Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 09, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39289 | |
Entity Registrant Name | Cano Health, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-1524224 | |
Entity Address, Address Line One | 9725 NW 117th Avenue | |
Entity Address, City or Town | Miami | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33178 | |
City Area Code | 855 | |
Local Phone Number | 226-6633 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001800682 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A common stock, $0.0001 par value per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | |
Trading Symbol | CANO | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 285,474,630 | |
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share | |
Trading Symbol | CANO/WS | |
Security Exchange Name | NYSE | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 253,208,965 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash, cash equivalents and restricted cash | $ 27,721 | $ 27,329 |
Accounts receivable, net of unpaid service provider costs | 107,164 | 233,816 |
Prepaid expenses and other current assets | 31,450 | 79,603 |
Total current assets | 166,335 | 340,748 |
Property and equipment, net | 129,330 | 131,325 |
Operating lease right-of-use assets | 174,581 | 177,892 |
Goodwill | 480,044 | 480,375 |
Payor relationships, net | 551,913 | 567,704 |
Other intangibles, net | 199,761 | 226,059 |
Other assets (net of allowance for credit losses of $62.0 million as of June 30, 2023) | 5,358 | 4,824 |
Total assets | 1,707,322 | 1,928,927 |
Current liabilities: | ||
Accounts payable and accrued expenses (Related parties comprised $2,992 and $2,669 as of June 30, 2023 and December 31, 2022, respectively) | 124,821 | 105,733 |
Current portion of notes payable, net of debt issuance costs | 109,667 | 6,444 |
Current portion of finance lease liabilities | 2,972 | 1,686 |
Current portions due to sellers | 46,506 | 46,016 |
Current portion of operating lease liabilities | 24,958 | 24,068 |
Other current liabilities | 28,010 | 24,491 |
Total current liabilities | 336,934 | 208,438 |
Notes payable, net of debt issuance costs | 922,232 | 997,806 |
Long term portion of operating lease liabilities | 163,972 | 166,347 |
Warrant liabilities | 7,042 | 7,373 |
Long term portion of finance lease liabilities | 7,770 | 3,364 |
Due to sellers, net of current portion | 1,050 | 15,714 |
Long term portion of contingent consideration | 1,400 | 2,800 |
Other liabilities | 31,149 | 32,810 |
Total liabilities | 1,471,549 | 1,434,652 |
Stockholders’ Equity | ||
Additional paid-in capital | 601,589 | 538,614 |
Accumulated deficit | (454,935) | (286,032) |
Total Stockholders' Equity before non-controlling interests | 146,707 | 252,631 |
Non-controlling interests | 89,066 | 241,644 |
Total Stockholders' Equity | 235,773 | 494,275 |
Total Liabilities and Stockholders' Equity | 1,707,322 | 1,928,927 |
Class A | ||
Stockholders’ Equity | ||
Common stock (in shares) | 28 | 22 |
Class B common stock | ||
Stockholders’ Equity | ||
Common stock (in shares) | $ 25 | $ 27 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Accounts payable and accrued expenses | $ 124,821 | $ 105,733 |
Other assets, allowance for credit losses | 62,000 | |
Affiliated Entity | ||
Accounts payable and accrued expenses | $ 2,992 | $ 2,669 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 6,000,000,000 | 6,000,000,000 |
Common stock, shares issued (in shares) | 281,517,626 | 224,118,566 |
Common stock, shares outstanding (in shares) | 281,517,626 | 224,118,566 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 253,208,965 | 268,794,608 |
Common stock, shares outstanding (in shares) | 253,208,965 | 268,794,608 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue: | ||||
Total revenue | $ 766,746 | $ 689,373 | $ 1,633,655 | $ 1,393,515 |
Operating expenses: | ||||
Third-party medical costs | 769,629 | 541,317 | 1,477,960 | 1,077,097 |
Direct patient expense (Related parties comprised $3,073 and $7,188 in the three months ended June 30, 2023 and 2022, respectively, and $3,064 and $4,518 in the six months ended June 30, 2023 and 2022, respectively) | 56,757 | 52,647 | 125,184 | 113,323 |
Selling, general, and administrative expenses (Related parties comprised $1,452 and $2,496 in the three months ended June 30, 2023 and 2022, respectively, and $3,305 and $5,452 in the six months ended June 30, 2023 and 2022, respectively) | 99,418 | 106,179 | 195,890 | 202,849 |
Depreciation and amortization expense | 27,251 | 19,836 | 54,473 | 38,872 |
Transaction costs | 9,125 | 6,207 | 19,211 | 14,583 |
Change in fair value of contingent consideration | (11,800) | (5,764) | (15,900) | (10,425) |
Credit loss on other assets | 62,000 | 0 | 62,000 | 0 |
Total operating expenses | 1,012,380 | 720,422 | 1,918,818 | 1,436,299 |
Income (loss) from operations | (245,634) | (31,049) | (285,163) | (42,784) |
Other income (expense): | ||||
Interest expense | (26,719) | (13,134) | (50,224) | (26,418) |
Interest income | 90 | 2 | 99 | 3 |
Loss on extinguishment of debt | 0 | 0 | 0 | (1,428) |
Change in fair value of warrant liabilities | (1,677) | 30,175 | 331 | 57,337 |
Other income (expense) | 1,323 | 251 | 1,755 | 530 |
Total other income (expense) | (26,983) | 17,294 | (48,039) | 30,024 |
Net income (loss) before income tax expense | (272,617) | (13,755) | (333,202) | (12,760) |
Income tax expense (benefit) | (1,872) | 809 | (1,872) | 1,889 |
Net income (loss) | (270,745) | (14,564) | (331,330) | (14,649) |
Net income (loss) attributable to non-controlling interests | (129,992) | (9,231) | (162,427) | (9,976) |
Net income (loss) attributable to Class A common stockholders | $ (140,753) | $ (5,333) | $ (168,903) | $ (4,673) |
Net income (loss) per share attributable to Class A common stockholders, basic (in dollars per share) | $ (0.51) | $ (0.03) | $ (0.66) | $ (0.02) |
Net income (loss) per share attributable to Class A common stockholders, diluted (in dollars per share) | $ (0.51) | $ (0.03) | $ (0.66) | $ (0.03) |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 274,640,987 | 210,053,037 | 257,317,776 | 200,783,129 |
Diluted (in shares) | 527,849,952 | 474,580,471 | 257,317,776 | 465,310,563 |
Capitated revenue | ||||
Revenue: | ||||
Total revenue | $ 743,324 | $ 655,493 | $ 1,584,397 | $ 1,329,844 |
Fee-for-service and other revenue | ||||
Revenue: | ||||
Total revenue | $ 23,422 | $ 33,880 | $ 49,258 | $ 63,671 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Direct patient expense | $ 56,757 | $ 52,647 | $ 125,184 | $ 113,323 |
Selling, general and administrative expenses | 99,418 | 106,179 | 195,890 | 202,849 |
Affiliated Entity | ||||
Direct patient expense | 3,073 | 7,188 | 3,064 | 4,518 |
Selling, general and administrative expenses | $ 1,452 | $ 2,496 | $ 3,305 | $ 5,452 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Class A Shares | Class B Shares | Common Stock Class A Shares | Common Stock Class B Shares | Additional Paid-in Capital | Accumulated Deficit | Non-Controlling Interests |
Balance at the beginning (in shares) at Dec. 31, 2021 | 180,113,551 | 297,385,981 | ||||||
Balance at the beginning at Dec. 31, 2021 | $ 798,568 | $ 18 | $ 30 | $ 397,443 | $ (78,760) | $ 479,837 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense, net | 31,600 | 31,600 | ||||||
Issuance of Class A common stock upon vesting of restricted stock units (in shares) | 807,315 | |||||||
Issuance of Class A common stock upon vesting of restricted stock units | 0 | $ 1 | (5,086) | 5,085 | ||||
Issuance of common stock for acquisitions (in shares) | 2,857,167 | |||||||
Issuance of common stock for acquisitions | 15,771 | 15,771 | ||||||
Exchange of Class B common stock for Class A common stock (in shares) | 32,858,547 | (32,858,547) | ||||||
Exchange of Class B common stock for Class A common stock | 0 | $ 3 | $ (3) | 51,765 | (51,765) | |||
Employee stock purchase plan issuance (in shares) | 1,392,372 | |||||||
Employee Stock Purchase Plan issuance | 9,707 | 9,707 | ||||||
Impact of transactions affecting non-controlling interests | 0 | (5,558) | 5,558 | |||||
Net income (loss) | (14,649) | (4,673) | (9,976) | |||||
Balance at the end (in shares) at Jun. 30, 2022 | 218,028,952 | 264,527,434 | ||||||
Balance at the end at Jun. 30, 2022 | 840,997 | $ 22 | $ 27 | 495,642 | (83,433) | 428,739 | ||
Balance at the beginning (in shares) at Mar. 31, 2022 | 205,026,367 | 276,722,704 | ||||||
Balance at the beginning at Mar. 31, 2022 | 837,777 | $ 20 | $ 28 | 464,262 | (78,100) | 451,567 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense, net | 17,783 | 17,783 | ||||||
Issuance of Class A common stock upon vesting of restricted stock units (in shares) | 807,315 | |||||||
Issuance of Class A common stock upon vesting of restricted stock units | 0 | $ 1 | (5,086) | 5,085 | ||||
Exchange of Class B common stock for Class A common stock (in shares) | 12,195,270 | (12,195,270) | ||||||
Exchange of Class B common stock for Class A common stock | 0 | $ 1 | $ (1) | 18,682 | (18,682) | |||
Net income (loss) | (14,564) | (5,333) | (9,231) | |||||
Balance at the end (in shares) at Jun. 30, 2022 | 218,028,952 | 264,527,434 | ||||||
Balance at the end at Jun. 30, 2022 | 840,997 | $ 22 | $ 27 | 495,642 | (83,433) | 428,739 | ||
Balance at the beginning (in shares) at Dec. 31, 2022 | 224,118,566 | 268,794,608 | 224,118,566 | 268,794,608 | ||||
Balance at the beginning at Dec. 31, 2022 | 494,275 | $ 22 | $ 27 | 538,614 | (286,032) | 241,644 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense, net | 11,368 | 11,368 | ||||||
Issuance of Class A common stock upon vesting of restricted stock units (in shares) | 1,510,066 | |||||||
Issuance of Class A common stock upon vesting of restricted stock units | 0 | (5,080) | 5,080 | |||||
Issuance of common stock for acquisitions (in shares) | 9,724,852 | |||||||
Issuance of common stock for acquisitions | 14,402 | $ 1 | 14,401 | |||||
Exchange of Class B common stock for Class A common stock (in shares) | 15,585,643 | (15,585,643) | ||||||
Exchange of Class B common stock for Class A common stock | 0 | $ 2 | $ (2) | 13,033 | (13,033) | |||
Warrants exercised (in share) | 29,420,204 | |||||||
Warrants Exercised | 217 | $ 3 | 214 | |||||
Debt discount - warrants issued | 45,698 | 45,698 | ||||||
Employee stock purchase plan issuance (in shares) | 1,158,295 | |||||||
Employee Stock Purchase Plan issuance | 1,143 | 1,143 | ||||||
Impact of transactions affecting non-controlling interests | 0 | (17,802) | 17,802 | |||||
Net income (loss) | (331,330) | (168,903) | (162,427) | |||||
Balance at the end (in shares) at Jun. 30, 2023 | 281,517,626 | 253,208,965 | 281,517,626 | 253,208,965 | ||||
Balance at the end at Jun. 30, 2023 | 235,773 | $ 28 | $ 25 | 601,589 | (454,935) | 89,066 | ||
Balance at the beginning (in shares) at Mar. 31, 2023 | 261,819,529 | 263,638,069 | ||||||
Balance at the beginning at Mar. 31, 2023 | 504,401 | $ 26 | $ 26 | 594,994 | (314,182) | 223,537 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense, net | 2,017 | 2,017 | ||||||
Issuance of Class A common stock upon vesting of restricted stock units (in shares) | 1,469,730 | |||||||
Issuance of Class A common stock upon vesting of restricted stock units | 0 | (4,984) | 4,984 | |||||
Issuance of common stock for acquisitions | 99 | 99 | ||||||
Exchange of Class B common stock for Class A common stock (in shares) | 10,429,104 | (10,429,104) | ||||||
Exchange of Class B common stock for Class A common stock | 0 | $ 1 | $ (1) | 9,463 | (9,463) | |||
Warrants exercised (in share) | 7,799,263 | |||||||
Warrants Exercised | 1 | $ 1 | ||||||
Net income (loss) | (270,745) | (140,753) | (129,992) | |||||
Balance at the end (in shares) at Jun. 30, 2023 | 281,517,626 | 253,208,965 | 281,517,626 | 253,208,965 | ||||
Balance at the end at Jun. 30, 2023 | $ 235,773 | $ 28 | $ 25 | $ 601,589 | $ (454,935) | $ 89,066 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash Flows (used in) from Operating Activities: | ||
Net loss | $ (331,330) | $ (14,649) |
Adjustments to reconcile net loss to net cash (used in) from operating activities: | ||
Depreciation and amortization expense | 54,473 | 38,872 |
Change in fair value of contingent consideration | (15,900) | (10,425) |
Change in fair value of warrant liabilities | (331) | (57,337) |
Loss on extinguishment of debt | 0 | 1,428 |
Fixed asset abandonment | 1,709 | 0 |
Amortization of debt issuance costs | 2,560 | 1,570 |
Non-cash lease expense | 1,642 | 3,642 |
Stock-based compensation, net | 11,368 | 31,600 |
Paid in kind interest expense | 7,380 | 0 |
Credit loss on other assets | 62,000 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 126,652 | (67,557) |
Other assets | (649) | 7,158 |
Prepaid expenses and other current assets | 654 | (17,834) |
Interest accrued due to sellers | 0 | 100 |
Accounts payable and accrued expenses (Related parties comprised $(295) and $1,331 for the six months ended June 30, 2023 and 2022, respectively) | 28,289 | (9,362) |
Other liabilities | 6,528 | 10,621 |
Net cash (used in) provided by operating activities | (44,955) | (82,173) |
Cash Flows (used in) from Investing Activities: | ||
Purchase of property and equipment (Related parties comprised $766 and $3,567 for the six months ended June 30, 2023 and 2022, respectively) | (11,270) | (20,431) |
Acquisitions of subsidiaries including non-compete intangibles, net of cash acquired | 0 | (4,995) |
Payments to sellers | (6,431) | (3,847) |
Net cash (used in) provided by investing activities | (17,701) | (29,273) |
Cash Flows (used in) from Financing Activities: | ||
Payments of long-term debt | (3,223) | (3,222) |
Debt issuance costs | (9,256) | (88) |
Proceeds from long-term debt | 150,000 | 0 |
Proceeds from CS Revolving Line of Credit | 55,000 | 0 |
Repayments of CS Revolving Line of Credit | (129,000) | 0 |
Proceeds from insurance financing arrangements | 2,690 | 2,529 |
Payments of principal on insurance financing arrangements | (1,467) | (1,380) |
Other | (1,696) | (1,716) |
Net cash (used in) provided by financing activities | 63,048 | (3,877) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 392 | (115,323) |
Cash, cash equivalents and restricted cash at beginning of year | 27,329 | 163,170 |
Cash, cash equivalents and restricted cash at end of period | 27,721 | 47,847 |
Supplemental cash flow information: | ||
Interest paid | 40,476 | 27,670 |
Income taxes paid | 0 | 82 |
Non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange of lease liabilities | 16,558 | 50,297 |
Issuance of Class A common stock for acquisitions | 14,402 | 15,771 |
Due to sellers in connection with acquisitions | 0 | 3,533 |
Addition to construction in process funded through accounts payable | 906 | 3,580 |
Humana Affiliate Provider clinic leasehold improvements | 363 | 2,928 |
Employee Stock Purchase Plan issuance | 1,143 | 9,707 |
Warrants issued | $ 45,698 | $ 0 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Changes in accounts payable and accrued expenses | $ 28,289 | $ (9,362) |
Purchase of property and equipment | 11,270 | 20,431 |
Affiliated Entity | ||
Changes in accounts payable and accrued expenses | (295) | 1,331 |
Purchase of property and equipment | $ 766 | $ 3,567 |
NATURE OF BUSINESS AND OPERATIO
NATURE OF BUSINESS AND OPERATIONS | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND OPERATIONS | NATURE OF BUSINESS AND OPERATIONS Nature of Business Cano Health, Inc. (“Cano Health”, or the “Company”), formerly known as Primary Care (ITC) Intermediate Holdings, LLC (“PCIH” or the "Seller"), provides value-based medical care for its members. The Company focuses on providing high-touch population health and wellness services to Medicare Advantage, Accountable Care Organization Realizing Equity, Access, and Community Health ("ACO REACH"), Medicare patients under ACO and Medicaid capitated members, particularly in underserved communities by leveraging our proprietary technology platform to d eliver high-quality health care services. The Company also operates pharmacies in the network for the purpose of providing a full range of managed care services to its members. On June 3, 2021 (the “Closing Date”), Jaws Acquisition, Corp. (“Jaws”) consummated the business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated as of November 11, 2020 (as amended, the “Business Combination Agreement”) by and among Jaws, Jaws Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), PCIH, and PCIH’s sole member, and the Seller (each as defined in the Business Combination Agreement). Upon the closing of the Business Combination, Jaws was reincorporated in the State of Delaware and changed its name to "Cano Health, Inc." Unless the context requires, "the Company", "we", "us", and "our" refer, for periods prior to the completion of the Business Combination, to PCIH and its consolidated subsidiaries, and for periods upon or after the completion of the Business Combination, to Cano Health and its consolidated subsidiaries, including PCIH and its subsidiaries. Pursuant to the Business Combination Agreement, on the Closing Date, Jaws contributed cash to PCIH in exchange for 69.0 million common limited liability company units of PCIH ("PCIH Common Units") equal to the number of shares of Jaws' Class A ordinary shares outstanding on the Closing Date, as well as 17.25 million Class B ordinary shares owned by Jaws Sponsor, LLC (the "Sponsor"). In connection with the Business Combination, the Company issued 306.8 million shares of the Company’s Class B common stock to existing stockholders of PCIH. The Company also issued 80.0 million shares of the Company’s Class A common stock in a private placement for $800.0 million (the "PIPE Investors"). Following the consummation of the Business Combination, substantially all of the Company’s assets and operations are held and conducted by PCIH and its subsidiaries. As the Company is a holding company with no material assets other than its ownership of PCIH Common Units and its managing member interest in PCIH, the Company has no independent means of generating revenue or cash flow. The Company’s ability to pay taxes and dividends depends on the financial results and cash flows of PCIH and the distributions it receives from PCIH. The Company’s only assets are equity interests in PCIH, which represented a 35.1% and 52.6% controlling ownership as of the Closing Date and as of June 30, 2023, respectively. Certain members of PCIH who retained their common unit interests in PCIH held the remaining 64.9% and 47.4% non-controlling ownership interests as of the Closing Date and as of June 30, 2023, respectively. These members hold an economic interest in PCIH through PCIH Common Units and a corresponding number of non-economic Class B common stock, which entitles the holder to one vote per share. Our organizational structure following the completion of the Business Combination is commonly referred to as an umbrella partnership-C (or Up-C) corporation structure. This organizational structure allowed the Seller, the former sole owner and managing member of PCIH, to retain its equity ownership in PCIH, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of PCIH Common Units (as defined in the Business Combination Agreement) . The former stockholders of Jaws and the PIPE Investors who, prior to the Business Combination, held Class A ordinary shares or Class B ordinary shares of Jaws, by contrast, received equity ownership in Cano Health, Inc., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes. Subject to the terms and conditions set forth in the Business Combination Agreement, the Seller and its equity holders received aggregate consideration with a value equal to $3,534.9 million, which consisted of (i) $466.5 million of cash and (ii) 306.8 million shares of Class B common stock valued at $3,068.4 million based on a reference stock price of $10.00 per share. Following the closing of the Business Combination, Class A stockholders owned direct controlling interests in the combined results of PCIH and Cano Health while the Seller, as the sole Class B stockholder, owned indirect economic interests in PCIH shown as non-controlling interests in Cano Health's unaudited condensed consolidated financial statements. The Seller holds these indirect economic interests in the form of PCIH Common Units that are redeemable for shares of Cano Health Class A common stock, together with the cancellation of an equal number of shares of Cano Health Class B common stock. The non-controlling interests will decrease over time as shares of Class B common stock and PCIH Common Units are exchanged for shares of Cano Health's Class A common stock. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The portion of an entity not wholly-owned by the Company is presented as non-controlling interests. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company. The Company has interests in various entities and considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights (“variable interest entities” or “VIEs”) and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Included in the Company's consolidated results are Cano Health Texas, PLLC, Cano Health Nevada, PLLC, Cano Health California, PC, CHC Provider Network, PC and Cano Health Illinois, PLLC (collectively, the "Physicians Groups"), which the Company has concluded are VIEs. All material intercompany accounts and transactions have been eliminated in consolidation. Risks and Uncertainties For additional information on the Company’s risk factors, please see Item 1A, "Risk Factors,” included in the Company’s 2022 Form 10-K, as supplemented by Part II, Item 1A, “Risk Factors,” included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2023 (the “Q1 2023 Form 10-Q") and in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023 (the “Q2 2023 Form 10-Q”). Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassifications impacted the classification of: repayments of equipment loans, repayment of finance lease obligation and employee stock purchase plan contributions within the statement of cash flows. Additionally, there were reclassifications related to revenue and direct patient expense within variable interest entities. These reclassifications had no impact on net loss as previously presented. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company described its significant accounting policies in Note 2, “Summary of Significant Accounting Policies,” included in the audited consolidated financial statements for the year ended December 31, 2022 included in its 2022 Form 10-K. During the six months ended June 30, 2023, there were no significant changes to those accounting policies. Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements through June 30, 2023 and believes that none of them will have a material effect on our unaudited condensed consolidated financial statements. |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | GOING CONCERN The Company’s accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the six months ended June 30, 2023, the Company generated a net loss of $331.3 million and used $45.0 million of cash from operations. The Company’s current liquidity as of August 9, 2023 was approximately $101.5 million, consisting of cash and cash equivalents (excluding restricted cash of approximately $14.1 million). As of August 10, 2023, the CS Revolving Line of Credit was fully drawn to ensure that the Company had access to liquidity while it was negotiating the 2023 Side-Car Amendment (each as discussed under Note 12, “Debt”); provided, however, having secured the 2023 Side-Car Amendment on August 10, 2023, the Company currently expects to repay a significant portion of such line of credit by the end of September 2023. The Company currently believes that this amount of liquidity is not sufficient to cover the Company’s operating, investing and financing cash uses for the next 12 months. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next 12 months to improve the Company’s liquidity and profitability, as discussed below. Management has evaluated the significance of these relevant conditions in relation to the Company’s ability to meet its obligations and has concluded that there is substantial doubt about the Company’s ability to continue as going concern within one year after the date that the financial statements are issued. The Company is pursuing several initiatives to improve its profitability liquidity and net cash, such as controlling and reducing operating expenses, limiting capital expenditures, selling assets and operations and exiting certain markets. The Company’s efforts to reduce operating expenses include reducing permanent staff, lowering its third party medical costs through negotiations with payors, consolidating underperforming medical centers, delaying renovations and other capital projects and significantly reducing nonessential spending. Other Company efforts to improve its liquidity include a strategic review of its Medicaid business in Florida, medical centers located in Texas and Nevada, pharmacy assets and other specialty practices. The Company is in the process of closing medical centers and exiting markets in California, New Mexico and Illinois. The Company also plans to exit its Puerto Rico operations by January 1, 2024. In addition to the above, the Company is pursuing a comprehensive process to identify and evaluate interest in a sale of the Company, or all or substantially all of its assets, consistent with the terms and conditions of the 2023 Side-Car Amendment, discussed below. The Company has engaged advisors to assist in the process. The Company has not set a timetable for the conclusion of this process and there is no assurance that the process will result in any transaction. Additionally, as discussed in Note 12, “Debt,” the Side-Car Credit Agreement contains a financial maintenance covenant, requiring the Borrower to maintain a First Lien Net Leverage Ratio (i.e., total first lien senior secured net debt to Consolidated Adjusted EBITDA) not to exceed 5.80 :1.00 on the last day of any four consecutive fiscal quarter period. Capitalized terms used, but not defined, in this Note are defined in Note 12, “Debt.” With a First Lien Leverage Ratio of approximately 12.00 :1.00 at June 30, 2023, the Borrower was not in compliance with this financial maintenance covenant as of such date. Under the Side-Car Credit Agreement, the Borrower has a right to cure noncompliance with the financial maintenance covenant by obtaining sufficient equity proceeds, which may be sourced from equity or debt financings by the Company, that will be deemed added to the Borrower’s Consolidated Adjusted EBITDA for purposes of recalculating the financial maintenance covenant when such proceeds are contributed to the Borrower. The cure right may be exercised by the Borrower no more than 2 times in any 4 consecutive testing periods and no more than 5 times during the term of the Side-Car Credit Agreement. Accordingly, on July 28, 2023, the Borrower delivered to the 2023 Term Loan Administrative Agent a notice of its intent to cure such noncompliance by September 5, 2023, which would require the Company to raise approximately $71 million of new capital, which amount, if raised, would be contributed to the Borrower to consummate the cure. Thereafter, on August 10, 2023, the Borrower obtained a waiver of such noncompliance and entered into an amendment of the Side-Car Credit Agreement (the “2023 Side-Car Amendment”) under which the Company will not be required to test compliance with the Side-Car Credit Agreement’s financial maintenance covenant until the fiscal quarter ending September 30, 2024. The 2023 Side-Car Amendment provides, among other modifications to the Side-Car Credit Agreement, that: (i) the Company will formally launch, announce and pursue a comprehensive process in an effort to yield one or more offers for a sale of all or substantially all of the assets or businesses of, or direct or indirect equity interests in, the Borrower and its subsidiaries with a purchase price that includes cash proceeds sufficient to pay the obligations under the Side-Car Credit Agreement, and will use its commercially reasonable efforts to promptly close such a transaction; (ii) the interest rate for the 2023 Term Loan will be increased to 16% during the payment-in-kind period ending on February 24, 2025; (iii) a premium payment of 5% of the outstanding principal amount of the 2023 Term Loan will be paid in kind by capitalizing such payment to the principal amount of the 2023 Term Loan; (iv) the applicable prepayment premium will be required in connection with any voluntary or mandatory prepayment or repayment of the 2023 Term Loan; and (v) the lenders will have participation rights in certain new debt financings incurred by the Borrower or any of its subsidiaries. Absent such waiver, the 2023 Term Loan Administrative Agent, acting at the direction of the lead lender, and at the requisite lenders request, could have immediately terminated all commitments under the 2023 Term Loan and accelerated the maturity of all principal, interest and other amounts due thereon. Pursuant to the terms of the 2023 Side-Car Amendment, the Borrower will not be required to pursue its cure right. Under the Credit Suisse Credit Agreement, if the Borrower was unable to obtain such waiver from the lenders under the 2023 Term Loan Agreement, or cure any such noncompliance by September 5, 2023, then the administrative agent under the Credit Suisse Credit Agreement would have been entitled to, and acting at the direction of the requisite lenders, could have, among other things, immediately terminated all commitments under the CS Term Loan and the CS Revolving Line of Credit and accelerated the maturity of all principal, interest and other amounts due thereunder. Under the Senior Notes, if (i) the Borrower was unable to obtain such waiver from the lenders under the 2023 Term Loan Agreement, or cure any such noncompliance by September 5, 2023; (ii) the lender under such facility or under the Credit Suisse Credit Agreement accelerated the maturity of $50 million or more of the amount outstanding thereunder; and (iii) the Borrower failed to pay such amount when due, then the trustee for the Senior Notes or the holders of at least 30% in principal amount of the Senior Notes would have been entitled to immediately accelerate the maturity of the Senior Notes, including all principal, interest and other amounts due thereon. |
REVENUE AND ACCOUNTS RECEIVABLE
REVENUE AND ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE The Company’s revenue streams for the three and six months ended June 30, 2023 and 2022, respectively, were as follows: Three Months Ended June 30, 2023 2022 (in thousands) Revenue $ Revenue % Revenue $ Revenue % Capitated revenue Medicare $ 695,612 90.7 % $ 602,613 87.4 % Other capitated revenue 47,712 6.2 % 52,880 7.6 % Total capitated revenue 743,324 96.9 % 655,493 95.0 % Fee-for-service and other revenue Fee-for-service 4,282 0.6 % 9,701 1.4 % Pharmacy 15,559 2.0 % 12,759 1.9 % Other 3,581 0.5 % 11,420 1.7 % Total fee-for-service and other revenue 23,422 3.1 % 33,880 5.0 % Total revenue $ 766,746 100.0 % $ 689,373 100.0 % Six Months Ended June 30, 2023 2022 (in thousands) Revenue $ Revenue % Revenue $ Revenue % Capitated revenue Medicare $ 1,489,240 91.2 % $ 1,217,831 87.5 % Other capitated revenue 95,157 5.8 % 112,013 8.0 % Total capitated revenue 1,584,397 97.0 % 1,329,844 95.5 % Fee-for-service and other revenue Fee-for-service 15,975 1.0 % 19,671 1.4 % Pharmacy 27,664 1.7 % 24,274 1.7 % Other 5,619 0.3 % 19,726 1.4 % Total fee-for-service and other revenue 49,258 3.0 % 63,671 4.5 % Total revenue $ 1,633,655 100.0 % $ 1,393,515 100.0 % Accounts Receivable The Company's accounts receivable balances are summarized for the periods indicated below. The Company’s accounts receivable are presented net of the unpaid service provider costs. A right of offset exists when all of the following conditions are met: 1) each of the two parties owed the other determinable amounts; 2) the reporting party has the right to offset the amount owed with the amount owed to the other party; 3) the reporting party intends to offset; and 4) the right of offset is enforceable by law. The Company believes all of the aforementioned conditions existed as of June 30, 2023 and December 31, 2022. As of (in thousands) June 30, 2023 December 31, 2022 Accounts receivable $ 459,633 $ 388,122 Medicare risk adjustment 24,868 49,586 Unpaid service provider costs (377,337) (203,892) Accounts receivable, net $ 107,164 $ 233,816 Concentration of Risk Three payors represented greater than 10% of our total revenue for the three and six months ended on each of June 30, 2023 and June 30, 2022. Three Months Ended Six Months Ended June 30, 2023 2022 2023 2022 Revenues 64.6% 64.7% 66.3% 64.9% Three payors represented, in aggregate, the following percentages of accounts receivable as of June 30, 2023 and December 31, 2023, respectively. As of June 30, 2023 December 31, 2022 Accounts receivable, net 36.6% 56.3% |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following as of June 30, 2023 and December 31, 2022, respectively: (in thousands) June 30, 2023 December 31, 2022 Third party receivables $ — $ 60,400 Contingent consideration asset 14,500 — Other 16,950 19,203 Prepaid expenses and other current assets $ 31,450 $ 79,603 Third party receivables represent amounts due from MSP Recovery Inc. ("MSP"). MSP provides healthcare claims reimbursement recovery services using data analytics to identify and recover improper payments made by Medicare, Medicaid and commercial health insurers (each a “Health Plan”), and charged to the Company under risk agreements, when the Health Plan is not the primary payor under the Medicare Secondary Payer Act and other state and federal laws. The Company has assigned certain past claims data to MSP, which could have been paid in either cash or equity at MSP's option. On July 7, 2023, the Company received 199,000,001 shares of MSP Class A common stock to settle certain receivables from MSP. As of June 30, 2023, the Company classified the receivables of $62.0 million from MSP in other assets due to the belief that at the balance sheet date the asset is not expected to be realized into cash within the next 12 months. On August 2, 2023, MSP announced that the SEC initiated an investigation of MSP on August 11, 2022. In addition, MSP announced that it received a subpoena on March 10, 2023 from the U.S. Attorney's Office in the U.S. District Court for the Southern District of Florida. As a result of (i) these recent disclosures by MSP; (ii) MSP's delinquent filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023; and (iii) MSP's not being in compliance with the NASDAQ listing requirements, the Company decided to utilize a third-party valuation specialist to provide a market value analysis of the shares of Class A common stock that MSP issued to the Company on July 7, 2023. As of June 30, 2023, the Company has recognized an allowance for credit losses of $62.0 million. |
UNPAID SERVICE PROVIDER COSTS
UNPAID SERVICE PROVIDER COSTS | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
UNPAID SERVICE PROVIDER COSTS | UNPAID SERVICE PROVIDER COSTS Activity in unpaid service provider costs for the six months ended June 30, 2023 and 2022, respectively, is summarized below: (in thousands) 2023 2022 Balance as of January 1, $ 318,554 $ 129,110 Incurred related to: Current year 1,270,245 843,427 Prior years 2,317 2,576 1,272,562 846,003 Paid related to: Current year 885,119 543,984 Prior years 286,528 120,997 1,171,647 664,981 Balance as of June 30, $ 419,469 $ 310,132 The Company maintains a provider excess loss insurance policy to protect against claim expenses exceeding certain levels that are incurred by the Company on behalf of members. As of both June 30, 2023 and June 30, 2022, the Company's excess loss insurance dedu ctible was $0.2 million and maximum coverage was $2.0 million per member per calendar year. The Company recorded excess loss insurance premiums of $1.4 million and $2.4 million for the three and six months ended June 30, 2023, respectively, and reimbursement of $0.7 million and $1.4 million for the three and six months ended June 30, 2023, respectively. The Company recorded excess loss insurance premiums of $2.5 million |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Activity impacting the Company's goodwill balance during the six months ended June 30, 2023 is summarized below: (in thousands) Goodwill as of December 31, 2022 $ 480,375 Other (331) Goodwill as of June 30, 2023 $ 480,044 We test goodwill for impairment annually on October 1st, or under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment. In the second quarter of 2023, due to the Company's significant losses, the Company determined there was a triggering event for a goodwill impairment test. With the assistance of a third-party specialist, management performed a quantitative assessment of the Company's fair value using the Market Approach and the Income Approach. We are required to impair goodwill only when our assessment determines the Company’s carrying value exceeds its fair value as we operate as one reporting unit. It was determined that the Company's fair value exceeded the carrying value and that no supplemental impairment was necessary. |
PAYOR RELATIONSHIPS AND OTHER I
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET | PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET As of June 30, 2023, the Company’s total intangibles, net, consisted of the following: (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangibles: Trade names $ 1,409 $ (1,024) $ 385 Brand names 183,877 (43,612) 140,265 Non-compete agreements 85,461 (37,115) 48,346 Customer relationships 880 (257) 623 Payor relationships 631,186 (79,273) 551,913 Provider relationships 19,842 (9,700) 10,142 Total intangibles, net $ 922,655 $ (170,981) $ 751,674 As of December 31, 2022, the Company’s total intangibles, net consisted of the following: (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangibles: Trade names $ 1,409 $ (945) $ 464 Brand names 183,878 (29,169) 154,709 Non-compete agreements 85,476 (28,341) 57,135 Customer relationships 880 (233) 647 Payor relationships 631,214 (63,510) 567,704 Provider relationships 19,842 (6,738) 13,104 Total intangibles, net $ 922,699 $ (128,936) $ 793,763 The Company recorded amortization expens e of $21.0 million and $42.1 million for the three and six months ended June 30, 2023, respectively, and $15.5 million and $30.6 million for the three and six months ended June 30, 2022, respectively. Expected amortization expense for the Company’s existing amortizable intangibles for the next 5 years, and thereafter, as of June 30, 2023 is as follows: (in thousands) Amount 2023 - remaining $ 40,835 2024 60,855 2025 57,166 2026 46,996 2027 40,230 Thereafter 505,592 Total $ 751,674 We periodically assess our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Changes or consolidation of the use of any of our brand names could result in a reduction in their remaining estimated economic lives, which could lead to increased amortization expense. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases offices, operating medical centers, vehicles and medical equipment. Leases consist of finance and operating leases, and have a remaining lease term of 1 year to 15 years. The Company elected the practical expedient, which allows the Company to exclude leases with a lease term less than 12 months from being recorded on the balance sheet. The Company adopted the practical expedient related to the combining of lease and non-lease components, which allows us to account for the lease and non-lease components as a single lease component. Future minimum lease payments under operating and finance leases as of June 30, 2023 were as follows: (in thousands) Operating Finance Total 2023 - remaining $ 19,121 $ 2,075 $ 21,196 2024 36,796 3,941 40,737 2025 33,984 3,515 37,499 2026 31,232 2,922 34,154 2027 28,651 801 29,452 Thereafter 99,961 — 99,961 Total minimum lease payments 249,745 13,254 262,999 Less: amount representing interest (60,815) (2,512) (63,327) Lease liabilities $ 188,930 $ 10,742 $ 199,672 |
LEASES | LEASES The Company leases offices, operating medical centers, vehicles and medical equipment. Leases consist of finance and operating leases, and have a remaining lease term of 1 year to 15 years. The Company elected the practical expedient, which allows the Company to exclude leases with a lease term less than 12 months from being recorded on the balance sheet. The Company adopted the practical expedient related to the combining of lease and non-lease components, which allows us to account for the lease and non-lease components as a single lease component. Future minimum lease payments under operating and finance leases as of June 30, 2023 were as follows: (in thousands) Operating Finance Total 2023 - remaining $ 19,121 $ 2,075 $ 21,196 2024 36,796 3,941 40,737 2025 33,984 3,515 37,499 2026 31,232 2,922 34,154 2027 28,651 801 29,452 Thereafter 99,961 — 99,961 Total minimum lease payments 249,745 13,254 262,999 Less: amount representing interest (60,815) (2,512) (63,327) Lease liabilities $ 188,930 $ 10,742 $ 199,672 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities consisted of the following as of June 30, 2023 and December 31, 2022, respectively: (in thousands) June 30, 2023 December 31, 2022 Service fund liability 1 $ 20,934 $ 16,652 Other 7,076 7,839 Other current liabilities $ 28,010 $ 24,491 |
CONTRACT LIABILITIES
CONTRACT LIABILITIES | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
CONTRACT LIABILITIES | CONTRACT LIABILITIES As further explained in Note 15, “Related Party Transactions,” in these unaudited condensed consolidated financial statements, the Company entered into certain agreements with Humana, Inc. ("Humana") under which the Company receives administrative payments in exchange for providing care coordination services at certain clinics licensed to the Company over the term of such agreements. The Company’s contract liabilities balance related to these payments from Humana was $5.1 million and $6.5 million as of June 30, 2023 and December 31, 2022, respectively. The short-term portion was recorded in other current liabilities and the long-term portion was recorded in other liabilities. The Company recognized $0.7 million and $1.4 million in revenue from contract liabilities recorded during the three and six months ended June 30, 2023, respectively, and $0.7 million and $1.3 million in the three and six months ended June 30, 2022 , respectively. A summary of significant changes in the contract liabilities balance during the period is as follows: (in thousands) For the three months ended June 30, 2023 Balance at March 31, 2023 $ 5,786 Revenues recognized from current period increases (675) Balance at June 30, 2023 $ 5,111 (in thousands) For the six months ended June 30, 2023 Balance at December 31, 2022 $ 6,461 Revenues recognized from current period increases (1,350) Balance at June 30, 2023 $ 5,111 Of the June 30, 2023 contract liabilities balance, the Company expects to recognize the following amounts as revenue in the succeeding years: Years ended December 31, Amount (in thousands) 2023 - remaining $ 1,349 2024 2,514 2025 1,183 2026 65 Total $ 5,111 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT At June 30, 2023, and December 31, 2022, the Company's current notes payable were as follows:. Current Notes Payable As of, (in thousands) June 30, 2023 December 31, 2022 2023 Term Loan 1 157,380 — Current portion of CS term loan 6,444 6,444 163,824 6,444 Less: Debt issuance costs (54,157) — Current notes payable, net of debt issuance costs $ 109,667 $ 6,444 1. Includes $7.4 million of Paid-in-Kind ("PIK") interest that was incurred under the 2023 Term Loan through June 30, 2023. At June 30, 2023 and December 31, 2022, the Company’s long-term notes payable were as follows: Long-Term Notes Payable As of, (in thousands) June 30, 2023 December 31, 2022 CS Term Loan $ 628,322 $ 631,544 CS Revolving Line of Credit 10,000 84,000 Senior Notes 300,000 300,000 938,322 1,015,544 Less: Debt issuance costs (16,090) (17,738) Long-term notes payable, net of debt issuance costs $ 922,232 $ 997,806 Credit Suisse Credit Agreement Pursuant to the Credit Suisse Credit Agreement, the Company, through its wholly owned operating subsidiary, Cano Health, LLC (the “Borrower”), has a senior secured term loan (as amended, the “CS Term Loan”) and a revolving credit facility (as amended, the “CS Revolving Line of Credit”). The Obligations under the Credit Suisse Credit Agreement are secured by substantially all of the Borrower’s assets. The Credit Suisse Credit Agreement contains a financial maintenance covenant (which is for the benefit of the lenders under the CS Revolving Line of Credit only), requiring the Borrower to not exceed a total first lien secured net debt to Consolidated Adjusted EBITDA (as defined therein) ratio, which is tested quarterly only if the Borrower has exceeded a certain amount drawn under the CS Revolving Line of Credit, which is approximately 35% of the total commitment under the CS Revolving Line of Credit, or approximately $42 million. As of June 30, 2023, the available balance on the CS Revolving Line of Credit was $110 million, and as of August 10, 2023 such line of credit was fully drawn to ensure that the Company had access to liquidity while it was negotiating the 2023 Side-Car Amendment , discussed under “2023 Term Loan Agreement;” provided, however, having secured the 2023 Side-Car Amendment on August 10, 2023, the Company currently expects to repay a significant portion of such line of credit by the end of September 2023. Accordingly, as of June 30, 2023, the Company was not required to test its compliance with the financial maintenance covenant under the Credit Suisse Credit Agreement. Please see the discussion below regarding the Company’s noncompliance with the financial maintenance covenant under the Side-Car Credit Agreement as of June 30, 2023 and the Company’s receipt of a waiver of such noncompliance on August 10, 2023. While the Company currently believes that the Borrower will not be required to test the financial maintenance covenant under the Credit Suisse Credit Agreement for the testing period ending September 30, 2023, if it were required to test such financial maintenance covenant and if, at such time, it is not in compliance with the financial maintenance covenant, the Borrower would be required to cure or seek a waiver of such noncompliance from the requisite revolving lenders under the Credit Suisse Credit Agreement by December 6, 2023. Under the Credit Suisse Credit Agreement, the Borrower has a right to cure any such noncompliance by obtaining sufficient equity proceeds, which may be sourced from equity or debt financings by the Company, that would be deemed added to the Borrower’s Consolidated Adjusted EBITDA for purposes of recalculating the financial maintenance covenant when such proceeds are contributed to the Borrower. The cure right may be exercised by the Borrower no more than 2 times in any 4 consecutive testing periods and no more than 5 times during the term of the Credit Suisse Credit Agreement. If the Borrower is unable to obtain a waiver of, or to cure, any such noncompliance, then the administrative agent under the Credit Suisse Credit Agreement would be entitled to, and acting at the direction of the requisite lenders could, among other things, immediately terminate the CS Term Loan and CS Revolving Line of Credit commitments and accelerate the maturity of all principal, interest and other amounts due under such facilities. If such circumstances were to arise, the Company can provide no assurances that the Borrower would be able to obtain such waiver or timely consummate such cure or repay or refinance any accelerated principal, interest and other amounts that may become due, if any. Under the Side-Car Credit Agreement, if the Borrower becomes required to test the financial maintenance covenant under the Credit Suisse Credit Agreement and if, at such time, the Borrower is not in compliance with such financial maintenance covenant and was unable to obtain a waiver of, or cure, any such noncompliance by December 6, 2023, then the 2023 Term Loan Administrative Agent would be entitled to, and acting at the direction of the requisite lenders, could, among other things, immediately terminate all commitments under the 2023 Term Loan and accelerate the maturity of all principal, interest and other amounts due thereunder. Under the Senior Notes, if (i) the Borrower becomes required to test the financial maintenance covenant under the Credit Suisse Credit Agreement and if, at such time, the Borrower is not in compliance with such financial maintenance covenant and was unable or obtain a waiver of, or cure, any such noncompliance by December 6, 2023; (ii) the lender under such facility or under the Side-Car Credit Agreement accelerates the maturity of $50 million or more of the amount outstanding thereunder; and (iii) the Borrower fails to pay such amount when due, then the trustee for the Senior Notes or the holders of at least 30% in principal amount of the Senior Notes would be entitled to immediately accelerate the maturity of the Senior Notes, including all principal, interest and other amounts due thereon. Prior to the CS Term Loan’s maturity date, the Borrower may elect to prepay, in whole or in part at any time without premium or penalty, other than in connection with certain repricing transactions and customary breakage costs. As of June 30, 2023 and December 31, 2022, the Borrower maintains restricted letters of credit for an aggregate amount of $5.7 million and $7.2 million, respectively. As of June 30, 2023 and December 31, 2022, the Borrower had $13.0 million (of its total cash of $27.7 million) and $4.4 million (of its total cash of $27.3 million), respectively, of cash held as collateral and letters of credit related to the ACO REACH program, respectively. The letters of credit and the collateral are both presented within the Company's cash, cash equivalents and restricted cash. On January 14, 2022, the Company entered into an amendment to the Credit Suisse Credit Agreem ent, pursuant to which the outstanding principal amount of the CS Term Loan was replaced with an equivalent amount of new term loan having substantially similar terms, except with a lower interest rate margin applicable to the new term loan. The amendment of the Credit Suisse Credit Agreement implemented a forward-looking term rate based on the secured overnight financing rate (“SOFR”) as the replacement for LIBOR as the benchmark interest rate for borrowings under the CS Term Loan and CS Revolving Line of Credit, and certain other provisions. The new interest rate applicable to the CS Term Loan and borrowings under the CS Revolving Line of Credit was revised to 4.00%, plus the greater of SOFR and the applicable credit spread adjustment or 0.50%; provided that if the Borrower achieves a public corporate rating from S&P of at least "B" and a public rating from Moody's of at least "B2", then for as long as such ratings remained in effect, a margin of 3.75% would be applicable . The Borrower has not reached these applicable corporate ratings. The amendment represented a partial extinguishment and resulted in a write-off of deferred issuance costs of $1.4 million, which was recorded as a loss on extinguishment of debt for the six months ended June 30, 2022. During the six months ended June 30, 2023, the SOFR exceeded the credit spread adjustment of 0.50%, resulting in monthly variable interest rates for the quarter. As of June 30, 2023, the effective interest rate of the CS Term Loan was 9.76%. 2023 Term Loan Agreement On February 24, 2023 (the “2023 Term Loan Closing Date”), the Company, through the Borrower and Primary Care (ITC) Intermediate Holdings, LLC (“Holdings”), entered into a Credit Agreement (the “Side-Car Credit Agreement”) with certain lenders and JP Morgan Chase Bank, N.A., as administrative agent (the “2023 Term Loan Administrative Agent”), pursuant to which the lenders provided a senior secured term loan (the “2023 Term Loan”) to the Borrower in the aggregate principal amount of $150 million, the full amount of which was funded on the 2023 Term Loan Closing Date. The Side-Car Credit Agreement contains a financial maintenance covenant, requiring the Borrower to maintain a First Lien Net Leverage Ratio (i.e., total first lien senior secured net debt to Consolidated Adjusted EBITDA) not to exceed 5.80:1.00 on the last day of any four consecutive fiscal quarter period. With a First Lien Leverage Ratio of approximately 12.00:1.00 at June 30, 2023, the Borrower was not in compliance with this financial maintenance covenant as of such date. Under the Side-Car Credit Agreement, the Borrower has a right to cure noncompliance with the financial maintenance covenant by obtaining sufficient equity proceeds, which may be sourced from equity or debt financings by the Company, that will be deemed added to the Borrower’s Consolidated Adjusted EBITDA for purposes of recalculating the financial maintenance covenant when such proceeds are contributed to the Borrower. The cure right may be exercised by the Borrower no more than 2 times in any 4 consecutive testing periods and no more than 5 times during the term of the Side-Car Credit Agreement. Accordingly, on July 28, 2023, the Borrower delivered to the 2023 Term Loan Administrative Agent a notice of its intent to cure such noncompliance by September 5, 2023, which would require the Company to raise approximately $71 million of new capital, which amount, if raised, would be contributed to the Borrower to consummate the cure. Thereafter, on August 10, 2023, the Borrower obtained a waiver of such noncompliance and entered into the 2023 Side-Car Amendment under which the Company will not be required to test compliance with the Side-Car Credit Agreement’s financial maintenance covenant until the fiscal quarter ending September 30, 2024. The 2023 Side-Car Amendment provides, among other modifications to the Side-Car Credit Agreement, that: (i) the Company will formally launch, announce and pursue a comprehensive process in an effort to yield one or more offers for a sale of all or substantially all of the assets or businesses of, or direct or indirect equity interests in, the Borrower and its subsidiaries with a purchase price that includes cash proceeds sufficient to pay the obligations under the Side-Car Credit Agreement, and will use its commercially reasonable efforts to promptly close such a transaction; (ii) the interest rate for the 2023 Term Loan will be increased to 16% during the payment-in-kind period ending on February 24, 2025; (iii) a premium payment of 5% of the outstanding principal amount of the 2023 Term Loan will be paid in kind by capitalizing such payment to the principal amount of the 2023 Term Loan; (iv) the applicable prepayment premium will be required in connection with any voluntary or mandatory prepayment or repayment of the 2023 Term Loan; and (v) the lenders will have participation rights in certain new debt financings incurred by the Borrower or any of its subsidiaries . Absent such waiver, the 2023 Term Loan Administrative Agent, acting at the direction of the lead lender, and at the requisite lenders request, could have immediately terminated all commitments under the 2023 Term Loan and accelerated the maturity of all principal, interest and other amounts due thereon . Pursuant to the terms of the 2023 Side-Car Amendment, the Borrower will not be required to pursue its cure right. Based on the conditions present within the Side-Car Amendment, amounts outstanding pertaining to the 2023 Term Loan Agreement have been classified within current notes payable. Under the Credit Suisse Credit Agreement, if the Borrower was unable to obtain such waiver from the lenders under the 2023 Term Loan Agreement, or cure any such noncompliance by September 5, 2023, then the administrative agent under the Credit Suisse Credit Agreement would have been entitled to, and acting at the direction of the requisite lenders, could have, among other things, immediately terminated all commitments under the CS Term Loan and the CS Revolving Line of Credit and accelerated the maturity of all principal, interest and other amounts due thereunder. Under the Senior Notes, if (i) the Borrower was unable to obtain such waiver from the lenders under the 2023 Term Loan Agreement, or cure any such noncompliance by September 5, 2023; (ii) the lender under such facility or under the Credit Suisse Credit Agreement accelerated the maturity of $50 million or more of the amount outstanding thereunder; and (iii) the Borrower failed to pay such amount when due, then the trustee for the Senior Notes or the holders of at least 30% in principal amount of the Senior Notes would have been entitled to immediately accelerate the maturity of the Senior Notes, including all principal, interest and other amounts due thereon. Pursuant to the Side-Car Credit Agreement, the 2023 Term Loan bears interest at a rate equal to: (i) on or prior to the date that is the second anniversary of the closing date, 14% per annum, payable quarterly either (at the Borrower’s election) in cash or in kind by adding such amount to the principal balance of the 2023 Term Loan (provided that pursuant to the 2023 Side-Car Amendment, the interest rate for the 2023 Term Loan will be increased to 16% during the payment-in-kind period ending on February 24, 2025); and (ii) thereafter, 13% per annum, payable quarterly in cash. The Borrower has elected to satisfy interest due on the 2023 Term Loan through the second anniversary in kind. The 2023 Term Loan is scheduled to mature on November 23, 2027. The 2023 Term Loan will not amortize. Prior to the Side-Car Credit Agreement’s maturity date, the Borrower may elect to prepay the 2023 Term Loan, in whole or in part, subject to the applicable prepayment premium. If the Borrower voluntarily prepays the 2023 Term Loan, or if the 2023 Term Loan is accelerated, including in connection with a bankruptcy or insolvency proceeding, then the 2023 Term Loan will be subject to an applicable prepayment premium. If the prepayment, repayment or acceleration occurs during the period from and after the Closing Date up to (but not including) the date that is the 18-month anniversary of the initial funding date, the prepayment premium shall be an amount equal to: (i) the aggregate amount of interest which would otherwise have been payable on the principal amount of the 2023 Term Loan prepaid, repaid or accelerated from the date of the occurrence of the trigger event until the date that is the 18-month anniversary of the initial funding date, discounted at the then-applicable treasury rate plus 0.50%, plus (ii) an amount equal to the premium that would otherwise be payable as if such prepayment, repayment or acceleration had occurred on the day after the 18-month anniversary of the initial funding date (the “Make-Whole Amount”). If the prepayment, repayment or acceleration occurs during the period from and after the 18-month anniversary of the initial funding date up to (but not including) the date that is the 30-month anniversary of the initial funding date, the prepayment premium shall be an amount equal to 3% of the principal amount of the 2023 Term Loan prepaid, repaid or accelerated on such date in cash. If the prepayment, repayment or acceleration occurs during the period from and after the 30-month anniversary of the initial funding date up to (but not including) the date that is the 42-month anniversary of the initial funding date, the prepayment premium shall be an amount equal to 2% of the principal amount of the 2023 Term Loan prepaid, repaid or accelerated on such date in cash. There is no prepayment premium from and after the 42-month anniversary of the initial funding date. In addition, the 2023 Term Loan must be prepaid with the net cash proceeds of any material asset sale (subject to reinvestment rights) or casualty or condemnation event or any incurrence of debt not permitted by the Side-Car Credit Agreement. The Side-Car Credit Agreement also provides for annual excess cash flow mandatory prepayments. The mandatory prepayments under the Side-Car Credit Agreement are substantially consistent with the Credit Suisse Credit Agreement. Mandatory prepayments of the 2023 Term Loan and the CS Term Loan must be offered pro rata to the lenders thereof. The Side-Car Credit Agreement contains certain other representations and warranties, events of default and covenants, which are qualified by certain exceptions and baskets, that are customary for a transaction of this type, including, among other things, covenants that restrict the ability of the Borrower and its subsidiaries to incur certain additional indebtedness, create or prevent certain liens on assets, engage in certain mergers or consolidations, engage in asset dispositions, declare or pay dividends and make equity redemptions or restrict the ability of its subsidiaries to do so, make loans and investments, enter into transactions with affiliates, or make voluntary payments, amendments or modifications to subordinated or junior indebtedness. The 2023 Term Loan is guaranteed, jointly and severally by Holdings and each domestic wholly-owned material subsidiary of the Borrower’s current and future direct and indirect domestic wholly-owned material subsidiaries, with certain exceptions in accordance with the terms of the Side-Car Credit Agreement. The 2023 Term Loan is secured on a first lien basis by substantially all the assets of the Borrower and the guarantors. The obligations under the Side-Car Credit Agreement and the Credit Suisse Credit Agreement are secured by the same collateral on a ratable basis. In connection with and as consideration for entering into the Side-Car Credit Agreement, on February 24, 2023, the Company granted the lenders warrants to purchase, in the aggregate, up to 29.5 million shares of the Company’s Class A common stock at an exercise price of $0.01 per share, of which 21.6 million warrants were exercised on March 8, 2023 and the remaining 7.9 million warrants were exercised on April 24, 2023. During the six months ended June 30, 2023, the Company paid customary fees and expenses to the 2023 Term Loan Administrative Agent and the lenders in connection with the Side-Car Credit Agreement. Senior Notes On September 30, 2021, the Company issued senior unsecured notes for a principal amount of $300.0 million (the "Senior Notes") in a private offering. The Senior Notes bear interest at 6.25% per annum, payable semi-annually on April 1st and October 1st of each year, which interest commenced on April 1, 2022. As of June 30, 2023, the effective interest rate of the Senior Notes was 6.66%. Principal on the Senior Notes is scheduled to become due in full on October 1, 2028. The Senior Notes are not subject to any amortization payments. Prior to October 1, 2024, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount redeemed, plus accrued and unpaid interest, plus a make-whole premium. Prior to October 1, 2024, the Company may also redeem up to 40% of the aggregate principal amount of the notes with the net cash proceeds of certain equity offerings, at a redemption price of 106.25%, plus accrued and unpaid interest. On or after October 1, 2024, the Company may redeem some or all of the Senior Notes at a redemption price of 100% to 103.13%, plus accrued and unpaid interest, depending on the date that the Senior Notes are redeemed. Future Principal Payments on Term Loans and Senior Notes The following table sets forth the Company’s future principal payments as of June 30, 2023 , assuming acceleration of principal and capitalized paid-in-kind interest related to the 2023 Term Loan into calendar year 2024 : (in thousands) Year ending December 31, Amount 2023 $ 3,222 2024 163,824 2025 6,444 2026 6,444 2027 622,212 Thereafter 300,000 Total $ 1,102,146 As of June 30, 2023 and December 31, 2022, the balance of debt issuance costs totale d $70.8 million and $18.4 million, respectively, and is being amortized into interest expense over the term of the loans using the effective interest method. Of the balance as of June 30, 2023, $70.2 million related to the CS Term Loan, the 2023 Term Loan and the indebtedness under the Senior Notes, reflected as a direct reduction to the long-term debt balances, while the remaining $0.3 million and $0.3 million related to the CS Revolving Line of Credit, and reflected in prepaid expenses and other current assets and other assets, respectively. The Company recognized interest expense of $26.7 million (including $5.3 million of PIK interest under the 2023 Term Loan) and $50.2 million (including $7.4 million of PIK interest under the 2023 Term Loan) for the three and six months ended June 30, 2023 , respectively, compared to $13.1 million and $26.4 million for the three and six months ended June 30, 2022, respectively. From the interest expense, approximately $0.5 million and $1.6 million were recognized related to the amortization expense for the three and six months ended June 30, 2023 , respectively, and $0.9 million and $1.6 million for the three and six months ended June 30, 2022 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS 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 $882.2 million and $745.9 million as of June 30, 2023 and December 31, 2022, respectively. Due to seller : On August 11, 2021, the Company issued 2,720,966 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 will 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 agreement which is then discounted to present value using the risk-free rate and the Company’s cost of debt. As of June 30, 2023, the seller has met the 2022 performance metrics to earn a 100% payout and the liability is classified in current portions due to sellers on the consolidated balance sheet at a fair value of $28.7 million. The liability will continue to be fair valued until paid as it will be settled in a variable amount of shares of the Company's Class A common stock. 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. Contingent consideration : There was a $15.9 million decrease in the fair value of the contingent consideration during the six months ended June 30, 2023, which was recorded in change in fair value of contingent consideration in the consolidated statement of operations. This amount represent gains that were recorded related to the acquisition which was completed on August 5, 2022, as described above. The gains resulted from a change in the fair value of the future performance of the assets acquired. On December 9, 2022, the Company entered into an asset acquisition agreement requiring future payments in shares of the Company's Class A common stock. As of June 30, 2023, $16.7 million of the liability was classified as current portions due to sellers in the condensed consolidated balance sheet. The liability will continue to be fair valued until paid, as it will be settled in a variable amount of shares of the Company's Class A common stock. The Company issued 9.7 million Class A common stock on January 31, 2023, to settle a portion of the purchase price. Warrant Liabilities: As of June 3, 2021, the Closing Date of the Business Combination, and as of June 30, 2023, there were 23.0 million public warrants ("Public Warrants") and 10.5 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. 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 are based on significant inputs not observable in the market as of June 30, 2023 and December 31, 2022. As discussed in Note 12 "Debt", the Company granted the lenders to the 2023 Term Loan warrants to purchase, in the aggregate, up to 29.4 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 $0.01. 21.6 million of these warrants were exercised on March 8, 2023 and the remaining warrants were exercised on April 24, 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 June 30, 2023 December 31, 2022 Exercise price $11.50 $11.50 Stock price $1.39 $1.37 Term (years) 2.9 3.4 Risk free interest rate 4.5% 4.1% Dividend yield None None Public warrant price $0.21 $0.22 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 June 30, 2023 : (in thousands) Carrying Quoted Prices in Significant Significant Liabilities and assets measured at fair value on a recurring basis: Contingent consideration liability $ 1,400 $ — $ — $ 1,400 Contingent consideration asset (14,500) — — (14,500) Due to sellers liabilities 45,122 45,122 — — Public Warrant Liabilities 4,830 4,830 — — Private Placement Warrant Liabilities 2,212 — — 2,212 Total liabilities and assets measured at fair value $ 39,064 $ 49,952 $ — $ (10,888) There was a decrease of $0.2 million in the fair value of the Public Warrant Liabilities during the six months ended June 30, 2023, and a decrease of $0.1 million in the fair value of the Private Placement Warrant Liabilities during the six months ended June 30, 2023. The change in fair value of the warrant liabilities is reflected in our condensed 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 Quoted Prices in Significant Significant 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 three and six months ended June 30, 2023 and 2022 and for liabilities measured at fair value: Fair Value Measurements for the Three Months Ended June 30, (in thousands) 2023 2022 Balance as of March 31, $ 46,865 $ 86,744 Change in fair value of contingent consideration (11,800) (5,764) Change in fair value of warrants 1,677 (30,175) Change in fair value of due to sellers 2,322 — Balance as of June 30, $ 39,064 $ 50,805 Fair Value Measurements for the Six Months Ended June 30, (in thousands) 2023 2022 Balance as of January 1, $ 67,113 $ 118,567 Change in fair value of contingent consideration (15,900) (10,425) Change in fair value of warrants (331) (57,337) Change in fair value of due to sellers 3,461 — Due to seller payments (15,279) — Balance as of June 30, $ 39,064 $ 50,805 |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIESThe Physicians Groups were established to employ healthcare providers to contract with managed care payors, and to deliver healthcare services to patients in the markets that the Company serves. The Company evaluated whether it has a variable interest in the Physicians Groups, whether the Physicians Groups are VIEs, and whether the Company has a controlling financial interest in the Physicians Groups. The Company concluded that it has variable interests in the Physicians Groups on the basis of each respective Master Service Agreement (“MSA”), which provides office space, consulting services, managerial and administrative services, billing and collection, personnel services, financial management, licensing, permitting, credentialing, and claims processing in exchange for a service fee and performance bonuses payable to the Company. Each respective MSA transfers substantially all the residual risks and rewards of ownership to the Company. The Physicians Groups’ equity at risk, as defined by GAAP, is insufficient to finance its activities without additional support, and therefore, the Physicians Groups are considered VIEs, and are not affiliates of the Company. In order to determine whether the Company has a controlling financial interest in the Physicians Groups, and thus, whether the Company is the primary beneficiary, the Company considered whether it has (i) the power to direct the activities that most significantly impact the Physicians Groups’ economic performance and (ii) the obligation to absorb losses of the entities that could potentially be significant to it or the right to receive benefits from the Physicians Groups that could potentially be significant to it. The Company concluded that it may unilaterally remove the physician owners of the Physicians Groups at its discretion and is therefore considered to hold substantive kick-out rights over the decision maker of the Physicians Groups. Under each MSA, the Company is entitled to a management fee and a performance bonus that entitle the Company to substantially all of the residual returns or losses and is exposed to economics that could be significant to it. As a result, the Company concluded that it is the primary beneficiary of the Physicians Groups and therefore, consolidates the balance sheets, results of operations, and cash flows of these entities. The Company performs a qualitative assessment on an ongoing basis to determine if it continues to be the primary beneficiary. The table below illustrates the aggregated VIE assets and liabilities and performance for the Physicians Groups: (in thousands) June 30, 2023 December 31, 2022 Total Assets 1 $ 21,832 $ 16,247 Total Liabilities 1 $ 32,370 $ 19,445 Three Months Ended Six Months Ended (in thousands) 2023 2022 2023 2022 Total revenue $ 21,369 $ 24,754 $ 49,030 $ 39,072 Operating expenses: 2 Third-party medical costs 18,748 18,792 37,000 25,423 Direct patient expense 7,381 7,666 14,768 13,430 Total operating expenses 26,129 26,458 51,768 38,853 Net income $ (4,760) $ (1,704) $ (2,738) $ 219 There are no restrictions on the Physicians Groups' assets or on the settlement of their liabilities. The assets of the Physicians Groups can be used to settle the Company's obligations. The Physicians Groups are included in the Company’s creditor group; thus, the Company's creditors have recourse to the assets owned by the Physicians Groups. There are no liabilities for which creditors of the Physicians Groups do not have recourse to the general credit of the Company. There are no restrictions placed on the retained earnings or net income of the Physicians Groups with respect to potential future distributions. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Significant Shareholder Relationship On March 8, 2023, the Company issued an aggregate of 21,620,941 shares of Class A common stock to funds affiliated with Diameter Capital Partners LP (collectively, “Diameter”) and on April 24, 2023 the Company issued an additional 7,862,160 shares of Class A common stock to Rubicon Credit Holdings LLC ("Rubicon") upon the exercise of the warrants that were issued in connection with the consummation of the 2023 Term Loan to Diameter and Rubicon pursuant to the Warrant Agreement, dated as of February 24, 2023, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent and transfer agent. See Note 12, “Debt,” for important information on the 2023 Term Loan, which bears interest at a rate equal to (i) on or prior to February 24, 2025, 14% per annum, payable quarterly either (at the Company’s election) in cash or in kind by adding such amount to the principal balance of the term loan and (ii) thereafter, 13% per annum, payable quarterly in cash. During the three and six months ended June 30, 2023, the Company paid in kind $5.3 million and $7.4 million of interest expense, respectively, which was compounded into the principal, and paid $9.2 million in cash for debt issuance costs. MedCloud Depot, LLC Relationship On August 1, 2022, the Company appointed Bob Camerlinck as Chief Operating Officer (the "COO"). The COO owns 20% of MedCloud Depot, LLC ("MedCloud"), a Florida-based software development firm that specializes in health information technology and data warehousing. The Company has a license agreement with MedCloud pursuant to which MedCloud has granted the Company a non-exclusive, non-transferable license to use their software. The Company recorded payments to MedCloud that amounted to approximately $1.2 million and $2.0 million for the three and six months ended June 30, 2023, respectively, and $0.8 million and $1.2 million for three and six months ended June 30, 2022, respectively, which were recorded within the caption selling, general and administrative expenses in the condensed consolidated financial statements. As of June 30, 2023 the Company owed $0.6 million to MedCloud. Dental Excellence and Onsite Dental Relationships On April 14, 2022, CD Support, LLC ("Onsite Dental") acquired Dental Excellence Partners, LLC ("DEP"), a company who at the time of the acquisition was owned by the spouse of Dr. Marlow Hernandez, the Company's former Chief Executive Officer who remains a member of the Company’s Board of Directors ("Dr. Hernandez"), and Onsite Dental entered into a dental services agreement with the Company. Dr. Hernandez’ spouse became a minority shareholder of Onsite Dental upon closing of the acquisition and she serves as a Board observer at Onsite Dental's board meetings. Dr. Hernandez’ brother and mother are employed as dentists at Onsite Dental. The Company has various sublease agreements with Onsite Dental. For such space, the Company recognized sublease income of approximately $0.2 million and $0.4 million during the three and six months ended June 30, 2023, respectively, and $0.2 million and $0.3 million during the three and six months ended June 30, 2022, respectively, which was recorded within the caption "Other Income (Expense)" in the accompanying condensed consolidated statements of operations. As of June 30, 2023, an immaterial amount was due to the Company in relation to these agreements and recorded in the caption accounts receivable. On October 9, 2020, the Company entered into a dental services agreement with DEP pursuant to which DEP agreed to provide dental services for managed care members of the Company. The Company recognized expenses of an immaterial amount and $1.5 million during the three and six months ended June 30, 2022, respectively, which was recorded within the caption "Direct Patient Expense". As of June 30, 2023, no balance was due to DEP. Subsequent to Onsite Dental acquiring DEP on April 14, 2022, the Company entered into a new dental services administration agreement with Onsite Dental to provide dental services for the Company's managed care members and terminated the prior contract with DEP. The Company paid in respect of the dental services provided to Cano Health's members by Onsite Dental in the amount of approximately $2.4 million and $6.4 million for the three and six months ended June 30, 2023, respectively, and $3.1 million for the three and six months ended June 30, 2022. As of June 30, 2023, the Company owed $2.2 million to Onsite Dental. Operating Leases The Company indirectly leased a medical space from the Company's COO. The Company paid approximately $0.2 million and $0.3 million for the three and six months ended June 30, 2023 to Humana, Inc., a managed care organization with whom the Company has entered into multi-year agreements (“Humana”), and in turn, Humana paid the Company's COO $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively. In addition, the Company paid $0.2 million and $0.2 million to the Humana and Humana paid the Company's COO $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively. The Company's COO leased three other properties directly to the Company and was paid $0.1 million and $0.2 million for th e three and six months ended June 30, 2023 and $0.1 million a nd $0.1 million for the three and six months ended June 30, 2022, respectively. General Contractor Agreements The Company has entered into various general contractor agreements with Cano Builders, USA, Inc. ("Cano Builders"), a company that is controlled by Jose Hernandez, the father of Dr. Hernandez, pursuant to which Cano Builders performs leasehold improvements at various Company locations, as well as performing various repairs and related maintenance. Payments made to Cano Builders pursuant to these general contractor agreements, as well as amounts paid for repairs and maintenance, totaled approximately $0.3 million and $0.8 million for the three and six months ended June 30, 2023, respectively, and $1.9 million and $3.6 million for the three and six months, ended June 30, 2022, respectively. As of June 30, 2023, the Company owed $0.2 million to Cano Builders. Other Dr. Hernandez' sister-in-law is employed at the Company as its director of payroll and her annualized cash compensation is approximately $135,000. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION 2021 Stock Option and Incentive Plan The Company maintains the 2021 Stock Option and Incentive Plan (the “2021 Stock Plan”) and the 2021 Employee Stock Purchase Plan (“2021 ESPP”) to encourage and enable the current and future officers, employees, directors, and consultants of the Company and its affiliates to obtain ownership in the Company and align their interests with those of the Company. The aggregate number of shares authorized for issuance under the 2021 Stock Plan will not exceed 52.0 million shares of stock. The aggregate number of shares authorized for issuance under the 2021 ESPP will not exceed 4.7 million. On January 1 of each year through January 1, 2031 the number of shares of Class A common stock reserved and available for issuance under the 2021 ESPP shall be cumulatively increased by the lesser of (i) 15.0 million shares of Class A common stock, (ii) 1.0% of the number of shares of Class A common stock issued and outstanding on the immediately preceding December 31st, or (iii) such lesser number of shares as determined by the Compensation Committee, which is the plan administrator. The 2021 Stock Plan provides for the grant of incentive and nonqualified stock option, restricted stock units (“RSUs”), restricted share awards, stock appreciation awards, unrestricted stock awards, and cash-based awards to the Company's employees, directors and consultants. Stock Options On June 3, 2021, in connection with closing the Business Combination, the Company granted 12.8 million stock options with market conditions (“Market Condition Awards”) to several of the Company's executive officers and directors. The Market Condition Awards are eligible to vest when the Company’s stock price meets specified hurdle prices and stays above those prices for 20 consecutive days after June 3, 2021 and before June 3, 2024 (i.e., the period from grant to the end date of the performance period). Once the market condition is satisfied, the applicable percentage of the Market Condition Awards will vest 50% on each of the first and second anniversaries, subject to the optionee remaining employed. The unrecognized compensation cost of the Market Condition Awards as of June 30, 2023 was $8.5 million, which is expected to be recognized over the weighted average remaining service period of 1.1 years . Further, on March 15, 2022, March 31, 2023 and April 11, 2023, in connection with achieving certain performance metrics, the Company granted a total of 2.3 million stock options with service conditions ("Service Condition Awards") to several of the Company's executive officers. The Service Condition Awards vest over 4 years, with 25% of the shares underlying the award vesting at the end of each successive 1-year period thereafter, subject to the optionee remaining employed. The unrecognized compensation cost of the Service Condition Awards as of June 30, 2023 was $1.7 million, which is expected to be recognized over the weighted average remaining service period of 1.9 years. Stock Option Valuation The Company uses two valuation methods to determine the fair value of the stock options granted under the 2021 Stock Plan. The Monte-Carlo simulation model is used to estimate the fair value of the Market Condition Awards . The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. The fair values were calculated using the Monte-Carlo model with the following assumptions as of the June 3, 2021 grant date: As of June 3, 2021 Closing Cano Health share price as of valuation date $ 14.75 Risk-free interest rate 1.68% - 2.0% Expected volatility 45.0% Expected dividend yield 0.0% Expected cost of equity 9.0% The Black-Scholes valuation method is used to determine the fair value of the Service Condition Awards. The Black-Scholes valuation model requires the input of assumptions regarding the expected term, expected volatility, dividend yield and risk-free interest to estimate the fair value of the stock options. The fair values of the Service Condition Awards were calculated using the following assumptions as of the March 15, 2022, March 31, 2023 and April 11, 2023 grant dates: As of March 15, 2022 Strike price $ 6.03 Risk-free interest rate 2.1% Expected volatility 70.0% Expected dividend yield 0.0% Expected term 6.25 As of March 31, 2023 Strike price $ 0.91 Risk-free interest rate 3.5% Expected volatility 100.0% Expected dividend yield 0.0% Expected term 6.25 As of April 11, 2023 Strike price $ 1.50 Risk-free interest rate 3.5% Expected volatility 100.0% Expected dividend yield 0.0% Expected term 6.25 A summary of the status of unvested options granted under the 2021 Stock Plan through June 30, 2023 is presented below: Market-Based Stock Options Service-Based Stock Options Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance, December 31, 2021 12,703,698 $ 4.23 — — Granted — — 435,141 $ 3.88 Forfeitures (262,146) 4.23 — — Balance, June 30, 2022 12,441,552 $ 4.23 435,141 $ 3.88 Balance, December 31, 2022 10,634,998 $ 4.23 405,652 $ 3.88 Granted — — 1,864,628 0.84 Forfeitures (904,906) 4.23 (16,393) 1.22 Balance, June 30, 2023 9,730,092 $ 4.23 2,253,887 $ 1.38 Restricted Stock Units On May 31, 2023, the Company granted certain executives 4.9 million performance-based RSU's ("PRSU's") that allow the executives to earn 50% to 150% of their target award, subject to achieving a performance condition based on the Company's 3-year cumulative Adjusted EBITDA for the performance period starting on January 1, 2023 and ending on December 31, 2025. The fair value of the PRSU's was computed using the closing price of the Company's Class A common stock on May 31, 2023. As of June 30, 2023, while the performance condition has not been earned, the Company is recording expense at 100% of the overall target awards and will adjust the expense based on the Company's performance going forward. In addition, the Company granted 11.1 million service based RSU's during the quarter. The fair value of the RSUs is based on the closing price of the Company’s Class A common stock on the grant date. The unrecognized compensation cost of the outstanding RSUs as of June 30, 2023 was $49.8 million for service based awards and $5.2 million for PRSUs. The RSUs and PRSUs are expected to be recognized over the weighted average remaining service period of 1.7 years and 1.7 years, respectively. A majority of the RSUs vest in equal annual installments over a period of 4 years from the grant date. Certain of the Company's executives received RSUs which vest in equal annual installments over a 2-year period. Further, RSUs granted to non-employee members of the Board of Directors vest over the lesser of one year or upon the next annual stockholders' meeting. A summary of the status of unvested RSUs granted under the 2021 Stock Plan through June 30, 2023 is presented below: Restricted Stock Units Performance - Restricted Stock Units Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance, December 31, 2021 4,460,772 $ 14.43 706,750 $ 12.73 Granted 11,326,599 5.38 — — Vested (717,138) 12.44 (93,493) 13.37 Forfeitures (293,538) 7.62 — — Balance, June 30, 2022 14,776,695 $ 7.73 613,257 $ 12.63 Balance, December 31, 2022 10,672,574 $ 7.64 280,477 $ 13.36 Granted 11,174,399 1.33 4,900,598 1.36 Vested (1,416,575) 7.10 (93,493) 13.37 Forfeitures (1,550,430) 4.83 — — Balance, June 30, 2023 18,879,968 $ 4.18 5,087,582 $ 1.80 The Company recorded compensation expenses related to stock options and RSUs of $1.7 million and $10.6 million for the three and six months ended June 30, 2023, respectively, and $17.4 million and $30.6 million for the three and six months ended June 30, 2022, respectively. The Company recorded compensation expense related to the 2021 ESPP of $0.4 million and $0.7 million for the three and six months ended June 30, 2023, respectively, and $0.4 million and $1.0 million for the three and six months ended June 30, 2022, respectively. On June 16, 2023, Dr. Marlow Hernandez, the Company’s former CEO, resigned from such position (while remaining a member of the Company’s Board of Directors), in connection with which the Company and Dr. Hernandez entered into a previously disclosed Letter Agreement dated June 18, 2023, which resulted in the modification of Dr. Hernandez’ previously issued equity grants. The modifications resulted in the Company allowing continued vesting of his unvested stock-based compensation awards after cessation of his employment with the Company. This resulted in reversal of previously recognized compensation cost of $12.7 million and the issuance of the modified award resulted in recognition of $5.9 million in additional compensation cost. The total stock-based compensation expense related to all the stock-based awards granted by the Company is reported in the Company's condensed consolidated statement of operations as compensation expense within the selling, general and administrative expense caption. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Vendor Agreements The Company, through its subsidiaries Comfort Pharmacy, LLC, Comfort Pharmacy 2, LLC, and Belen Pharmacy Group, LLC, entered into a multi-year Prime Vendor Agreement ("PVA") with a pharmaceutical wholesaler, effective November 1, 2020, that continues through October 31, 2023. This agreement extends on a month-to-month basis thereafter until either party gives 90 days' written notice to terminate. The pharmaceutical wholesaler serves as the Company’s primary wholesale supplier for branded and generic pharmaceuticals. The agreement contains a provision that requires average monthly net purchases of $0.8 million, and if the minimum is not met, the vendor may adjust the pricing of goods. A Joinder Agreement was entered into on December 1, 2020, which amended the PVA to include IFB Pharmacy, LLC, a fully consolidated subsidiary, under the agreement as of this date. As a result of our acquisition of University Health Care and its affiliates (“University”) in June 2021, the Company assumed the vendor agreement in 2021 that University, through its subsidiary University Health Care Pharmacy, Inc., had with a second pharmaceutical vendor. The agreement, effective through December 2023, contains a provision that requires average monthly net purchases of $0.6 million, and if the minimum is not met, the vendor may adjust the pricing of goods. Management believes it has satisfied the minimum requirements of these agreements for the six months ended June 30, 2023 and 2022. Legal Matters On March 18, 2022, a purported stockholder of the Company filed a putative class action lawsuit in the U.S. District Court for the Southern District of Florida against the Company, certain current officers and certain former officers of Jaws , captioned Alberto Gonzalez v. Cano Health, Inc. f/k/a Jaws Acquisition Corp., et al. (No. 1:22-cv-20827) . An amended complaint was filed on February 21, 2023. Defendants moved to dismiss the amended complaint on April 7, 2023. The lawsuit alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against all defendants in connection with allegedly false and misleading statements made by the Company regarding compliance with GAAP and the timing of its revenue recognition from Medicare Advantage contracts in 2021. The lawsuit seeks, among other things, certification of a class action and unspecified compensatory damages for purchasers of the Company’s common stock between May 7, 2021 and February 25, 2022 , as well as attorneys’ fees and costs. The Company believes it has meritorious defenses and intends to vigorously defend against the allegations. On April 28, 2023, three former directors of the Company (Barry Sternlicht and Elliot Cooperstone and Dr. Lewis Gold), filed a lawsuit in the Court of Chancery of the State of Delaware, captioned Sternlicht et al. v. Hernandez et al., C.A. No. 2023-0477-PAF, against the Company and its Board of Directors. The lawsuit claimed a breach of fiduciary duties by the Board and sought to re-open the Company’s advance-notice nomination window for stockholder notice of director candidate nominations and business proposals for the Company’s 2023 annual stockholders’ meeting. On June 14, 2023, the Court denied the plaintiffs’ motion for a preliminary injunction of the Company’s 2023 annual stockholders’ meeting, and that meeting went forward on June 15, 2023, as previously disclosed in a Current Report on Form 8-K filed with the SEC on June 22, 2023. On August 3, 2023, the plaintiffs voluntarily dismissed, without prejudice, their remaining claims. The Company is exposed to various other asserted and unasserted potential claims encountered in the normal course of business. Management believes that the resolution of these matters will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company generated a $1.9 million tax benefit for the three and six months ended June 30, 2023, resulting in an effective tax rate of 0.7% and 0.6%, respectively, as compared to an effective tax rate of (5.9)% and (14.8)% for the three and six months ended June 30, 2022. The effective tax rate for the periods presented differs from the statutory U.S. tax rate primarily as a result of the income allocated to non-controlling interests and the valuation allowance recorded against the Company’s deferred tax assets. The Company evaluates the realizability of its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax assets may not be realized. The Company does not have any uncertain tax positions ("UTPs") as of June 30, 2023. While the Company currently does not have any UTPs, it is foreseeable that the calculation of the Company’s tax liabilities may involve dealing with uncertainties in the application of complex tax laws and regulations in multiple jurisdictions across the Company’s operations. The Company files income tax returns in the U.S. with Federal, State and local agencies, and in Puerto Rico. The Company, and its subsidiaries are subject to U.S. Federal, state and local tax examinations for tax years starting in 2019. In addition, the Puerto Rico subsidiary group is subject to U.S. Federal, state and foreign tax examinations for tax years starting in 2018. The Internal Revenue Service ("IRS") commenced an examination of PCIH’s income tax return for the year ended December 31, 2020 in the first quarter of 2023. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to the tax examination and that any settlement related thereto will not have a material adverse effect on the Company’s consolidated financial statements; however, there can be no assurances as to the ultimate outcome until the examination is completed. The Company has analyzed filing positions in the Federal, State, local and foreign jurisdictions where it is required to file income tax returns for all open tax years and does not believe any tax uncertainties exist. Tax Receivable Agreement Upon the completion of the Business Combination, Cano Health became a party to the Tax Receivable Agreement ("TRA"). Under the terms of that agreement, Cano Health generally is required to pay to the Seller and to each other person from time to time that becomes a “TRA Party” under the Tax Receivable Agreement, 85% of the tax savings, if any, that Cano Health is deemed to realize in certain circumstances as a result of certain tax attributes that exist following the Business Combination and that are created thereafter, including as a result of payments made under the Tax Receivable Agreement. To the extent payments are made pursuant to the Tax Receivable Agreement, Cano Health generally is required to pay to the Sponsor and to each other person from time to time that becomes a “Sponsor Party” under the Tax Receivable Agreement such Sponsor Party’s proportionate share of an amount equal to such payments multiplied by a fraction with the numerator of 0.15 and the denominator of 0.85. As a result of the payments to the TRA Party and Sponsor Party we generally are required to pay an amount equal to, but not in excess of the tax benefit realized from the tax attributes subject to the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless Cano Health exercises its right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement or certain other acceleration events occur. The Tax Receivable Agreement liability is determined and recorded under ASC 450, “Contingencies”, as a contingent liability; therefore, we are required to evaluate whether the liability is both probable and the amount can be estimated. Since the Tax Receivable Agreement liability is payable upon cash tax savings and we have determined that positive future taxable income is not probable based on Cano Health's historical loss position and other factors that make it difficult to rely on forecasts, we have not recorded the Tax Receivable Agreement liability as of June 30, 2023. We will continue to evaluate this on a quarterly basis which may result in future adjustments to the treatment. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE The following table sets forth the net income (loss) and the computation of basic and diluted per common stock for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except shares and per share data) 2023 2022 2023 2022 Numerator: Net income (loss) $ (270,745) $ (14,564) $ (331,330) $ (14,649) Less: net income (loss) attributable to non-controlling interests (129,992) (9,231) (162,427) (9,976) Net income (loss) attributable to Class A common stockholders (140,753) (5,333) (168,903) (4,673) Dilutive effect of RSU's — — — — Dilutive effect of Class B common stock (129,992) (9,231) — (9,976) Net income (loss) attributable to Class A common stockholders - Diluted $ (270,745) $ (14,564) $ (168,903) $ (14,649) Basic and Diluted Earnings Per Share denominator: Weighted average common stock outstanding - basic 274,640,987 210,053,037 257,317,776 200,783,129 Net income (loss) per share - basic $ (0.51) $ (0.03) $ (0.66) $ (0.02) Diluted Earnings Per Share: Dilutive effect of RSU's — — — — Dilutive effect of Class B common stock on weighted average common stock outstanding 253,208,965 264,527,434 — 264,527,434 Weighted average common stock outstanding - diluted 527,849,952 474,580,471 257,317,776 465,310,563 Net income (loss) per share - diluted $ (0.51) $ (0.03) $ (0.66) $ (0.03) The outstanding Company’s Class B common stock does not represent economic interests in the Company, and as such, is not included in the denominator of the basic net loss per share calculation. The Class B common stock was dilutive for the three months ended June 30, 2023. On August 11, 2021, the Company issued 2,720,966 shares of 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 transaction's closing date. These shares were deposited in escrow and will be released to the seller upon the satisfaction of certain performance metrics during 2022 and 2023. The final number of shares to be issued to the seller, if any, from the escrow account will be calculated by multiplying the initial share amount by an earned share percentage in accordance with the purchase agreement and subtracting any forfeited indemnity shares . The dilutive effects of these shares were excluded from the diluted earnings per share calculation for the six months ended June 30, 2023 because they were anti-dilutive. The table below presents the Company’s potentially dilutive securities: As of June 30, 2023 Class B common stock 253,208,965 Public Warrants 22,999,900 Private Placement Warrants 10,533,292 Restricted Stock Units 23,967,551 Stock Options 11,983,979 Contingent Shares Issued in Connection with Acquisitions 2,720,966 ESPP Shares 1,345,325 Potential Common Stock Equivalents 326,759,978 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATIONThe Company organizes its operations into one reportable segment. The Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews financial information and makes decisions about resource allocation based on the Company’s responsibility to deliver high-quality primary medical care services to the Company’s patient population. For the periods presented, all of the Company’s revenues were earned in the U.S., including Puerto Rico, and all of the Company’s long-lived assets were located in the U.S. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSExcept as set forth in Note 12, "Debt," the Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income | $ (140,753) | $ (5,333) | $ (168,903) | $ (4,673) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 shares | Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
David Armstrong [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On June 27, 2023, David Armstrong, the Company’s Chief Compliance Officer & General Counsel (the “Executive”), entered into a Rule 10b5-1 trading plan (the “10b5-1 Plan”) intended to satisfy the affirmative defense of the SEC’s Rule 10b5–1(c). Under the 10b5-1 Plan, the Executive may sell a maximum of 387,500 shares of the Company’s Class A common stock (the “Maximum Plan Shares”). Following a mandatory cooling-off period, trading under the 10b5-1 Plan is expected to commence on or about September 27, 2023. The 10b5-1 Plan will terminate on the earlier of: (i) December 31, 2025; (ii) the date on which the Maximum Plan Shares have been sold; or (iii) such date the 10b5-1 Plan is otherwise terminated according to its terms. Cessation of Employment On August 8, 2023, Dr. Richard B. Aguilar ceased employment as the Company’s Chief Clinical Officer and in exchange for his entering into a Separation Agreement and Release of Claims, which conforms in all material respects with the form of separation agreement and release of claims attached to Dr. Aguilar’s Employment Agreement (filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2021), Dr. Aguilar is eligible for the severance benefits described in Sections 6(a) and 6(c) of his Employment Agreement. 2023 Side-Car Credit Agreement Amendment On August 10, 2023, the Borrower entered into the 2023 Side-Car Amendment, as described in Note 12, “Debt,” and in “Liquidity and Capital Resources” in the MD&A. | |
Name | David Armstrong | |
Title | Chief Compliance Officer & General Counsel | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | June 27, 2023 | |
Arrangement Duration | 826 days | |
Aggregate Available | 387,500 | 387,500 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The portion of an entity not wholly-owned by the Company is presented as non-controlling interests. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company. The Company has interests in various entities and considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights (“variable interest entities” or “VIEs”) and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Included in the Company's consolidated results are Cano Health Texas, PLLC, Cano Health Nevada, |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassifications impacted the classification of: repayments of equipment loans, repayment of finance lease obligation and employee stock purchase plan contributions within the statement of cash flows. Additionally, there were reclassifications related to revenue and direct patient expense within variable interest entities. These reclassifications had no impact on net loss as previously presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements through June 30, 2023 and believes that none of them will have a material effect on our unaudited condensed consolidated financial statements. |
Fair Value Measurements | 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. |
REVENUE AND ACCOUNTS RECEIVAB_2
REVENUE AND ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue | The Company’s revenue streams for the three and six months ended June 30, 2023 and 2022, respectively, were as follows: Three Months Ended June 30, 2023 2022 (in thousands) Revenue $ Revenue % Revenue $ Revenue % Capitated revenue Medicare $ 695,612 90.7 % $ 602,613 87.4 % Other capitated revenue 47,712 6.2 % 52,880 7.6 % Total capitated revenue 743,324 96.9 % 655,493 95.0 % Fee-for-service and other revenue Fee-for-service 4,282 0.6 % 9,701 1.4 % Pharmacy 15,559 2.0 % 12,759 1.9 % Other 3,581 0.5 % 11,420 1.7 % Total fee-for-service and other revenue 23,422 3.1 % 33,880 5.0 % Total revenue $ 766,746 100.0 % $ 689,373 100.0 % Six Months Ended June 30, 2023 2022 (in thousands) Revenue $ Revenue % Revenue $ Revenue % Capitated revenue Medicare $ 1,489,240 91.2 % $ 1,217,831 87.5 % Other capitated revenue 95,157 5.8 % 112,013 8.0 % Total capitated revenue 1,584,397 97.0 % 1,329,844 95.5 % Fee-for-service and other revenue Fee-for-service 15,975 1.0 % 19,671 1.4 % Pharmacy 27,664 1.7 % 24,274 1.7 % Other 5,619 0.3 % 19,726 1.4 % Total fee-for-service and other revenue 49,258 3.0 % 63,671 4.5 % Total revenue $ 1,633,655 100.0 % $ 1,393,515 100.0 % |
Schedule of Account Receivable Balance | The Company's accounts receivable balances are summarized for the periods indicated below. The Company’s accounts receivable are presented net of the unpaid service provider costs. A right of offset exists when all of the following conditions are met: 1) each of the two parties owed the other determinable amounts; 2) the reporting party has the right to offset the amount owed with the amount owed to the other party; 3) the reporting party intends to offset; and 4) the right of offset is enforceable by law. The Company believes all of the aforementioned conditions existed as of June 30, 2023 and December 31, 2022. As of (in thousands) June 30, 2023 December 31, 2022 Accounts receivable $ 459,633 $ 388,122 Medicare risk adjustment 24,868 49,586 Unpaid service provider costs (377,337) (203,892) Accounts receivable, net $ 107,164 $ 233,816 |
Schedule of Concentration of Risk | Three Months Ended Six Months Ended June 30, 2023 2022 2023 2022 Revenues 64.6% 64.7% 66.3% 64.9% Three payors represented, in aggregate, the following percentages of accounts receivable as of June 30, 2023 and December 31, 2023, respectively. As of June 30, 2023 December 31, 2022 Accounts receivable, net 36.6% 56.3% |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid and Other Current Assets | Prepaid expenses and other current assets consisted of the following as of June 30, 2023 and December 31, 2022, respectively: (in thousands) June 30, 2023 December 31, 2022 Third party receivables $ — $ 60,400 Contingent consideration asset 14,500 — Other 16,950 19,203 Prepaid expenses and other current assets $ 31,450 $ 79,603 |
UNPAID SERVICE PROVIDER COSTS (
UNPAID SERVICE PROVIDER COSTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Activity in Unpaid Service Provider Costs | Activity in unpaid service provider costs for the six months ended June 30, 2023 and 2022, respectively, is summarized below: (in thousands) 2023 2022 Balance as of January 1, $ 318,554 $ 129,110 Incurred related to: Current year 1,270,245 843,427 Prior years 2,317 2,576 1,272,562 846,003 Paid related to: Current year 885,119 543,984 Prior years 286,528 120,997 1,171,647 664,981 Balance as of June 30, $ 419,469 $ 310,132 |
GOODWILL (Tables)
GOODWILL (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Net Carrying Amount of Goodwill | Activity impacting the Company's goodwill balance during the six months ended June 30, 2023 is summarized below: (in thousands) Goodwill as of December 31, 2022 $ 480,375 Other (331) Goodwill as of June 30, 2023 $ 480,044 |
PAYOR RELATIONSHIPS AND OTHER_2
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Total Intangible, Net | As of June 30, 2023, the Company’s total intangibles, net, consisted of the following: (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangibles: Trade names $ 1,409 $ (1,024) $ 385 Brand names 183,877 (43,612) 140,265 Non-compete agreements 85,461 (37,115) 48,346 Customer relationships 880 (257) 623 Payor relationships 631,186 (79,273) 551,913 Provider relationships 19,842 (9,700) 10,142 Total intangibles, net $ 922,655 $ (170,981) $ 751,674 As of December 31, 2022, the Company’s total intangibles, net consisted of the following: (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangibles: Trade names $ 1,409 $ (945) $ 464 Brand names 183,878 (29,169) 154,709 Non-compete agreements 85,476 (28,341) 57,135 Customer relationships 880 (233) 647 Payor relationships 631,214 (63,510) 567,704 Provider relationships 19,842 (6,738) 13,104 Total intangibles, net $ 922,699 $ (128,936) $ 793,763 |
Schedule of Expected Amortization Expense of The Intangible Assets | Expected amortization expense for the Company’s existing amortizable intangibles for the next 5 years, and thereafter, as of June 30, 2023 is as follows: (in thousands) Amount 2023 - remaining $ 40,835 2024 60,855 2025 57,166 2026 46,996 2027 40,230 Thereafter 505,592 Total $ 751,674 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments for Operating Leases | Future minimum lease payments under operating and finance leases as of June 30, 2023 were as follows: (in thousands) Operating Finance Total 2023 - remaining $ 19,121 $ 2,075 $ 21,196 2024 36,796 3,941 40,737 2025 33,984 3,515 37,499 2026 31,232 2,922 34,154 2027 28,651 801 29,452 Thereafter 99,961 — 99,961 Total minimum lease payments 249,745 13,254 262,999 Less: amount representing interest (60,815) (2,512) (63,327) Lease liabilities $ 188,930 $ 10,742 $ 199,672 |
Schedule of Future Minimum Lease Payments for Finance Leases | Future minimum lease payments under operating and finance leases as of June 30, 2023 were as follows: (in thousands) Operating Finance Total 2023 - remaining $ 19,121 $ 2,075 $ 21,196 2024 36,796 3,941 40,737 2025 33,984 3,515 37,499 2026 31,232 2,922 34,154 2027 28,651 801 29,452 Thereafter 99,961 — 99,961 Total minimum lease payments 249,745 13,254 262,999 Less: amount representing interest (60,815) (2,512) (63,327) Lease liabilities $ 188,930 $ 10,742 $ 199,672 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities consisted of the following as of June 30, 2023 and December 31, 2022, respectively: (in thousands) June 30, 2023 December 31, 2022 Service fund liability 1 $ 20,934 $ 16,652 Other 7,076 7,839 Other current liabilities $ 28,010 $ 24,491 |
CONTRACT LIABILITIES (Tables)
CONTRACT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Significant Changes In The Contract Liabilities | A summary of significant changes in the contract liabilities balance during the period is as follows: (in thousands) For the three months ended June 30, 2023 Balance at March 31, 2023 $ 5,786 Revenues recognized from current period increases (675) Balance at June 30, 2023 $ 5,111 (in thousands) For the six months ended June 30, 2023 Balance at December 31, 2022 $ 6,461 Revenues recognized from current period increases (1,350) Balance at June 30, 2023 $ 5,111 Of the June 30, 2023 contract liabilities balance, the Company expects to recognize the following amounts as revenue in the succeeding years: Years ended December 31, Amount (in thousands) 2023 - remaining $ 1,349 2024 2,514 2025 1,183 2026 65 Total $ 5,111 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | At June 30, 2023, and December 31, 2022, the Company's current notes payable were as follows:. Current Notes Payable As of, (in thousands) June 30, 2023 December 31, 2022 2023 Term Loan 1 157,380 — Current portion of CS term loan 6,444 6,444 163,824 6,444 Less: Debt issuance costs (54,157) — Current notes payable, net of debt issuance costs $ 109,667 $ 6,444 1. Includes $7.4 million of Paid-in-Kind ("PIK") interest that was incurred under the 2023 Term Loan through June 30, 2023. At June 30, 2023 and December 31, 2022, the Company’s long-term notes payable were as follows: Long-Term Notes Payable As of, (in thousands) June 30, 2023 December 31, 2022 CS Term Loan $ 628,322 $ 631,544 CS Revolving Line of Credit 10,000 84,000 Senior Notes 300,000 300,000 938,322 1,015,544 Less: Debt issuance costs (16,090) (17,738) Long-term notes payable, net of debt issuance costs $ 922,232 $ 997,806 |
Schedule of Maturities of Long-term Debt | The following table sets forth the Company’s future principal payments as of June 30, 2023 , assuming acceleration of principal and capitalized paid-in-kind interest related to the 2023 Term Loan into calendar year 2024 : (in thousands) Year ending December 31, Amount 2023 $ 3,222 2024 163,824 2025 6,444 2026 6,444 2027 622,212 Thereafter 300,000 Total $ 1,102,146 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements | 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 June 30, 2023 December 31, 2022 Exercise price $11.50 $11.50 Stock price $1.39 $1.37 Term (years) 2.9 3.4 Risk free interest rate 4.5% 4.1% Dividend yield None None Public warrant price $0.21 $0.22 |
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | 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 June 30, 2023 : (in thousands) Carrying Quoted Prices in Significant Significant Liabilities and assets measured at fair value on a recurring basis: Contingent consideration liability $ 1,400 $ — $ — $ 1,400 Contingent consideration asset (14,500) — — (14,500) Due to sellers liabilities 45,122 45,122 — — Public Warrant Liabilities 4,830 4,830 — — Private Placement Warrant Liabilities 2,212 — — 2,212 Total liabilities and assets measured at fair value $ 39,064 $ 49,952 $ — $ (10,888) (in thousands) Carrying Quoted Prices in Significant Significant 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 |
Schedule of Liabilities Measured At Fair Value Using Significant Unobservable Inputs | The following table includes a roll forward of the amounts for the three and six months ended June 30, 2023 and 2022 and for liabilities measured at fair value: Fair Value Measurements for the Three Months Ended June 30, (in thousands) 2023 2022 Balance as of March 31, $ 46,865 $ 86,744 Change in fair value of contingent consideration (11,800) (5,764) Change in fair value of warrants 1,677 (30,175) Change in fair value of due to sellers 2,322 — Balance as of June 30, $ 39,064 $ 50,805 Fair Value Measurements for the Six Months Ended June 30, (in thousands) 2023 2022 Balance as of January 1, $ 67,113 $ 118,567 Change in fair value of contingent consideration (15,900) (10,425) Change in fair value of warrants (331) (57,337) Change in fair value of due to sellers 3,461 — Due to seller payments (15,279) — Balance as of June 30, $ 39,064 $ 50,805 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Aggregated VIE Assets and Liabilities and Performance | The table below illustrates the aggregated VIE assets and liabilities and performance for the Physicians Groups: (in thousands) June 30, 2023 December 31, 2022 Total Assets 1 $ 21,832 $ 16,247 Total Liabilities 1 $ 32,370 $ 19,445 Three Months Ended Six Months Ended (in thousands) 2023 2022 2023 2022 Total revenue $ 21,369 $ 24,754 $ 49,030 $ 39,072 Operating expenses: 2 Third-party medical costs 18,748 18,792 37,000 25,423 Direct patient expense 7,381 7,666 14,768 13,430 Total operating expenses 26,129 26,458 51,768 38,853 Net income $ (4,760) $ (1,704) $ (2,738) $ 219 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Fair Value of Stock Options Granted Using Monte-Carlo model and Service Condition Awards | The fair values were calculated using the Monte-Carlo model with the following assumptions as of the June 3, 2021 grant date: As of June 3, 2021 Closing Cano Health share price as of valuation date $ 14.75 Risk-free interest rate 1.68% - 2.0% Expected volatility 45.0% Expected dividend yield 0.0% Expected cost of equity 9.0% As of March 15, 2022 Strike price $ 6.03 Risk-free interest rate 2.1% Expected volatility 70.0% Expected dividend yield 0.0% Expected term 6.25 As of March 31, 2023 Strike price $ 0.91 Risk-free interest rate 3.5% Expected volatility 100.0% Expected dividend yield 0.0% Expected term 6.25 As of April 11, 2023 Strike price $ 1.50 Risk-free interest rate 3.5% Expected volatility 100.0% Expected dividend yield 0.0% Expected term 6.25 |
Schedule of Activity of Unvested Options | A summary of the status of unvested options granted under the 2021 Stock Plan through June 30, 2023 is presented below: Market-Based Stock Options Service-Based Stock Options Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance, December 31, 2021 12,703,698 $ 4.23 — — Granted — — 435,141 $ 3.88 Forfeitures (262,146) 4.23 — — Balance, June 30, 2022 12,441,552 $ 4.23 435,141 $ 3.88 Balance, December 31, 2022 10,634,998 $ 4.23 405,652 $ 3.88 Granted — — 1,864,628 0.84 Forfeitures (904,906) 4.23 (16,393) 1.22 Balance, June 30, 2023 9,730,092 $ 4.23 2,253,887 $ 1.38 |
Schedule of Unvested Restricted Stock Units and Performance Restricted Stock Activity | A summary of the status of unvested RSUs granted under the 2021 Stock Plan through June 30, 2023 is presented below: Restricted Stock Units Performance - Restricted Stock Units Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance, December 31, 2021 4,460,772 $ 14.43 706,750 $ 12.73 Granted 11,326,599 5.38 — — Vested (717,138) 12.44 (93,493) 13.37 Forfeitures (293,538) 7.62 — — Balance, June 30, 2022 14,776,695 $ 7.73 613,257 $ 12.63 Balance, December 31, 2022 10,672,574 $ 7.64 280,477 $ 13.36 Granted 11,174,399 1.33 4,900,598 1.36 Vested (1,416,575) 7.10 (93,493) 13.37 Forfeitures (1,550,430) 4.83 — — Balance, June 30, 2023 18,879,968 $ 4.18 5,087,582 $ 1.80 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net (Income) Loss Per Common Share | The following table sets forth the net income (loss) and the computation of basic and diluted per common stock for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except shares and per share data) 2023 2022 2023 2022 Numerator: Net income (loss) $ (270,745) $ (14,564) $ (331,330) $ (14,649) Less: net income (loss) attributable to non-controlling interests (129,992) (9,231) (162,427) (9,976) Net income (loss) attributable to Class A common stockholders (140,753) (5,333) (168,903) (4,673) Dilutive effect of RSU's — — — — Dilutive effect of Class B common stock (129,992) (9,231) — (9,976) Net income (loss) attributable to Class A common stockholders - Diluted $ (270,745) $ (14,564) $ (168,903) $ (14,649) Basic and Diluted Earnings Per Share denominator: Weighted average common stock outstanding - basic 274,640,987 210,053,037 257,317,776 200,783,129 Net income (loss) per share - basic $ (0.51) $ (0.03) $ (0.66) $ (0.02) Diluted Earnings Per Share: Dilutive effect of RSU's — — — — Dilutive effect of Class B common stock on weighted average common stock outstanding 253,208,965 264,527,434 — 264,527,434 Weighted average common stock outstanding - diluted 527,849,952 474,580,471 257,317,776 465,310,563 Net income (loss) per share - diluted $ (0.51) $ (0.03) $ (0.66) $ (0.03) |
Schedule of Diluted Net Income (Loss) Per Share | The table below presents the Company’s potentially dilutive securities: As of June 30, 2023 Class B common stock 253,208,965 Public Warrants 22,999,900 Private Placement Warrants 10,533,292 Restricted Stock Units 23,967,551 Stock Options 11,983,979 Contingent Shares Issued in Connection with Acquisitions 2,720,966 ESPP Shares 1,345,325 Potential Common Stock Equivalents 326,759,978 |
NATURE OF BUSINESS AND OPERAT_2
NATURE OF BUSINESS AND OPERATIONS (Details) $ / shares in Units, $ in Millions | 6 Months Ended | |||
Aug. 11, 2021 shares | Jun. 03, 2021 USD ($) $ / shares shares | Jun. 30, 2023 vote shares | Dec. 31, 2022 shares | |
Primary Care ITC Intermediate Holdings LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Percentage of controlling ownership | 35.10% | 52.60% | ||
Primary Care ITC Intermediate Holdings LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Percentage of non controlling ownership | 64.90% | 47.40% | ||
Jaws Acquisition Corp | Primary Care ITC Intermediate Holdings LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Payment to acquire business | $ | $ 466.5 | |||
Business combination, consideration transferred | $ | $ 3,534.9 | |||
Business acquisition equity interests issued or issuable shares (in shares) | 3,068,400,000 | |||
Business acquisition share price (in dollars per share) | $ / shares | $ 10 | |||
Jaws Acquisition Corp | PIPE Financing | ||||
Nature Of Business And Operations [Line Items] | ||||
Payment to acquire business | $ | $ 800 | |||
Class A | ||||
Nature Of Business And Operations [Line Items] | ||||
Common stock outstanding (in shares) | 281,517,626 | 224,118,566 | ||
Shares issued in PIPE financing (in shares) | 2,720,966 | |||
Class A | Jaws Acquisition Corp | PIPE Financing | ||||
Nature Of Business And Operations [Line Items] | ||||
Shares issued in PIPE financing (in shares) | 80,000,000 | |||
Class A | Jaws Acquisition Corp | Stock Outstanding Prior To Business Combination | ||||
Nature Of Business And Operations [Line Items] | ||||
Common stock outstanding (in shares) | 69,000,000 | |||
Class B common stock | ||||
Nature Of Business And Operations [Line Items] | ||||
Common stock outstanding (in shares) | 253,208,965 | 268,794,608 | ||
Class B common stock | Jaws Acquisition Corp | Primary Care ITC Intermediate Holdings LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Business acquisition equity interests issued or issuable shares (in shares) | 306,800,000 | |||
Class B common stock | Jaws Acquisition Corp | PCIH Shareholders | ||||
Nature Of Business And Operations [Line Items] | ||||
Stock issued during period, acquisitions (in shares) | 306,800,000 | |||
Class B common stock | Jaws Acquisition Corp | Founder Shares | Jaws Sponsor LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Common stock outstanding (in shares) | 17,250,000 | |||
Class B common stock | Primary Care ITC Intermediate Holdings LLC | ||||
Nature Of Business And Operations [Line Items] | ||||
Common stock, voting rights (in dollars per share) | vote | 1 |
GOING CONCERN (Details)
GOING CONCERN (Details) | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2023 USD ($) testingPeriod | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) testingPeriod | Jun. 30, 2022 USD ($) | Aug. 10, 2023 | Aug. 09, 2023 USD ($) | Jul. 28, 2023 USD ($) | Feb. 24, 2023 qtr | Sep. 30, 2021 | |
Debt Instrument [Line Items] | |||||||||
Net income (loss) | $ (270,745,000) | $ (14,564,000) | $ (331,330,000) | $ (14,649,000) | |||||
Cash from operations | $ (44,955,000) | $ (82,173,000) | |||||||
2023 Term Loan | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt covenant, leverage ratio (not to exceed) | 5.80 | ||||||||
Debt covenant, leverage ratio, number of consecutive fiscal quarter period | qtr | 4 | ||||||||
Leverage ratio, actual | 12 | 12 | |||||||
Debt covenant, times of cure exercised | 2 | 2 | |||||||
Debt covenant, times of cure exercised, period | testingPeriod | 4 | 4 | |||||||
2023 Term Loan | Secured Debt | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt covenant, times of cure exercised | 5 | 5 | |||||||
Credit Suisse Credit Agreement | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt covenant, times of cure exercised | 2 | 2 | |||||||
Debt covenant, times of cure exercised, period | testingPeriod | 4 | 4 | |||||||
Debt covenant, accelerated maturity amount outstanding | $ 50,000,000 | $ 50,000,000 | |||||||
Credit Suisse Credit Agreement | Secured Debt | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt covenant, times of cure exercised | 5 | 5 | |||||||
Senior Notes | Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt stated Interest rate | 6.25% | ||||||||
Debt covenant, holders of percentage in principal amount may immediately accelerate maturity | 30% | 30% | |||||||
Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Current liquidity amount | $ 101,500,000 | ||||||||
Restricted cash | $ 14,100,000 | ||||||||
Subsequent Event | 2023 Term Loan | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt covenant, new capital amount required to raise | $ 71,000,000 | ||||||||
Debt stated Interest rate | 16% | ||||||||
Debt, premium payment as percentage of outstanding principal amount | 5% |
REVENUE AND ACCOUNTS RECEIVAB_3
REVENUE AND ACCOUNTS RECEIVABLE - Schedule of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 766,746 | $ 689,373 | $ 1,633,655 | $ 1,393,515 |
Revenue % | 100% | 100% | 100% | 100% |
Capitated revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 743,324 | $ 655,493 | $ 1,584,397 | $ 1,329,844 |
Revenue % | 96.90% | 95% | 97% | 95.50% |
Fee-for-service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 23,422 | $ 33,880 | $ 49,258 | $ 63,671 |
Revenue % | 3.10% | 5% | 3% | 4.50% |
Medicare | Capitated revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 695,612 | $ 602,613 | $ 1,489,240 | $ 1,217,831 |
Revenue % | 90.70% | 87.40% | 91.20% | 87.50% |
Other capitated revenue | Capitated revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 47,712 | $ 52,880 | $ 95,157 | $ 112,013 |
Revenue % | 6.20% | 7.60% | 5.80% | 8% |
Other capitated revenue | Fee-for-service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 3,581 | $ 11,420 | $ 5,619 | $ 19,726 |
Revenue % | 0.50% | 1.70% | 0.30% | 1.40% |
Fee-for-service | Fee-for-service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 4,282 | $ 9,701 | $ 15,975 | $ 19,671 |
Revenue % | 0.60% | 1.40% | 1% | 1.40% |
Pharmacy | Fee-for-service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue $ | $ 15,559 | $ 12,759 | $ 27,664 | $ 24,274 |
Revenue % | 2% | 1.90% | 1.70% | 1.70% |
REVENUE AND ACCOUNTS RECEIVAB_4
REVENUE AND ACCOUNTS RECEIVABLE - Schedule of Account Receivable Balance (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Account Receivable [Line Items] | ||
Accounts receivable, net | $ 107,164 | $ 233,816 |
Accounts receivable | ||
Schedule of Account Receivable [Line Items] | ||
Accounts receivable, net | 459,633 | 388,122 |
Medicare risk adjustment | ||
Schedule of Account Receivable [Line Items] | ||
Accounts receivable, net | 24,868 | 49,586 |
Unpaid service provider costs | ||
Schedule of Account Receivable [Line Items] | ||
Accounts receivable, net | $ (377,337) | $ (203,892) |
REVENUE AND ACCOUNTS RECEIVAB_5
REVENUE AND ACCOUNTS RECEIVABLE - Concentration of Risk (Details) - Three Payors - Customer Concentration Risk | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Revenues | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk percentage | 64.60% | 64.70% | 66.30% | 64.90% | |
Accounts receivable, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk percentage | 36.60% | 56.30% |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Prepaid And Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Third party receivables | $ 0 | $ 60,400 |
Contingent consideration asset | 14,500 | 0 |
Other | 16,950 | 19,203 |
Prepaid expenses and other current assets | $ 31,450 | $ 79,603 |
PREPAID EXPENSES AND OTHER CU_4
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Narrative (Details) $ in Millions | 6 Months Ended | |
Jul. 07, 2023 shares | Jun. 30, 2023 USD ($) payorContract | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for credit loss | $ 62 | |
Other assets, allowance for credit losses | $ 62 | |
Number of acquired payor contracts | payorContract | 2 | |
Class A | Subsequent Event | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of common stock received to settle receivable (in shares) | shares | 199,000,001 |
UNPAID SERVICE PROVIDER COSTS -
UNPAID SERVICE PROVIDER COSTS - Schedule of Activity in Unpaid Service Provider Cost For The Period (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Unpaid Service Cost [Roll Forward] | ||
Beginning balance | $ 318,554 | $ 129,110 |
Unpaid service cost incurred in current year | 1,270,245 | 843,427 |
Unpaid service cost incurred in prior years | 2,317 | 2,576 |
Total | 1,272,562 | 846,003 |
Unpaid service cost paid in current year | 885,119 | 543,984 |
Unpaid service cost paid in prior years | 286,528 | 120,997 |
Total | 1,171,647 | 664,981 |
Ending balance | $ 419,469 | $ 310,132 |
UNPAID SERVICE PROVIDER COSTS_2
UNPAID SERVICE PROVIDER COSTS - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Increase (decrease) in estimates for unpaid service costs | $ 2.3 | $ 2.6 | ||
Unpaid service provider costs, accounts receivable | $ 20.9 | $ 18.5 | 20.9 | 18.5 |
Unpaid service provider costs, liabilities | 42.1 | 32.7 | 42.1 | 32.7 |
Loss contingency insurance policy, deductible | 0.2 | 0.2 | ||
Loss contingency insurance policy, maximum coverage limit | 2 | 2 | ||
Loss contingency insurance policy, premiums | 1.4 | 2.5 | 2.4 | 4.9 |
Loss contingency insurance policy, insurance reimbursements | $ 0.7 | $ 1.6 | $ 1.4 | $ 3.6 |
GOODWILL - Changes in Net Carry
GOODWILL - Changes in Net Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill as of December 31, 2022 | $ 480,375 |
Other | (331) |
Goodwill as of June 30, 2023 | $ 480,044 |
GOODWILL - Additional Informati
GOODWILL - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) reporting_unit | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Number of reporting units | reporting_unit | 1 |
Goodwill impairment loss | $ | $ 0 |
PAYOR RELATIONSHIPS AND OTHER_3
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET - Schedule of Total Intangible, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 922,655 | $ 922,699 |
Accumulated Amortization | (170,981) | (128,936) |
Total | 751,674 | 793,763 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,409 | 1,409 |
Accumulated Amortization | (1,024) | (945) |
Total | 385 | 464 |
Brand names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 183,877 | 183,878 |
Accumulated Amortization | (43,612) | (29,169) |
Total | 140,265 | 154,709 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 85,461 | 85,476 |
Accumulated Amortization | (37,115) | (28,341) |
Total | 48,346 | 57,135 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 880 | 880 |
Accumulated Amortization | (257) | (233) |
Total | 623 | 647 |
Payor relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 631,186 | 631,214 |
Accumulated Amortization | (79,273) | (63,510) |
Total | 551,913 | 567,704 |
Provider relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 19,842 | 19,842 |
Accumulated Amortization | (9,700) | (6,738) |
Total | $ 10,142 | $ 13,104 |
PAYOR RELATIONSHIPS AND OTHER_4
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 21 | $ 15.5 | $ 42.1 | $ 30.6 |
PAYOR RELATIONSHIPS AND OTHER_5
PAYOR RELATIONSHIPS AND OTHER INTANGIBLES, NET - Schedule of Expected Amortization Expense of The Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 - remaining | $ 40,835 | |
2024 | 60,855 | |
2025 | 57,166 | |
2026 | 46,996 | |
2027 | 40,230 | |
Thereafter | 505,592 | |
Total | $ 751,674 | $ 793,763 |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Rent expense | $ 9.7 | $ 8.2 | $ 19.3 | $ 15.4 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Finance lease, term of contract | 1 year | 1 year | ||
Operating lease, term of contract | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Finance lease, term of contract | 15 years | 15 years | ||
Operating lease, term of contract | 15 years | 15 years |
LEASES - Schedule of Lease Matu
LEASES - Schedule of Lease Maturity (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Operating | |
2023 - remaining | $ 19,121 |
2024 | 36,796 |
2025 | 33,984 |
2026 | 31,232 |
2027 | 28,651 |
Thereafter | 99,961 |
Total minimum lease payments | 249,745 |
Less: amount representing interest | (60,815) |
Lease liabilities | 188,930 |
Finance | |
2023 - remaining | 2,075 |
2024 | 3,941 |
2025 | 3,515 |
2026 | 2,922 |
2027 | 801 |
Thereafter | 0 |
Total minimum lease payments | 13,254 |
Less: amount representing interest | (2,512) |
Lease liabilities | 10,742 |
Total | |
2023 - remaining | 21,196 |
2024 | 40,737 |
2025 | 37,499 |
2026 | 34,154 |
2027 | 29,452 |
Thereafter | 99,961 |
Total minimum lease payments | 262,999 |
Less: amount representing interest | (63,327) |
Lease liabilities | $ 199,672 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Servicing Liabilities at Fair Value [Line Items] | ||
Service fund liability | $ 20,934 | $ 16,652 |
Other | 7,076 | 7,839 |
Other current liabilities | 28,010 | 24,491 |
IBNR | ||
Servicing Liabilities at Fair Value [Line Items] | ||
Service fund liability | 42,100 | 114,700 |
Accounts receivable, net | ||
Servicing Liabilities at Fair Value [Line Items] | ||
Service fund liability | $ 21,200 | $ 98,000 |
CONTRACT LIABILITIES - Addition
CONTRACT LIABILITIES - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Change In Contract With Customer Liability [Line Items] | ||||||
Contract liabilities | $ 5,111 | $ 5,111 | $ 5,786 | $ 6,461 | ||
Revenue recognized from contract liabilities | 675 | 1,350 | ||||
Humana Affiliate Provider | ||||||
Change In Contract With Customer Liability [Line Items] | ||||||
Contract liabilities | 5,100 | 5,100 | $ 6,500 | |||
Revenue recognized from contract liabilities | $ 700 | $ (700) | $ 1,400 | $ (1,300) |
CONTRACT LIABILITIES - Schedule
CONTRACT LIABILITIES - Schedule of Significant Changes In The Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | $ 5,786 | $ 6,461 |
Revenues recognized from current period increases | (675) | (1,350) |
Ending balance | $ 5,111 | $ 5,111 |
CONTRACT LIABILITIES - Revenue,
CONTRACT LIABILITIES - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 5,111 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,349 |
Revenue, remaining performance obligation, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 2,514 |
Revenue, remaining performance obligation, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,183 |
Revenue, remaining performance obligation, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 65 |
Revenue, remaining performance obligation, period | 12 months |
DEBT - Schedule of Notes Payabl
DEBT - Schedule of Notes Payable (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||||
Notes payable, current, gross | $ 163,824 | $ 163,824 | $ 6,444 | |
Debt Issuance Costs, Current, Net | (54,157) | (54,157) | 0 | |
Current notes payable, net of debt issuance costs | (109,667) | (109,667) | (6,444) | |
Notes payable, noncurrent, gross | 938,322 | 938,322 | 1,015,544 | |
Less: Debt issuance costs | (16,090) | (16,090) | (17,738) | |
Notes payable, net of debt issuance costs | 922,232 | 922,232 | 997,806 | |
Paid in kind interest expense | 7,380 | $ 0 | ||
CS Term Loan | ||||
Debt Instrument [Line Items] | ||||
Notes payable, noncurrent, gross | 628,322 | 628,322 | 631,544 | |
CS Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes payable, current, gross | 6,444 | 6,444 | 6,444 | |
CS Revolving Line Of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Notes payable, noncurrent, gross | 10,000 | 10,000 | 84,000 | |
2023 Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes payable, current, gross | 157,380 | 157,380 | 0 | |
Paid in kind interest expense | 5,300 | 7,400 | ||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Notes payable, noncurrent, gross | $ 300,000 | $ 300,000 | $ 300,000 |
DEBT - Credit Suisse Credit Agr
DEBT - Credit Suisse Credit Agreement (Details) | 6 Months Ended | ||||
Jan. 14, 2022 | Jun. 30, 2023 USD ($) testingPeriod | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||
Letters of credit outstanding | $ 5,700,000 | $ 7,200,000 | |||
Cash, cash equivalents and restricted cash | $ 27,721,000 | $ 47,847,000 | 27,329,000 | $ 163,170,000 | |
CS Term Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt effective interest rate | 9.76% | ||||
Credit Suisse Credit Agreement | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt covenant, accelerated maturity amount outstanding | $ 50,000,000 | ||||
Cash held as collateral | $ 13,000,000 | $ 4,400,000 | |||
Debt, variable rate exceeded credit spread adjustment | 0.50% | 0.50% | |||
Write off of deferred financing costs | $ 1,400,000 | ||||
Debt covenant, times of cure exercised | 2 | ||||
Debt covenant, times of cure exercised, period | testingPeriod | 4 | ||||
Credit Suisse Credit Agreement | Secured Debt | Maximum | |||||
Debt Instrument [Line Items] | |||||
Debt covenant, times of cure exercised | 5 | ||||
Credit Suisse Credit Agreement | Secured Debt | Secured Overnight Financing Rate (SOFR) | Debt Instrument, Variable Rate Component One | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 4% | ||||
Credit Suisse Credit Agreement | Secured Debt | Secured Overnight Financing Rate (SOFR) | Debt Instrument, Variable Rate Component Two | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.75% | ||||
Revolving Credit Facility | CS Revolving Line Of Credit | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt covenant, amount drawn as percentage of total commitment | 35% | ||||
Debt covenant, amount drawn | $ 42,000,000 | ||||
Line of credit facility, remaining borrowing capacity | $ 110,000,000 |
DEBT - 2023 Term Loan Agreement
DEBT - 2023 Term Loan Agreement (Details) | Apr. 24, 2023 shares | Mar. 08, 2023 shares | Feb. 24, 2023 USD ($) qtr $ / shares shares | Aug. 10, 2023 | Jul. 28, 2023 USD ($) | Jun. 30, 2023 testingPeriod |
Class A | ||||||
Debt Instrument [Line Items] | ||||||
Warrant, number of securities called (in shares) | shares | 29,500,000 | |||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | |||||
Warrants exercised during period (in shares) | shares | 7,900,000 | 21,600,000 | ||||
2023 Term Loan | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ | $ 150,000,000 | |||||
Debt covenant, leverage ratio (not to exceed) | 5.80 | |||||
Debt covenant, leverage ratio, number of consecutive fiscal quarter period | qtr | 4 | |||||
Leverage ratio, actual | 12 | |||||
Debt covenant, times of cure exercised | 2 | |||||
Debt covenant, times of cure exercised, period | testingPeriod | 4 | |||||
2023 Term Loan | Secured Debt | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Debt covenant, times of cure exercised | 5 | |||||
2023 Term Loan | Secured Debt | From triggering event to the 18-month anniversary of the initial funding date | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment premium, basis spread on variable rate | 0.50% | |||||
2023 Term Loan | Secured Debt | After the 18-month anniversary of the initial funding date up to (but not including) the date that is the 30-month anniversary of the initial funding date | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment premium in percentage equal to principle amount | 3% | |||||
2023 Term Loan | Secured Debt | After the 30-month anniversary of the initial funding date up to (but not including) the date that is the 42-month anniversary of the initial funding date | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment premium in percentage equal to principle amount | 2% | |||||
2023 Term Loan | Secured Debt | Payable quarterly in cash or in kind by adding such amount to principal balance | ||||||
Debt Instrument [Line Items] | ||||||
Debt stated Interest rate | 14% | |||||
2023 Term Loan | Secured Debt | Payment In Kind Period Ending On February 24, 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Debt stated Interest rate | 16% | |||||
2023 Term Loan | Secured Debt | Payable quarterly in cash | ||||||
Debt Instrument [Line Items] | ||||||
Debt stated Interest rate | 13% | |||||
2023 Term Loan | Secured Debt | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Debt covenant, new capital amount required to raise | $ | $ 71,000,000 | |||||
Debt stated Interest rate | 16% | |||||
Debt, premium payment as percentage of outstanding principal amount | 5% |
DEBT - Senior Notes (Details)
DEBT - Senior Notes (Details) - Senior Notes - Senior Notes - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 300,000,000 | |
Debt stated Interest rate | 6.25% | |
Debt effective interest rate | 6.66% | |
Debt covenant, holders of percentage in principal amount may immediately accelerate maturity | 30% | |
Prior to October 1, 2024 | ||
Debt Instrument [Line Items] | ||
Percentage of principal amount redeemed with net cash proceeds of certain equity offerings | 40% | |
Redemption price percentage | 106.25% | |
Percentage of principal amount redeemed | 100% | |
On or after October 1, 2024 | Minimum | ||
Debt Instrument [Line Items] | ||
Percentage of principal amount redeemed with net cash proceeds of certain equity offerings | 100% | |
On or after October 1, 2024 | Maximum | ||
Debt Instrument [Line Items] | ||
Percentage of principal amount redeemed with net cash proceeds of certain equity offerings | 103.13% |
DEBT - Schedule of Maturities o
DEBT - Schedule of Maturities of Long-Term Debt (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 3,222 |
2024 | 163,824 |
2025 | 6,444 |
2026 | 6,444 |
2027 | 622,212 |
Thereafter | 300,000 |
Total | $ 1,102,146 |
DEBT - Additional Information (
DEBT - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Debt issuance costs and debt discounts premium, net | $ 70,800 | $ 70,800 | $ 18,400 | ||
Interest expenses | 26,719 | $ 13,134 | 50,224 | $ 26,418 | |
Paid in kind interest expense | 7,380 | 0 | |||
Amortization of debt issuance costs | 500 | $ 900 | 1,600 | $ 1,600 | |
CS Term Loan, 2023 Senior Notes, And 2023 Senior Loans | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs and debt discounts premium, net | 70,200 | 70,200 | |||
CS Revolving Line Of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs and debt discounts premium, net | 300 | 300 | $ 300 | ||
2023 Term Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Paid in kind interest expense | $ 5,300 | $ 7,400 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||||
Apr. 24, 2023 shares | Mar. 08, 2023 shares | Jan. 31, 2023 shares | Aug. 11, 2021 USD ($) trading_day shares | Jun. 30, 2023 USD ($) shares | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) payorContract shares | Jun. 30, 2022 USD ($) | Feb. 24, 2023 $ / shares shares | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Fair value, liability, recurring basis, level two debt | $ 882,200 | $ 882,200 | $ 745,900 | ||||||||
Business acquisition, equity interest issued value assigned | $ 30,000 | ||||||||||
Threshold consecutive trading days | trading_day | 20 | ||||||||||
Performance metrics to earn payout | 100% | ||||||||||
Number of acquired payor contracts | payorContract | 2 | ||||||||||
Change in fair value of warrant liabilities | 1,677 | $ (30,175) | $ (331) | $ (57,337) | |||||||
2023 Term Loan | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Warrants outstanding (in shares) | shares | 29,400,000 | ||||||||||
2021 Asset Acquisition | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Reclassified to current portions due to sellers | $ 28,700 | ||||||||||
2022 Asset Acquisition | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Classified to current portions due to sellers | $ 16,700 | $ 16,700 | |||||||||
Class A | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Warrants exercised (in share) | shares | 21,600,000 | ||||||||||
Class A | 2023 Term Loan | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | ||||||||||
Public Warrants | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Warrants outstanding (in shares) | shares | 23,000,000 | 23,000,000 | |||||||||
Change in fair value of warrant liabilities | $ (200) | ||||||||||
Private Placement Warrants | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Warrants outstanding (in shares) | shares | 10,500,000 | 10,500,000 | |||||||||
Change in fair value of warrant liabilities | $ (100) | ||||||||||
Contingent Consideration | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Decrease in fair value | $ (11,800) | $ (5,764) | $ (15,900) | $ (10,425) | |||||||
Class A | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Shares issued in PIPE financing (in shares) | shares | 2,720,966 | ||||||||||
Settlement of due to seller (in shares) | shares | 9,700,000 | ||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | ||||||||||
Warrants exercised (in share) | shares | 7,900,000 | 21,600,000 | |||||||||
Minimum | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Earned share percentage | 0% | ||||||||||
Maximum | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Earned share percentage | 100% |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Warrant Liability (Details) - Warrant Liabilities - Significant Unobservable Inputs (Level 3) | Jun. 30, 2023 $ / shares yr | Dec. 31, 2022 $ / shares yr |
Exercise price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 11.50 | 11.50 |
Stock price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 1.39 | 1.37 |
Term (years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | yr | 2.9 | 3.4 |
Risk free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 0.045 | 0.041 |
Dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 0 | 0 |
Public warrant price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 0.21 | 0.22 |
FAIR VALUE MEASUREMENTS - Sch_2
FAIR VALUE MEASUREMENTS - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | $ 67,113 | |
Total liabilities and assets measured at fair value | $ 39,064 | |
Carrying Value | Contingent consideration liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 1,400 | 2,800 |
Carrying Value | Contingent consideration asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | (14,500) | |
Carrying Value | Due to sellers liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 45,122 | 56,940 |
Carrying Value | Public Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 4,830 | 5,060 |
Carrying Value | Private Placement Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 2,212 | 2,313 |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 62,000 | |
Total liabilities and assets measured at fair value | 49,952 | |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | Contingent consideration liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | Contingent consideration asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | Due to sellers liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 45,122 | 56,940 |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | Public Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 4,830 | 5,060 |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Items (Level 1) | Private Placement Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | |
Total liabilities and assets measured at fair value | 0 | |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | Contingent consideration liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | Contingent consideration asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | Due to sellers liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | Public Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | Private Placement Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 5,113 | |
Total liabilities and assets measured at fair value | (10,888) | |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | Contingent consideration liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 1,400 | 2,800 |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | Contingent consideration asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | (14,500) | |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | Due to sellers liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | Public Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | Private Placement Warrant Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | $ 2,212 | $ 2,313 |
FAIR VALUE MEASUREMENTS - Sch_3
FAIR VALUE MEASUREMENTS - Schedule of Liabilities Measured At Fair Value Using Significant Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | $ 46,865 | $ 86,744 | $ 67,113 | $ 118,567 |
Change in fair value of due to sellers | 2,322 | 0 | 3,461 | 0 |
Due to seller payments | (15,279) | 0 | ||
Ending Balance | 39,064 | 50,805 | 39,064 | 50,805 |
Contingent Consideration | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value adjustments | (11,800) | (5,764) | (15,900) | (10,425) |
Warrant Liabilities | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value adjustments | $ 1,677 | $ (30,175) | $ (331) | $ (57,337) |
VARIABLE INTEREST ENTITIES - Sc
VARIABLE INTEREST ENTITIES - Schedule of Aggregated VIE Assets and Liabilities and Performance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Variable Interest Entity [Line Items] | |||||
Total Assets | $ 1,707,322 | $ 1,707,322 | $ 1,928,927 | ||
Total Liabilities | 1,471,549 | 1,471,549 | 1,434,652 | ||
Operating expenses: | |||||
Total operating expenses | 1,012,380 | $ 720,422 | 1,918,818 | $ 1,436,299 | |
Net income (loss) | (270,745) | (14,564) | (331,330) | (14,649) | |
Selling, general and administrative expenses | 99,418 | 106,179 | 195,890 | 202,849 | |
Depreciation and amortization expense | 27,251 | 19,836 | 54,473 | 38,872 | |
Variable Interest Entity, Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Total Assets | 125,800 | 125,800 | 99,200 | ||
Total Liabilities | 85,000 | 85,000 | 156,800 | ||
Operating expenses: | |||||
Selling, general and administrative expenses | 13,200 | 9,100 | 26,300 | 20,800 | |
Depreciation and amortization expense | 2,000 | 1,100 | 3,900 | 1,900 | |
Variable Interest Entity, Primary Beneficiary | Physicians Groups | |||||
Variable Interest Entity [Line Items] | |||||
Total Assets | 21,832 | 21,832 | 16,247 | ||
Total Liabilities | 32,370 | 32,370 | $ 19,445 | ||
Total revenue | 21,369 | 24,754 | 49,030 | 39,072 | |
Operating expenses: | |||||
Third-party medical costs | 18,748 | 18,792 | 37,000 | 25,423 | |
Direct patient expense | 7,381 | 7,666 | 14,768 | 13,430 | |
Total operating expenses | 26,129 | 26,458 | 51,768 | 38,853 | |
Net income (loss) | $ (4,760) | $ (1,704) | $ (2,738) | $ 219 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Apr. 24, 2023 shares | Mar. 08, 2023 shares | Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) | Feb. 24, 2023 | Aug. 01, 2022 | |
Related Party Transaction [Line Items] | ||||||||
Paid in kind interest expense | $ 7,380 | $ 0 | ||||||
Debt issuance costs | 9,256 | 88 | ||||||
Selling, general and administrative expenses | $ 99,418 | $ 106,179 | 195,890 | 202,849 | ||||
Direct patient expense | 56,757 | 52,647 | 125,184 | 113,323 | ||||
Class A | ||||||||
Related Party Transaction [Line Items] | ||||||||
Warrants exercised during period (in shares) | shares | 7,900,000 | 21,600,000 | ||||||
Affiliated Entity | ||||||||
Related Party Transaction [Line Items] | ||||||||
Selling, general and administrative expenses | 1,452 | 2,496 | 3,305 | 5,452 | ||||
Direct patient expense | 3,073 | 7,188 | 3,064 | 4,518 | ||||
Issuance of Stock Warrants | Affiliated Entity | Class A | Diameter Capital Partners LP | ||||||||
Related Party Transaction [Line Items] | ||||||||
Warrants exercised during period (in shares) | shares | 21,620,941 | |||||||
Issuance of Stock Warrants | Affiliated Entity | Class A | Rubicon Credit Holdings LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Warrants exercised during period (in shares) | shares | 7,862,160 | |||||||
Issuance of Debt | Affiliated Entity | Secured Debt | 2023 Term Loan | Line of Credit | Diameter Capital Partners LP | ||||||||
Related Party Transaction [Line Items] | ||||||||
Paid in kind interest expense | 5,300 | 7,400 | ||||||
Debt issuance costs | 9,200 | |||||||
Issuance of Debt | Affiliated Entity | Payable quarterly in cash or in kind by adding such amount to principal balance | Secured Debt | 2023 Term Loan | Line of Credit | Diameter Capital Partners LP | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt stated Interest rate | 14% | |||||||
Issuance of Debt | Affiliated Entity | Payable quarterly in cash | Secured Debt | 2023 Term Loan | Line of Credit | Diameter Capital Partners LP | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt stated Interest rate | 13% | |||||||
License Agreement | Related Party | MedCloud Depot, LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Selling, general and administrative expenses | 1,200 | 800 | 2,000 | 1,200 | ||||
Amount due | 600 | 600 | ||||||
Administrative Service Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Direct patient expense | 0 | 1,500 | ||||||
Administrative Service Agreement | Related Party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Sublease Income | 200 | 200 | 400 | 300 | ||||
Administrative Service Agreement | Related Party | Onsite Dental | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount due | 2,200 | 2,200 | ||||||
Direct patient expense | 2,400 | 3,100 | 6,400 | 3,100 | ||||
Leased Medical Space Member | Humana | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | 200 | 300 | ||||||
Leased Medical Space Member | Related Party | Humana | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | 200 | 200 | ||||||
Operating Lease Agreements | Beneficial Owner | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | 100 | 100 | 200 | 100 | ||||
General Contractor Agreements | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | 300 | 1,900 | 800 | 3,600 | ||||
General Contractor Agreements | Related Party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount due | 200 | 200 | ||||||
Employment Compensation | Immediate Family Member of Management or Principal Owner | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | 135 | |||||||
Chief Operating Officer | Leased Medical Space Member | Related Party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Transactions with related party | $ 100 | $ 100 | $ 200 | $ 200 | ||||
Chief Operating Officer | Operating Lease Agreements | Beneficial Owner | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of other properties leased | property | 3 | 3 | ||||||
MedCloud Depot, LLC | Chief Operating Officer | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percentage of controlling ownership | 20% |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 13 Months Ended | ||||||
Jun. 16, 2023 USD ($) | May 31, 2023 shares | Jun. 03, 2021 day shares | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) shares | Apr. 11, 2023 shares | Jun. 02, 2021 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock based compensation expense | $ | $ 1.7 | $ 17.4 | $ 10.6 | $ 30.6 | |||||
Incremental expense as a result of modification | $ | $ 5.9 | ||||||||
Market-Based Stock Options | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock options granted (in shares) | 12,800,000 | 0 | 0 | ||||||
Common stock threshold consecutive trading days | day | 20 | ||||||||
Percentage of vesting awards during period | 50% | ||||||||
Unrecognized compensation cost | $ | 8.5 | $ 8.5 | |||||||
Remaining service period | 1 year 1 month 6 days | ||||||||
Service-Based Stock Options | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock options granted (in shares) | 1,864,628 | 435,141 | 2,300,000 | ||||||
Unrecognized compensation cost | $ | 1.7 | $ 1.7 | |||||||
Remaining service period | 1 year 10 months 24 days | ||||||||
Vesting period | 4 years | ||||||||
Service-Based Stock Options | Awards Vesting Annually after March 15, 2022 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Percentage of vesting awards during period | 25% | ||||||||
Performance - Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Granted (in shares) | 4,900,000 | 4,900,598 | 0 | ||||||
Performance measurement period | 3 years | ||||||||
Percentage of overall target for recording expense | 100% | ||||||||
Unrecognized compensation expenses | $ | $ 5.2 | $ 5.2 | |||||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 1 year 8 months 12 days | ||||||||
Performance - Restricted Stock Units | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Executives to earn target | 0.50 | ||||||||
Performance - Restricted Stock Units | Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Executives to earn target | 1.50 | ||||||||
Service-Based Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Granted (in shares) | 11,100,000 | ||||||||
Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 4 years | ||||||||
Granted (in shares) | 11,174,399 | 11,326,599 | |||||||
Unrecognized compensation expenses | $ | $ 49.8 | $ 49.8 | |||||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 1 year 8 months 12 days | ||||||||
Restricted Stock Units | Certain Executives | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 2 years | ||||||||
Restricted Stock Units | Non-Employee, Board of Director Member | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 1 year | ||||||||
2021 Stock Option and Incentive Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares authorized (in shares) | 52,000,000 | ||||||||
2021 ESPP | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares authorized (in shares) | 4,700,000 | ||||||||
Cumulatively increase of common stock reserved and available for issuance (in shares) | 15,000,000 | ||||||||
Percentage of cumulative increase of common stock capital shares reserved for future issuance over common stock issued and outstanding | 1% | ||||||||
Stock based compensation expense | $ | $ 0.4 | $ 0.4 | $ 0.7 | $ 1 |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Fair Value of Stock Options Granted Using Monte-Carlo Model (Details) - $ / shares | Apr. 11, 2023 | Mar. 31, 2023 | Mar. 15, 2022 | Jun. 03, 2021 |
Market Condition Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Strike price (in dollars per share) | $ 14.75 | |||
Risk-free interest rate minimum | 1.68% | |||
Risk-free interest rate maximum | 2% | |||
Expected volatility | 45% | |||
Expected dividend yield | 0% | |||
Expected term | 9% | |||
Service-Based Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Strike price (in dollars per share) | $ 1.50 | $ 0.91 | $ 6.03 | |
Risk-free interest rate | 3.50% | 3.50% | 2.10% | |
Expected volatility | 100% | 100% | 70% | |
Expected dividend yield | 0% | 0% | 0% | |
Expected term | 625% | 625% | 625% |
STOCK-BASED COMPENSATION - Sc_2
STOCK-BASED COMPENSATION - Schedule of Activity of Unvested Options (Details) - $ / shares | 6 Months Ended | 13 Months Ended | ||
Jun. 03, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Apr. 11, 2023 | |
Market-Based Stock Options | ||||
Shares | ||||
Beginning Balance (in shares) | 10,634,998 | 12,703,698 | ||
Granted (in shares) | 12,800,000 | 0 | 0 | |
Forfeitures (in shares) | (904,906) | (262,146) | ||
Ending Balance (in shares) | 9,730,092 | 12,441,552 | ||
Weighted Average Grant Date Fair Value | ||||
Beginning Balance (in dollars per share) | $ 4.23 | $ 4.23 | ||
Granted (in dollars per share) | 0 | 0 | ||
Forfeitures (in dollars per share) | 4.23 | 4.23 | ||
Ending Balance (in dollars per share) | $ 4.23 | $ 4.23 | ||
Service-Based Stock Options | ||||
Shares | ||||
Beginning Balance (in shares) | 405,652 | 0 | ||
Granted (in shares) | 1,864,628 | 435,141 | 2,300,000 | |
Forfeitures (in shares) | (16,393) | 0 | ||
Ending Balance (in shares) | 2,253,887 | 435,141 | ||
Weighted Average Grant Date Fair Value | ||||
Beginning Balance (in dollars per share) | $ 3.88 | $ 0 | ||
Granted (in dollars per share) | 0.84 | 3.88 | ||
Forfeitures (in dollars per share) | 1.22 | 0 | ||
Ending Balance (in dollars per share) | $ 1.38 | $ 3.88 |
STOCK-BASED COMPENSATION - Sc_3
STOCK-BASED COMPENSATION - Schedule of Unvested Restricted Stock Units Activity (Details) - $ / shares | 6 Months Ended | ||
May 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restricted Stock Units | |||
Shares | |||
Beginning balance (in shares) | 10,672,574 | 4,460,772 | |
Granted (in shares) | 11,174,399 | 11,326,599 | |
Vested (in shares) | (1,416,575) | (717,138) | |
Forfeitures (in shares) | (1,550,430) | (293,538) | |
Ending balance (in shares) | 18,879,968 | 14,776,695 | |
Weighted Average Grant Date Fair Value | |||
Beginning balance (in dollars per share) | $ 7.64 | $ 14.43 | |
Granted (in dollars per share) | 1.33 | 5.38 | |
Vested (in dollars per share) | 7.10 | 12.44 | |
Forfeitures (in dollars per share) | 4.83 | 7.62 | |
Ending balance (in dollars per share) | $ 4.18 | $ 7.73 | |
Performance - Restricted Stock Units | |||
Shares | |||
Beginning balance (in shares) | 280,477 | 706,750,000 | |
Granted (in shares) | 4,900,000 | 4,900,598 | 0 |
Vested (in shares) | (93,493) | (93,493,000) | |
Forfeitures (in shares) | 0 | 0 | |
Ending balance (in shares) | 5,087,582 | 613,257,000 | |
Weighted Average Grant Date Fair Value | |||
Beginning balance (in dollars per share) | $ 13.36 | $ 12.73 | |
Granted (in dollars per share) | 1.36 | 0 | |
Vested (in dollars per share) | 13.37 | 13.37 | |
Forfeitures (in dollars per share) | 0 | 0 | |
Ending balance (in dollars per share) | $ 1.80 | $ 12.63 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Apr. 28, 2023 Plaintiff | Nov. 01, 2020 USD ($) |
Breach Of Fiduciary | ||
Loss Contingencies [Line Items] | ||
Number of plaintiffs | Plaintiff | 3 | |
Prime Vendor Agreement PVA | ||
Loss Contingencies [Line Items] | ||
Notice of termination, period | 90 days | |
Purchase obligation | $ 0.8 | |
New Agreement | ||
Loss Contingencies [Line Items] | ||
Purchase obligation | $ 0.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 03, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (1,872) | $ 809 | $ (1,872) | $ 1,889 | |
Effective tax rate | 0.70% | (5.90%) | 0.60% | (14.80%) | |
Tax receivable agreement, percent of tax savings | 85% |
NET INCOME (LOSS) PER SHARE - S
NET INCOME (LOSS) PER SHARE - Schedule of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net income (loss) | $ (270,745) | $ (14,564) | $ (331,330) | $ (14,649) |
Less: net income (loss) attributable to non-controlling interests | (129,992) | (9,231) | (162,427) | (9,976) |
Net income (loss) attributable to Class A common stockholders | (140,753) | (5,333) | (168,903) | (4,673) |
Dilutive effect of RSU's | 0 | 0 | 0 | 0 |
Dilutive effect of Class B common stock | (129,992) | (9,231) | 0 | (9,976) |
Net income (loss) attributable to Class A common stockholders - Diluted | $ (270,745) | $ (14,564) | $ (168,903) | $ (14,649) |
Basic and Diluted Earnings Per Share denominator: | ||||
Weighted average common stock outstanding - basic (in shares) | 274,640,987 | 210,053,037 | 257,317,776 | 200,783,129 |
Net income (loss) per share - basic (in dollars per share) | $ (0.51) | $ (0.03) | $ (0.66) | $ (0.02) |
Dilutive effect of RSU's (in shares) | 0 | 0 | 0 | 0 |
Dilutive effect of Class B common stock on weighted average common stock outstanding (in shares) | 253,208,965 | 264,527,434 | 0 | 264,527,434 |
Weighted average common stock outstanding - diluted (in shares) | 527,849,952 | 474,580,471 | 257,317,776 | 465,310,563 |
Net loss per share - diluted (in dollars per share) | $ (0.51) | $ (0.03) | $ (0.66) | $ (0.03) |
NET INCOME (LOSS) PER SHARE - A
NET INCOME (LOSS) PER SHARE - Additional Information (Details) $ in Millions | Aug. 11, 2021 USD ($) trading_day shares |
Business Acquisition [Line Items] | |
Threshold consecutive trading days | 20 |
Other acquisitions | |
Business Acquisition [Line Items] | |
Number of shares of equity interests issued to acquire entity (in shares) | shares | 2,720,966 |
Equity interests issued and issuable | $ | $ 30 |
Threshold consecutive trading days | 20 |
NET INCOME (LOSS) PER SHARE- Sc
NET INCOME (LOSS) PER SHARE- Schedule of Diluted Net Loss Per Share (Details) | 6 Months Ended |
Jun. 30, 2023 shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 326,759,978 |
Class B common stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 253,208,965 |
Warrant | Public Warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 22,999,900 |
Warrant | Private Placement Warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 10,533,292 |
Restricted Stock Units | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 23,967,551 |
Stock Options | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 11,983,979 |
Contingent Shares Issued in Connection with Acquisitions | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 2,720,966 |
ESPP Shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potential Common Stock Equivalents (in shares) | 1,345,325 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) | 6 Months Ended |
Jun. 30, 2023 reporting_segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |