includes a roll forward of the amounts for the years ended December 31, 2023, 2022 and 2021 respectively, and for liabilities measured at fair value:


	Fair Value Measurements for the years ended
(in thousands)	2023		2022		2021
Balance as of January 1,	$	67,113	$	118,567	$	5,172



Change in fair value of contingent consideration	(2,800)		(5,025)		(11,680)
Contingent consideration recognized due to acquisitions	—		(4,100)		47,900
Warrants acquired in the Business Combination	—		—		163,058
Change in fair value of warrants	(7,373)		(72,772)		(82,914)
Contingent consideration write off	—		(197)		—
Contingent consideration reclassified to due to seller	—		(26,300)		(756)
Due to sellers recognized at fair value	—		56,940		—

Contingent consideration payments	—		—		(2,213)
Change in fair value of due to sellers	5,161		—		—
Due to seller payments	(14,971)		$	—	$	—
Due to seller reclassification	(30,000)		$	—	$	—
Balance as of December 31,	$	17,130	$	67,113	$	118,567

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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