10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

    ☐

    TRANSITION REPORT PURSUANT TO SECTION 13 OR
 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39391

CareMax, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	85-0992224
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1000 NW 57th Court, Suite 400 Miami, FL	33126
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (786) 360-4768

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	CMAX	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for 1/30th of one share of Class A common stock	CMAXW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May 6, 2024, the registrant had 3,802,883 shares of Class A common stock, $0.0001 par value per share, and no shares of Class B common stock, $0.0001 par value per share issued and outstanding.

CareMax, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2024

Table of Contents


PART I. FINANCIAL INFORMATION
	Item 1	Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Changes in Stockholders' Equity	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
	Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION			41
	Item 1.	Legal Proceedings	41
	Item 1A.	Risk Factors	41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 3.	Defaults Upon Senior Securities	41
	Item 4.	Mine Safety Disclosures	41
	Item 5.	Other Information	41
	Item 6.	Exhibits	41

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CAREMAX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)


	March 31, 2024			December 31, 2023
ASSETS

Current Assets
Cash and cash equivalents	$	41,479		$	65,528
Accounts receivable, net		107,985			114,754
Other current assets		6,650			3,066
Total Current Assets		156,113			183,348

Property and equipment, net		47,243			47,918
Operating lease right-of-use assets		109,947			109,215
Goodwill, net		156,841			156,841
Intangible assets, net		96,092			101,243
Other assets		47,965			24,737
Total Assets	$	614,202		$	623,301

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable	$	6,704		$	6,275
Accrued expenses		20,172			16,224
Risk settlement liabilities		53,599			42,602
Related party liabilities		1,229			190
Current portion of third-party debt, net		390,995			364,380
Current portion of operating lease liabilities		32,062			8,975
Other current liabilities		2,354			165
Total Current Liabilities		507,114			438,812
Derivative liabilities		49			22
Long-term debt, net		1,879			21,443
Long-term operating lease liabilities		78,417			97,136
Other liabilities		6,340			4,443
Total Liabilities		593,800			561,856
COMMITMENTS AND CONTINGENCIES (NOTE 14)
STOCKHOLDERS' EQUITY
Preferred stock (1,000,000 shares authorized; one share issued and outstanding as of March 31, 2024 and December 31, 2023)		—			—
Class A common stock ($0.0001 par value; 8,333,333 shares authorized; 3,802,883 and 3,744,732 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)		11			11
Additional paid-in-capital		784,736			782,371
Accumulated deficit		(764,345	)		(720,938	)
Total Stockholders' Equity		20,403			61,444

Total Liabilities and Stockholders' Equity	$	614,202		$	623,301

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1)

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended March 31,
	2024			2023
Revenue
Medicare risk-based revenue	$	168,502		$	121,593
Medicaid risk-based revenue		37,653			25,626
Government value-based care revenue		18,815			10,010
Other revenue		7,276			15,754
Total revenue		232,246			172,983

Operating expenses
External provider costs		180,941			110,673
Cost of care		43,133			38,627
Sales and marketing		3,064			3,765
Corporate, general and administrative		20,108			23,965
Depreciation and amortization		6,705			6,576
Goodwill impairment		—			98,000
Total operating expenses		253,951			281,606
Operating loss		(21,705	)		(108,623	)
Nonoperating (expenses) income
Interest expense		(19,756	)		(10,711	)
Change in fair value of derivative liabilities		(2,381	)		1,107
Gain on remeasurement of contingent earnout liabilities		—			36,136
Other income, net		610			187
Total nonoperating (expenses) income		(21,526	)		26,718
Loss before income tax		(43,231	)		(81,904	)
Income tax expense		(177	)		(177	)
Net loss	$	(43,408	)	$	(82,082	)

Weighted-average basic shares outstanding		3,778,600			3,712,027
Weighted-average diluted shares outstanding		3,778,600			3,712,027
Net loss per share
Basic	$	(11.49	)	$	(22.11	)
Diluted	$	(11.49	)	$	(22.11	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(2)

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands, except share data)


	Three Months Ended March 31, 2024 and 2023
	Class A Common Stock				Preferred		Additional		Retained Earnings			Total Stockholders'
	Shares		Amount		Stock		Paid-in-capital		(Deficit)			Equity
BALANCE - DECEMBER 31, 2023		3,744,732	$	11	$	—	$	782,371	$	(720,938	)	$	61,444
Stock-based compensation expense		—		—		—		2,365		—			2,365
Net loss		—		—		—		—		(43,408	)		(43,408	)
Fractional shares issued upon Reverse Split		58,151		—		—		—		—			—
BALANCE - MARCH 31, 2024		3,802,883	$	11	$	—	$	784,736	$	(764,345	)	$	20,403

BALANCE - DECEMBER 31, 2022		3,711,086	$	11	$	—	$	657,126	$	(37,590	)	$	619,547
Stock-based compensation expense		—		—		—		2,298		—			2,298
Issuance of shares upon vesting of stock-based compensation awards		941		—		—		—		—			—
Net loss		—		—		—		—		(82,082	)		(82,082	)
BALANCE - MARCH 31, 2023		3,712,027	$	11	$	—	$	659,424	$	(119,672	)	$	539,763

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(3)

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(43,408	)	$	(82,082	)
Adjustments to reconcile net loss to cash and cash equivalents:
Depreciation and amortization expense		6,705			6,576
Amortization of debt issuance costs and discounts		931			1,839
Stock-based compensation expense		2,365			2,298
Income tax expense		177			177
Change in fair value of derivative liabilities		2,381			(1,107	)
Gain on remeasurement of contingent earnout liabilities		—			(36,136	)
Payment-in-kind interest expense		5,915			2,453
Non-cash finance lease expense		156			—
Provision for credit losses		(302	)		(104	)
Goodwill impairment		—			98,000
Amortization of right-of-use assets		2,675			2,725
Other non-cash, net		134			1,080
Changes in operating assets and liabilities:
Accounts receivable		7,072			(7,850	)
Other current assets		(3,583	)		(1,961	)
Risk settlement liabilities		10,997			(454	)
Other assets		(23,332	)		(9,735	)
Operating lease liabilities		962			(1,280	)
Accounts payable		(188	)		(500	)
Accrued expenses		3,948			(29	)
Related party liabilities		1,039			—
Other liabilities		1,555			4,343
Net cash used in operating activities		(23,802	)		(21,746	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(126	)		(2,286	)
Net cash used in investing activities		(126	)		(2,286	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings, net		—			27,000
Principal payments of debt		(119	)		(25	)
Payments of debt issuance costs		—			(348	)
Net cash (used in) provided by financing activities		(119	)		26,627

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(24,047	)		2,596
Cash and cash equivalents - beginning of period		65,528			41,626
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	41,479		$	44,222

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(4)

CAREMAX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2024		2023
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
Additions to property and equipment funded through accounts payable	$	617	$	947
Financed property and equipment purchases		168		—
Decrease in right-of-use assets and lease liabilities due to lease remeasurements		145		—
Right-of-use assets obtained in exchange for operating lease obligations		4,388		—
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		8,915		6,375

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(5)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

Note 1. DESCRIPTION of business and going concern

CareMax, Inc. (“CareMax” or the “Company”), formerly Deerfield Healthcare Technology Acquisitions Corp. (“DFHT”), is a Delaware corporation, which announced its initial public offering in July 2020 (the "IPO") as a publicly traded special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination involving one or more businesses. CareMax provides high-quality, value-based care and chronic disease management through physicians and health care professionals committed to the overall health and wellness continuum of care for its patients. As of March 31, 2024, the Company operated 55 centers and managed affiliated providers across 10 states that offer a comprehensive suite of healthcare and social services, and a proprietary software and services platform that provides data, analytics, and rules-based decision tools/workflows for physicians across the United States.

The Business Combination and Acquisitions

On December 18, 2020, DFHT entered into a Business Combination Agreement (the “Business Combination Agreement”) with CareMax Medical Group, L.L.C., a Florida limited liability company (“CMG”), and entities listed in the Business Combination Agreement, IMC Medical Group Holdings, LLC, a Delaware limited liability company (“IMC”), IMC Holdings, LP, a Delaware limited partnership, and Deerfield Partners, L.P. The Business Combination (as defined below) closed on June 8, 2021 (the “Closing Date”), whereby DFHT acquired 100% of the equity interests in CMG and 100% of the equity interests in IMC, with CMG and IMC becoming wholly owned subsidiaries of DFHT. Immediately upon completion (the “Closing”) of the transactions contemplated by the Business Combination Agreement and the related financing transactions (the “Business Combination”), the name of the combined company was changed to CareMax, Inc.

Unless the context otherwise requires, “the Company,” “we,” “us,” and “our” refer, for periods prior to the completion of the Business Combination, to CMG and its subsidiaries, and, for periods upon or after the completion of the Business Combination, to CareMax, Inc. and its subsidiaries.

Subsequent to consummation of the Business Combination, primarily during the second half of 2021, the Company acquired Senior Medical Associates, LLC, Stallion Medical Management, LLC, Unlimited Medical Services of Florida, LLC, Advantis Physician Alliance, LLC, Business Intelligence & Analytics LLC, and three additional businesses. In November 2022, the Company acquired the Medicare value-based care business of Steward Health Care System (“Steward Value Based Care”, and such transaction the “Steward Acquisition”).

Going Concern

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has generated recurring losses and negative cash flows from operations since completion of the Business Combination, and believes that, absent the Company successfully taking certain measures to reduce operating expenses and/or divest certain assets or businesses, as set forth below, the Company will continue to incur net losses and negative cash flows for the foreseeable future. The Company obtained a limited waiver of certain breaches of financial and administrative covenants under the Credit Agreement (as defined below) through May 15, 2024, subject to an earlier termination of the waiver upon the occurrence of certain specified events, as further explained in Note 7, Debt and Related Party Debt. Further, as of March 31, 2024, the Company was in breach of certain financial and administrative covenants (such as the failure to pay rent when it came due) under certain of its lease agreements, as further explained in Note 12, Leases. Although the Company had $41.5 million in cash and cash equivalents and $108.0 million of current accounts receivable, net, at March 31, 2024, absent the Company successfully implementing management’s plans as set forth below, the Company believes it will not be able to comply with the minimum liquidity requirement and maximum leverage ratio covenants contained in its Credit Agreement once the current limited waiver expires, nor will it be able to comply with certain financial covenants under certain of the Company’s leases. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for one year after the date these condensed consolidated financial statements are issued, and these financial statements do not include any adjustments that may result from the outcome of this uncertainty.

To address the Company’s capital needs, the Company is undergoing efforts to reduce operating expenses and pursuing various equity and debt refinancing and other strategic alternatives, including the possibility of a restructuring under Chapter 11 of the US Bankruptcy Code if the Company is unable to successfully implement its plans. Management’s plans that are intended to mitigate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern include selling

(6)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

certain assets, exiting certain markets and reducing operating expenses. The Company’s efforts to reduce operating expenses may include lowering external provider costs, exiting unprofitable centers, consolidating certain medical centers, delaying capital expenditures and reducing non-essential spending. The Company may also seek to raise additional capital or refinance its indebtedness to provide additional liquidity to fund its losses until its operations become cash flow positive. There is no guarantee that the Company will be able to implement its operational plans or raise additional equity or debt financing on acceptable terms, if at all.

Reverse Stock Split

On January 31, 2024 (the “Effective Date”), the Company effected a 1-for-30 reverse stock split (the “Reverse Split”) of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”). As a result of the Reverse Split, every thirty shares of the Class A Common Stock issued and outstanding as of the Effective Date automatically converted into one share of Class A Common Stock. No fractional shares were issued in connection with the Reverse Split. In lieu of issuing fractional shares, stockholders of record who otherwise would have been entitled to receive fractional shares were entitled to rounding up of the fractional share to the nearest whole number. The Reverse Split automatically and proportionately adjusted, based on a 1-for-30 split ratio, all issued and outstanding shares of the Company’s common stock, as well as the terms of warrants outstanding at the time of the effectiveness of the Reverse Split. Proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock. There was no change in the par value of our Common Stock or Preferred Stock.

References to number of shares of Class A Common Stock and per share data (except par value) in the financial statements and notes thereto for all periods presented have been adjusted to reflect the Reverse Split.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The condensed consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Certain amounts in the prior year's unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.

There is no comprehensive income (loss) so the statements of comprehensive income (loss) are not presented.

Segment Financial Information

The Company’s chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company identifies operating segments based on this review by its CODM and operates in and reports as a single operating segment. For the periods presented, materially all of the Company’s long-lived assets were located in the United States, and all revenue was earned in the United States.

Significant Accounting Policies

There have been no changes to our significant accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 18, 2024.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The areas where significant estimates are used in the financial statements include, but are not limited to, revenues and related receivables from risk adjustments, costs of our services and related liabilities, purchase price allocations, including fair value estimates of intangibles and contingent consideration, the valuation and related impairment testing of

(7)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

long-lived assets, including goodwill and intangible assets, the valuation of derivative liabilities, and the estimated useful lives of fixed assets and intangible assets, including internally developed software. Actual results could differ from those estimates.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Additionally, as an emerging growth company, the Company is exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and the Company’s independent registered public accounting firm is not required to evaluate and report on the effectiveness of internal control over financial reporting.

Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full retrospective adoption or modified retrospective adoption. The guidance is effective for the Company in the first quarter of fiscal year 2025 and early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. This guidance requires annual and interim disclosure of significant segment expenses that are provided to the CODM as well as interim disclosures for all reportable segment’s profit or loss and assets. This guidance also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. This guidance is expected to improve financial reporting by providing additional information about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal period. The ASU is effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect adoption of ASU 2023-07 will have a significant impact on the disclosures within our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for the Company’s fiscal year beginning January 1, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company does not expect adoption of ASU 2023-09 will have a significant impact on the disclosures within our consolidated financial statements.

NOTE 3. ACCOUNTS RECEIVABLE

The Company’s accounts receivable are presented net of the unpaid external 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 March 31, 2024 and December 31, 2023.

(8)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

As of March 31, 2024 and December 31, 2023, $26.0 million and $8.9 million of accounts receivable were included in other assets in the Company’s condensed consolidated balance sheets.

Composition of the Company’s current accounts receivable, net, and risk settlement liabilities was as follows (in thousands):


	As of March 31, 2024			As of December 31, 2023
Risk-based accounts receivable	$	161,619		$	170,397
Incurred but not reported claims liability		(56,471	)		(58,027	)
Other receivables		2,837			2,384
Accounts receivable, net	$	107,985		$	114,754

	As of March 31, 2024			As of December 31, 2023
Risk-based accounts receivable	$	21,042		$	381
Incurred but not reported claims liability		(69,440	)		(37,401	)
Distribution liabilities		(5,201	)		(5,583	)
Risk settlement liabilities	$	(53,599	)	$	(42,602	)

The Company re-evaluated key assumptions and estimates and based on this analysis, the Company identified changes in estimates to revenue, external provider costs, short-term and long-term accounts receivable, net, and risk settlement liabilities. Accordingly, the Company recognized the following changes in prior year estimates in each respective period (in thousands):


	Three Months Ended March 31,
Increase (decrease)	2024			2023
Revenue	$	(540	)	$	(26,913	)
External provider costs		(7,363	)		(12,413	)
Short-term and long-term accounts receivable, net		(2,680	)		(14,500	)
Risk settlement liabilities		(9,503	)		—

For the three months ended March 31, 2024, the decreases were mostly driven by favorable development in provider costs from Medicare full risk plans, partially offset by unfavorable development in provider costs from Medicaid full risk plans primarily from 2022 dates of service. For the three months ended March 31, 2023, the developments were primarily driven by new, updated information regarding MSO membership at one health plan, and an unseasonably early flu season.

Concentration of Credit Risk

Composition of the Company’s revenues and accounts receivable balances for the payors comprising 10% or more of revenue was as follows (n/a - indicates balance or activity that is less than 10%):


	Revenue
	Three Months Ended March 31,
	2024	2023
Payor A	19%	31%
Payor B	13%	n/a
Payor C	18%	22%
Payor D	13%	12%
Payor E	11%	20%


	Short-Term and Long-Term Accounts Receivable, net
	As of March 31, 2024	As of December 31, 2023
Payor A	10%	10%
Payor B	n/a	10%
Payor C	n/a	n/a
Payor D	n/a	n/a
Payor E	n/a	n/a

As of March 31, 2024 and December 31, 2023, the Company’s provision for credit losses was $2.8 million and $3.1 million, respectively.

NOTE 4. REINSURANCE

(9)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

The Company purchases stop loss insurance on catastrophic costs to limit the exposure on patient losses. Premiums and policy recoveries are reported in external provider costs in the Company’s condensed consolidated statements of operations.

The intent of the Company’s stop loss coverage is to limit the benefits paid for any individual patient. The Company’s stop loss limits are defined within each respective health plan contract or other third-party contract and range typically from $30,000 to $300,000 per patient per year. Premium expense incurred was $7.9 million and $6.8 million for the three months ended March 31, 2024, and 2023, respectively. Physicians under capitation arrangements typically have stop loss coverage so that a physician’s financial risk for any single member is limited to a maximum amount on an annual basis. The Company monitors the financial performance and solvency of its stop loss providers. However, the Company remains financially responsible for health care services to its members in the event the health plans or other third parties are unable to fulfill their obligations under stop loss contractual terms.

Recoveries recognized were $7.8 million and $4.6 million for the three months ended March 31, 2024 and 2023, respectively. Estimated recoveries under stop loss policies are reported within accounts receivable, net, or risk settlement liabilities as the counterparty responsible for the payment of the claims and the stop loss is the respective health plan.

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company’s policy is to test goodwill for impairment annually on December 31, or on an interim basis if an event triggering impairment may have occurred. As of March 31, 2024, our total shareholders’ equity exceeded our market capitalization. Accordingly, we estimated the fair value of our single reporting unit primarily on the basis of the Company’s market capitalization after considering reasonable control premiums which could be expected in transactions with third-party market participants. Based on this analysis, no goodwill impairment was identified.

As of March 31, 2023, the economic uncertainty and market volatility resulting from the rising interest rate environment, the then-recent banking crisis and other industry developments resulted in a decrease in the Company’s stock price and market capitalization. Management believed that such decrease was a triggering event requiring an interim goodwill impairment quantitative analysis. The Company performed a market capitalization reconciliation to evaluate the Company’s estimated fair value balance and support the implied control premium. Based on the quantitative analysis performed, the Company’s estimated fair value as of March 31, 2023 was less than its carrying value as of March 31, 2023 by 17.9% or $98.0 million. The $98.0 million goodwill impairment charge was reflected in goodwill impairment in the Company’s statements of operations for the three months ended March 31, 2023.

The Company’s cumulative goodwill impairment was $617.2 million as of March 31, 2024 and December 31, 2023.

Other Intangible Assets

The following tables summarize the gross carrying amounts, accumulated amortization and net carrying amounts of intangible assets by major class (in thousands):


	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
March 31, 2024
Risk contracts	$	102,070	$	(42,734	)	$	59,336
Provider network		42,900		(8,512	)		34,388
Non-compete agreements		4,170		(2,548	)		1,622
Trademarks		1,862		(1,526	)		336
Other		693		(284	)		410
Total	$	151,695	$	(55,603	)	$	96,092

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)


	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
December 31, 2023
Risk contracts	$	102,070	$	(39,394	)	$	62,676
Provider network		42,900		(6,980	)		35,920
Non-compete agreements		4,170		(2,343	)		1,827
Trademarks		1,862		(1,491	)		371
Other		693		(244	)		449
Total	$	151,695	$	(50,452	)	$	101,243

Amortization expense, excluding amortization related to the finance lease right-of-use asset, totaled $5.2 million and $5.4 million for the three months ended March 31, 2024 and 2023, respectively.

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2024 and December 31, 2023 consisted of the following (in thousands):


	March 31, 2024			December 31, 2023
Leasehold improvements	$	21,082		$	19,200
Vehicles		2,779			2,892
Furniture and equipment		12,949			12,765
Software		3,865			3,865
Assets under finance leases (1)		18,312			18,552
Construction in progress		3,853			5,074
Total		62,841			62,349
Less: Accumulated depreciation and amortization (2)		(15,598	)		(14,431	)
Total Property and equipment, net	$	47,243		$	47,918

(1) Refer to Note 12, Leases, for information.

(2) Includes accumulated amortization related to finance lease right-of-use assets of $0.9 million and $0.6 million as of March 31, 2024 and December 31, 2023, respectively.

Construction in progress primarily consists of leasehold improvements at the Company’s centers, which have not opened.

Depreciation expense, including amortization related to finance lease right-of-use assets, totaled $1.6 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

NOTE 7. DEBT AND RELATED PARTY DEBT

Credit Agreement

In May 2022, the Company entered into a credit agreement (the “Credit Agreement”) that provided for an aggregate of up to $300.0 million in term loans, comprised of (i) initial term loans in the aggregate principal amount of $190.0 million (the “Initial Term Loans”) and (ii) a delayed term loan facility in the aggregate principal amount of $110.0 million (the “Delayed Draw Term Loans”). The Credit Agreement permits the Company to enter into certain incremental facilities subject to compliance with the terms, conditions and covenants set forth therein. In May 2022, the Company drew $190.0 million of the Initial Term Loans and used approximately $121 million of the net proceeds from this borrowing to repay its outstanding obligations under the credit agreement dated June 8, 2021, as amended and recognized related debt extinguishment losses of $6.2 million.

The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, liens or encumbrances, to make certain investments, to enter into sale-leaseback transactions or sell certain assets, to make certain restricted payments or pay dividends, to enter into consolidations, to transact with affiliates and to amend certain agreements, subject in each case to the exceptions and other qualifications as provided in the Credit Agreement. The Credit Agreement also contains covenants that require the Company to satisfy a minimum liquidity requirement of $50.0 million, which may be decreased to $25.0 million if the Company achieves a certain adjusted EBITDA, and maintain a maximum total leverage ratio based on the Company’s consolidated EBITDA, as defined in the Credit Agreement, with de novo losses excluded from the calculation of such ratio for up to 36 months after the opening of a de novo center, which maximum total leverage ratio was initially 8.50 to 1.00, commencing with the fiscal quarter ended September

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

30, 2022 and is subject to a series of step-downs. For the fiscal quarters ending September 30, 2026 and thereafter the Company must maintain a maximum total leverage ratio no greater than 5.50 to 1.00.

The Credit Agreement contains embedded derivatives related to optional and mandatory prepayments, default interest and the impact of potential legislative changes. Embedded derivatives are separated from the host contract, and are carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that mandatory prepayment and default interest features within the Credit Agreement meet these criteria and, as such, are valued separately and apart from the Credit Agreement and are recorded at fair value each reporting period. While such embedded features did not have material value prior to this period, the value of these bifurcated derivatives as of March 31, 2024 is approximately $2.4 million. Changes in the fair value of these derivatives are reflected in the Change in fair value of derivative liabilities within the condensed consolidated statements of operations and the fair value of the derivatives as of March 31, 2024 is reflected in other current liabilities within the condensed consolidated balance sheets. Refer to Note 10, Fair Value Measurements, for information about the valuation of the embedded derivatives.

On March 8, 2023 (the “Amendment Closing Date”), the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment amended the Credit Agreement to, among other things, (i) provide for a new incremental delayed draw term loan B facility in an aggregate principal amount of $60.0 million (the “Delayed Draw Term Loan B Facility”); (ii) revise the commitment expiration date for the Company’s existing $110.0 million Delayed Draw Term Loan to forty-five days following the Amendment Closing Date; (iii) extend the commencement of amortization payments on loans under the Credit Agreement from March 31, 2024 to May 31, 2025; (iv) reduce the amount of interest that the Company may elect to capitalize from 4.00% to 3.50% beginning on the second anniversary of the execution date of the Credit Agreement, 3.00% beginning on the third anniversary of the execution date of the Credit Agreement, and 1.50% beginning on December 10, 2025; (v) increase the amount of the super-priority revolving credit facility that is permitted to be added to the Credit Agreement to $45.0 million and provide that the entirety of such facility may be used for general corporate purposes; and (vi) amend the prepayment provisions of the Credit Agreement, including to have such provisions run as of the Amendment Closing Date.

On March 15, 2024 (the “Third Amendment Effective Date”), the Company entered into a Waiver and Third Amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment amended the Credit Agreement to, among other things, (i) waive certain events of default under the Credit Agreement in the limited manner set forth therein through May 15, 2024 (the “Third Amendment Specified Period”), subject to an earlier termination of the waiver upon the occurrence of certain specified events, (ii) increase the applicable margin rate by 2.00% during the Third Amendment Specified Period, which additional interest the Company may elect to capitalize as principal amount on the outstanding loans and (iii) modify certain covenants contained in the Credit Agreement, including, but not limited to, reducing the minimum liquidity requirement to $10 million during the Third Amendment Specified Period and providing for additional reporting to the lenders.

During the three months ended March 31, 2024 and 2023, the Company drew $0 and $30.0 million of the Delayed Draw Term Loans, respectively.

Loan and Security Agreement - Related Party Debt

In November 2022, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”), by and among Sparta Merger Sub I Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Sparta Merger Sub II Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Sparta Merger Sub I LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger LLC I”), Sparta Merger Sub II LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (together with Merger LLC I, the “Guarantors”), Steward Accountable Care Network, Inc. (n/k/a as Steward Accountable Care Network, LLC) and Steward National Care Network, Inc. (n/k/a Steward National Care Network, LLC), as borrowers (the “Borrowers”), CAJ Lending LLC (“CAJ”) and Deerfield Partners L.P., as lenders (the “Lenders”), and CAJ, as administrative agent and collateral agent (in such capacity, the “Agent”). Mr. Carlos A. de Solo, a director of the Company and the Company’s President and Chief Executive Officer, Mr.

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

Pursuant to the Loan and Security Agreement, the Lenders provided the Borrowers a term loan (the “Term Loan”) in the aggregate principal amount of $35.5 million. The Company used the proceeds of the Term Loan to fund the payment for the estimated value of the accounts receivable attributable to Medicare value-based payments for the period between January 1, 2022 and the closing of the Steward Acquisition, minus the amount of such payments payable to the affiliate physicians of the acquired Steward entities (the “Financed Net Pre-Closing Medicare AR”).

The Term Loan bore fixed interest at a rate of 12.0% per annum. In addition, the Borrowers paid a facility fee equal to 3.0% of the aggregate principal amount of the Term Loan, which was accounted for as a debt discount. Any additional interest (if applicable) accrued and owing during the term of the Loan and Security Agreement was paid-in-kind and capitalized to principal monthly in arrears. Pursuant to the Agreement and Plan of Merger entered into in connection with the Steward Acquisition (the “Merger Agreement”), Sparta Holding Co. LLC agreed to pay the costs of financing the Financed Net Pre-Closing Medicare AR and, at the closing of the Steward Acquisition, paid to the Borrowers $6.8 million, representing all scheduled payments of interest and fees from the Steward Acquisition closing date up to and including November 30, 2023, which amount was then paid in advance by the Borrowers to the Lenders.

In October 2023, the Company paid off all outstanding indebtedness of $35.5 million due under the Loan and Security Agreement with the proceeds of the MSSP payment from the federal government, and the Loan and Security Agreement was terminated.

Elevance Health

In October 2022, in connection with the collaboration agreement with Elevance Health (formerly known as Anthem) the Company entered into a promissory note for $1.0 million due in October 2032. This borrowing bears a fixed interest rate of 6.25% per annum.

Finance Leases

Refer to Note 12, Leases, for information about the Company’s finance leases.

As of March 31, 2024 and December 31, 2023, debt consisted of the following (in thousands):


	March 31, 2024			December 31, 2023
Indebtedness under the Credit Agreement, weighted-average interest rate of 15.2% during the three months ended March 31, 2024.	$	383,256		$	377,340
Finance lease obligations, interest averaging 13.5% and maturing at various dates through 2043 as of March 31, 2024 and December 31, 2023.		19,768			19,612
Other		2,297			2,220
Less: Unamortized discounts and debt issuance costs		(12,447	)		(13,349	)
		392,874			385,823
Less: Current portion		(390,995	)		(364,380	)
Long-term portion	$	1,879		$	21,443

Future maturities of the indebtedness outstanding at March 31, 2024 were as follows (in thousands):


Year	Amount
Remainder of 2024	$	322
2025		3,566
2026		4,172
2027		376,564
2028		769
Thereafter		160
Total	$	385,553

In the table above, the future maturities are presented consistent with the contractual terms. As of March 31, 2024, we were in compliance with all of the financial covenants under the Credit Agreement, as amended through the Third Amendment; however, we do not expect to be in compliance during the subsequent quarterly testing dates. A breach of any of the covenants under the Credit Agreement or the occurrence of other events specified in the Credit Agreement could result in an event of

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

default under the same and give rise to the lenders’ right to accelerate our debt obligations thereunder and pursue other remedial actions under such agreement and/or trigger a cross default under our long-term leases. Accordingly, as of March 31, 2024, the full balance of the outstanding indebtedness related to the Credit Agreement was classified as a current liability in our condensed consolidated balance sheet.

Refer to Note 1, Description of Business and Going Concern, for going concern considerations.

NOTE 8. STOCK-BASED COMPENSATION

The Company’s 2021 Long-Term Incentive Plan (the “2021 Plan”) permits the grant of equity-based awards to officers, directors, employees and other service providers. The 2021 Plan permits the grant of an initial share pool of 233,333 shares of Class A Common Stock and will be increased automatically, without further action of the Company’s board of directors, on January 1st of each calendar year commencing after the Closing Date and ending on (and including) January 1, 2031, by a number of shares of Class A Common Stock equal to the lesser of (i) four percent of the aggregate number of shares of Class A Common Stock outstanding on December 31st of the immediately preceding calendar year, excluding for this purpose any such outstanding shares of Class A Common Stock that were granted under the 2021 Plan and remain unvested and subject to forfeiture as of the relevant December 31st, or (ii) a lesser number of shares of Class A Common Stock as determined by the Company’s board of directors or the Compensation Committee of the board of directors prior to the relevant January 1st.

Our outstanding stock-based compensation awards consist of time-based share awards, performance-based share awards and options. Our equity awards generally vest over a three-year period, subject to continued provision of services to the Company through the applicable vesting date.

During the three months ended March 31, 2024 and 2023, no equity awards were granted under the 2021 Plan and there was no vesting of previously issued awards.

During the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense totaling $2.4 million and $2.3 million, respectively. As of March 31, 2024 and 2023, total unrecognized compensation expense related to unvested equity awards was $11.8 million and $16.4 million, respectively, expected to be recognized over a weighted-average period of 1.6 years and 1.9 years, respectively.

NOTE 9. NET LOSS PER SHARE

The following table sets forth the calculation of basic and diluted net loss per share for the periods indicated based on the weighted-average number of common shares outstanding (in thousands, except share and per share data):


	Three Months Ended March 31,
	2024			2023
Net loss attributable to CareMax, Inc. Class A common stockholders	$	(43,408	)	$	(82,082	)

Weighted-average basic shares outstanding		3,778,600			3,712,027
Weighted-average diluted shares outstanding		3,778,600			3,712,027

Net loss per share:
Basic	$	(11.49	)	$	(22.11	)
Diluted	$	(11.49	)	$	(22.11	)

The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive or because issuance of shares underlying such securities is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three Months Ended March 31,
	2024		2023
Series A and Series B warrants		266,667		266,667
Public and private placement warrants		193,055		193,055
Contingent consideration		1,250,000		1,356,667
Unvested restricted stock units		111,969		84,928
Unvested performance stock units (assumes 100% target payout)		15,050		6,972
Unvested options		25,012		12,452
Total		1,861,753		1,920,740

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

NOTE 10. FAIR VALUE MEASUREMENTS

Financial Instruments that are Measured at Fair Value on a Recurring Basis

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value (in thousands):


			Fair Value
March 31, 2024			Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
Description	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Derivative warrant liabilities - public warrants	$	49	$	49	$	—	$	—
Derivative warrant liabilities - private placement warrants		—		—		—		—
Embedded derivative liabilities - Credit Agreement		2,354		—		—		2,354
Total liabilities measured at fair value	$	2,403	$	49	$	—	$	2,354

			Fair Value
December 31, 2023			Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
Description	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Derivative warrant liabilities - public warrants	$	22	$	22	$	—	$	—
Derivative warrant liabilities - private placement warrants		1		—		—		1
Embedded derivative liabilities - Credit Agreement		—		—		—		—
Total liabilities measured at fair value	$	22	$	22	$	—	$	1

Derivative Warrant Liabilities

Fair value of public warrants is measured using the listed market price of such warrants.

Fair value of the private placement warrants is estimated using a Monte Carlo simulation model at each measurement date. Inherent in a Monte Carlo simulation are assumptions related to expected stock price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

During the three months ended March 31, 2024 and 2023, the Company recognized a loss of less than $0.1 million and a gain of $1.1 million, respectively, related to the change in the fair value of the derivative warrant liabilities.

Credit Agreement Embedded Derivatives

Fair value of the embedded derivatives contained in the Credit Agreement is estimated using the discounted cash flow model. This involves significant Level 3 inputs and assumptions including the probability of occurrence of the respective triggering events and our risk-adjusted discount rate. During the three months ended March 31, 2024 and 2023, the Company recognized a loss of $2.4 million and $0, respectively, related to the change in the fair value of the Credit Agreement embedded derivatives. As of March 31, 2024, the carrying value of the embedded derivatives is recorded in other current liabilities in the Company’s condensed consolidated balance sheet.

Transfers between level 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers between levels for the three months ended March 31, 2024 or 2023.

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

Activity of the Level 3 liabilities during the three months ended March 31, 2024 measured at fair value was as follows (in thousands):


Balance as of December 31, 2023	$	1
Change in fair value of Credit Agreement embedded derivative liabilities		2,354
Change in fair value of derivative warrant liabilities		(1	)
Balance as of March 31, 2024	$	2,354

Activity of the Level 3 liabilities during the three months ended March 31, 2023 measured at fair value was as follows (in thousands):


Balance as of December 31, 2022	$	138,535
Change in fair value of derivative warrant liabilities		(1,107	)
Change in fair value of contingent consideration		(36,136	)
Balance as of March 31, 2023	$	101,293

Financial Instruments that are not Measured at Fair Value on a Recurring Basis


			Fair Value
March 31, 2024	Carrying Value		Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
(in thousands)			(Level 1)		(Level 2)		(Level 3)
Liabilities
Fixed rate debt (a)	$	893	$	—	$	—	$	625
Floating rate debt (a)		383,256		—		—		354,841
Total	$	384,149	$	—	$	—	$	355,466

			Fair Value
December 31, 2023	Carrying Value		Quoted Prices in Active Markets		Significant other Observable Units		Significant other Unobservable Units
(in thousands)			(Level 1)		(Level 2)		(Level 3)
Liabilities
Fixed rate debt (a)	$	913	$	—	$	—	$	747
Floating rate debt (a)		377,340		—		—		375,240
Total	$	378,253	$	—	$	—	$	375,987

(a) The debt amounts above do not include the impact of debt issuance costs or discounts.‌

NOTE 11. RELATED PARTY TRANSACTIONS

The Related Companies

In 2021, the Company entered into an exclusive real estate advisory agreement (the “Advisory Agreement”) with Related CM Advisor, LLC (the “Advisor”), a Delaware limited liability company and a subsidiary of The Related Companies, L.P. (“Related”) (the “Advisory Agreement”), pursuant to which the Advisor has agreed to provide certain real estate advisory services to the Company on an exclusive basis. In connection with the Advisory Agreement, the Company issued certain warrants to the Advisor which vested at the time of issuance, and additional 5,000,000 warrants, which will vest and become exercisable from time to time upon the opening of each center under the Advisory Agreement for which the Advisor provides services. As of March 31, 2024 and December 31, 2023, 3,500,000 Advisory Agreement warrants remained unvested.

During the three months ended March 31, 2024 and 2023, the Company recognized $0.1 million of expense related to the amortization of the vested Advisory Agreement warrants, in corporate, general and administrative expenses.

As of March 31, 2024 and December 31, 2023, the Company recorded $0.4 million and $0.6 million in other current assets, respectively, related to the Advisory Agreement warrants.

On July 13, 2021, the Board appointed Mr. Bryan Cho, Executive Vice President of Related, to serve as a Class III director of the Company. The appointment of Mr. Cho was made in connection with the Advisory Agreement, which provides the Advisor with the right to designate a director to serve on the Board, subject to the continuing satisfaction of certain conditions, including

(16)

CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

that the Advisor and its affiliates maintain ownership of at least 16,667 shares of Class A Common Stock. As a director of the Company, Mr. Cho receives compensation in the same manner as the Company’s other non-employee directors.

Steward Health Care System, LLC

In November 2022, as part of the Steward Acquisition, the Board appointed Dr. Ralph de la Torre, Chairman, Chief Executive Officer and principal equity holder of Steward Health Care System, LLC (“Steward Health Care System”) as a director of the Company. Dr. de la Torre receives compensation in the same manner as the Company’s other non-employee directors.

As part of the Steward Acquisition, the aggregate consideration to the Seller included contingent earnout consideration. The earnout has not been achieved as of March 31, 2024. Refer to Note 4, Acquisitions, in the notes of the financial statements in the Company’s 2023 Form 10-K for details related to the contingent earnout consideration.

During the three months ended March 31, 2024 and 2023, the Company incurred expenses related to transition services agreement with Steward Health Care System of $0.2 million and $1.2 million, respectively, within corporate, general and administrative expenses.

As of March 31, 2024 and December 31, 2023, the Company had liabilities due to Steward Health Care System, or its affiliates, of $1.2 million and $0.2 million, respectively.

CAJ and Deerfield

In November 2022, the Company entered into the Loan and Security Agreement, described in Note 7, Debt and Related Party Debt, whereby CAJ and Deerfield are the lenders.‌

Mr. Carlos A. de Solo, a director of the Company and the Company’s President and Chief Executive Officer, Mr. Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

Mr. Kevin Berg, who is on the Board, is a Senior Advisor with Deerfield. As a director of the Company, Mr. Berg receives compensation in the same manner as the Company’s other non-employee directors.‌

NOTE 12. LEASES

The Company has entered into operating and finance lease agreements for centers and office space expiring at various times through 2043, inclusive of renewal options that the Company is reasonably certain to exercise. The exercise of such lease renewal options is at our sole discretion, and to the extent we are reasonably certain we will exercise a renewal option, the years related to that option are included in our determination of the lease term for purposes of classifying and measuring a given lease.

The following table presents the location of the finance lease right-of-use assets and lease liabilities in the Company’s condensed consolidated balance sheets (in thousands):


	Condensed Consolidated Balance Sheet Location	March 31, 2024		December 31, 2023
Finance lease right-of-use assets, net	Property and equipment, net	$	18,312	$	18,552
Current finance lease liabilities	Current portion of third-party debt, net		19,768		—
Long-term finance lease liabilities	Long-term debt, net		—		19,612

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

Lease costs were as follows (in thousands):


		Three Months Ended March 31,
	Condensed Consolidated Statements of Operations Location	2024		2023
Operating lease cost	Corporate, general and administrative	$	3,904	$	4,284
Finance lease cost:
Amortization of lease assets	Depreciation and amortization		240		—
Interest on lease liabilities	Interest expense		656		—
Variable lease cost	Corporate, general and administrative		1,169		669
Short-term lease cost	Corporate, general and administrative		278		281
Total lease cost		$	6,247	$	5,234

As of March 31, 2024, maturities of operating and finance lease liabilities were as follows (in thousands):


Year	Operating Leases			Finance Leases
Remainder of 2024	$	11,030		$	1,701
2025		16,212			2,499
2026		15,708			2,549
2027		14,743			2,625
2028		13,698			2,704
Thereafter		112,855			48,944
Total undiscounted lease obligations		184,246			61,021
Less: Present value discount		(73,767	)		(41,253	)
Present value of lease liabilities	$	110,479		$	19,768

In the table above, the future maturities of operating and finance lease liabilities are presented consistent with the contractual terms. As further explained below, as of March 31, 2024, we were in default under certain operating and finance lease agreements. Accordingly, as of March 31, 2024, total lease liabilities related to such leases were classified as current liability in our condensed consolidated balance sheet.

Other information related to lease agreements was as follows (in thousands):


	March 31, 2024			December 31, 2023
Weighted-average remaining lease term (years)
Operating leases		11.9			11.7
Finance leases		19.1			19.3
Weighted-average discount rate
Operating leases		8.67	%		8.16	%
Finance leases		13.46	%		13.46	%
Cash paid for amounts included in measurement of liabilities
Operating cash flows for operating leases		810			12,605
Operating cash flows for finance leases		500			1,310

At March 31, 2024, the Company was party to leases that have not yet commenced with aggregated estimated future lease payments of approximately $43.2 million, which are not included in the above tables.

The Company’s finance leases, two of the operating leases, and two leases that have not yet commenced, contain various covenants, that require the Company, among other things, to maintain minimum consolidated stockholder's equity of $100.0 million and a minimum cash balance of $25.0 million. In addition, these leases are subject to provisions that provide for a cross default in the event any of covenant violations under the Company’s Credit Agreement or in the event that covenant violations occur in other lease agreements with the same landlord.

In March 2024, the Company failed to make rent payments due pursuant to certain of its center leases on centers that the Company generally does not intend to operate, which resulted in an event of default under the terms of the applicable lease agreements. Upon an event of default, remedies available to our landlords generally include, without limitation, terminating such lease agreement, repossessing and reletting the leased properties and requiring us to remain liable for all obligations under such lease agreement, including the difference between the rent under such lease agreement and the rent payable as a result of reletting the leased properties, or requiring us to pay the rent due for the balance of the term of such lease agreement, less proceeds from re-letting, if any. As of March 31, 2024, the Company continued to occupy each of the leased centers. The Company is currently negotiating a resolution with the landlords for certain of the leased centers, which may include the

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

Company’s continued occupancy and use of certain of the facilities that the Company intends to continue to operate. Lease liabilities related to such leases are classified as current as of March 31, 2024, as one of the remedies available to our landlords is the acceleration of rent due during the remaining lease term.

Refer to Note 16, Subsequent Events, for further information regarding lease activities that occurred subsequent to March 31, 2024.

NOTE 13. INCOME TAXES

Income tax expense was $0.2 million and $0.2 million during the three months ended March 31, 2024 and 2023, respectively. The effective tax rate was (0.4)% and (0.2)% during the three months ended March 31, 2024 and 2023, respectively, based on the assessment of a full valuation allowance, excluding a portion attributable to the “naked credit” deferred tax liability.

NOTE 14. COMMITMENTS AND CONTINGENCIES

Compliance

The health care industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed. Compliance with these laws and regulations, specifically those related to the Medicare and Medicaid programs, can be subject to government review and interpretation, as well as regulatory actions unknown and not yet asserted at this time. Management believes that the Company is in substantial compliance with current laws and regulations.

Litigation

From time to time, the Company is involved in various legal actions, demands, claims, qui tam suits, governmental investigations and audits, and other legal matters arising in the normal course of business. Except as described below, management has not identified any legal actions during the three months ended March 31, 2024 or 2023 that were deemed to be material.

As described above in Note 12, Leases, in March 2024, the Company failed to make rent payments due pursuant to certain of its center leases on centers that the Company generally does not intend to operate, which resulted in an event of default under the terms of the related lease agreements. Landlords of certain of the Company’s leased centers for which the Company failed to pay rent have filed lawsuits against the Company for default on the lease payments. As of March 31, 2024, total lease liabilities related to such leases were classified as a current liability in the Company’s condensed consolidated balance sheet.

NOTE 15. VARIABLE INTEREST ENTITIES

The Company has Administrative Service Agreements (the “ASAs”) with Medical Care of NY, P.C., Medical Care of Tennessee, PLLC and Medical Care of Texas, PLLC (together, the “PCs”), which were established to employ healthcare providers to deliver healthcare services to patients in New York, Tennessee, and Texas, and with Care Optical, LLC (“Care Optical”), which provides optometry services in the state of Florida. The Company concluded that it has variable interest in the PCs and Care Optical on the basis of its ASAs which provide for a management fee payable to the Company from the PCs and Care Optical in exchange for providing management and administrative services which creates risk and a potential return to the Company. The PCs’ and Care Optical’s equity at risk, as defined by GAAP, is insufficient to finance their activities without additional support, and therefore, the PCs and Care Optical are considered to be VIEs.

In order to determine whether the Company has a controlling financial interest in the PCs and Care Optical, and, thus, is the PCs’ and Care Optical’s primary beneficiary, the Company considered whether it has (i) the power to direct the activities of PCs and Care Optical that most significantly impacts their economic performance and (ii) the obligation to absorb losses of the PCs and Care Optical or the right to receive benefits from the PCs and Care Optical that could potentially be significant to

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CAREMAX, inc.

NOTES TO condensed consolidated FINANCIAL STATEMENTS

(Unaudited)

them. The Company concluded that the member and employees of the PCs and Care Optical have no individual power to direct activities of the PCs and Care Optical that most significantly impact their economic performance. Under the ASAs, the Company is responsible for providing services that impact the growth of the patient population of the PCs and Care Optical, the management of the respective population’s healthcare needs, the provision of required healthcare services to those patients, and the PCs’ and Care Optical’s ability to receive revenue from health plans. In addition, the Company’s variable interest in the PCs and Care Optical provides the Company with the right to receive benefits that could potentially be significant to them. The single members of the PCs and Care Optical are employees of the Company. Based on this analysis, the Company concluded that it is the primary beneficiary of the PCs and Care Optical and therefore consolidates the balance sheet, results of operations and cash flow of the PCs and Care Optical.

Furthermore, as a direct result of nominal initial equity contributions by the single members of the PCs and Care Optical, the financial support CareMax provides to the PCs and Care Optical (e.g. loans) and the provisions of the arrangements described above, the interest held by the single member lacks economic substance and does not provide the member with the ability to participate in the residual profits or losses generated by the PCs and Care Optical. Therefore, all income and expenses recognized by the PCs and Care Optical are allocated to CareMax.

The following tables summarize the financial position and operations of the PCs and Care Optical (in thousands):


	March 31, 2024		December 31, 2023
Total assets	$	1,077	$	1,200
Total liabilities	$	10,906	$	9,896

	Three Months Ended March 31,
	2024		2023
Revenues	$	873	$	417
Operating expenses	$	1,727	$	1,714

NOTE 16. SUBSEQUENT EVENTS

In April 2024, the Company entered into a lease termination agreement for one of its leases. As part of this termination, the Company expects to recognize an estimated reduction in its right-of-use assets of $2.6 million, reduction in operating lease liabilities of $2.7 million, and a nominal termination loss.

Additionally, in April 2024, the Company entered into an agreement with one of its landlords, which among other things, requires us to surrender six of our leased properties by June 30, 2024. The Company is evaluating the impact of this agreement on its condensed consolidated financial statements.

On May 6, 2024, Steward Health Care System and certain of its affiliates commenced an in-court restructuring process through the filing of voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. As previously disclosed, the Company entered into certain agreements with affiliates of Steward Health Care System in connection with the Steward Acquisition. The Company is currently evaluating the impact that Steward Health Care System’s restructuring may have on the Company’s business.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this section to “CareMax,” “we,” “us,” “our,” and the “Company” refer to CareMax, Inc. together with its consolidated subsidiaries. The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (the “Report”).

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which represent our belief or current expectations, plans or forecasts of future events based on assumptions and information currently available to our management, involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control. The words “anticipate,” “believe,” “continue,” “plan,” “expect,” “estimate,” “may,” “could,” “should,” “project,” “will,” or the negative or other variations thereof and similar words or phrases or comparable terminology may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Actual results could differ materially from those discussed in these forward-looking statements due to a variety of risks and uncertainties and other factors, including but not limited to those contained in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2024, under the caption “Risk Factors” and, the following:

•

our history of losses and our future profitability remains uncertain and our net losses, level of indebtedness and significant cash used in operating activities have raised substantial doubt regarding our ability to continue as a going concern;

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the execution of our growth strategy may include divesting certain assets or businesses, which we may be unable to successfully execute and we may be unable to achieve the benefits we expect from any such divestitures;

•

we may be unable to successfully implement cost-saving measures or achieve expected benefits under our plans to optimize performance of the MSO network and our centers;

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the impact of our existing or future indebtedness and any associated debt covenants on our business and growth prospects;

•

the impact of restrictions on our current and future operations contained in certain of our agreements;

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risks relating to lease termination, lease expense escalators, lease extensions, special charges and our inability to comply with provisions of our lease agreements;

•

our ability to integrate acquired businesses, including Steward Value-Based Care, and realize the expected benefits of any such acquisitions;

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the viability of our growth strategy, including organic growth, and growth by acquisitions, and our ability to realize expected results, as well as our ability to access the capital necessary for such growth;

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our ability to manage our growth effectively, execute our business plan, maintain high levels of service and patient satisfaction and adequately address competitive challenges;

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our ability to attract new patients;

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the dependence of our revenue and operations on a limited number of key payors;

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the risk of termination, non-renewal or renegotiation of the MA contracts held by the health plans with which we contract, or the termination, non-renewal or renegotiation of our contracts with those plans;

•

the impact on our business from changes in the payor mix of our patients and potential decreases in our reimbursement rates;

•

competition from primary care facilities and other healthcare services providers;

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•

competition for physicians and nurses, and shortages of qualified personnel;

•

the impact on our business of reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program, including the MA program;

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the impact of the COVID-19 pandemic or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide on our business, financial condition and results of operation;

•

the impact on our business of state and federal efforts to reduce Medicaid spending;

•

a shift in payor mix to Medicaid payors as well as an increase in the number of Medicaid patients may result in a reduction in the average rate of reimbursement;

•

our assumption under most of our agreements with health plans of some or all of the risk that the cost of providing services will exceed our compensation;

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risks associated with estimating the amount of revenues and refund liabilities that we recognize under our risk agreements with health plans;

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the impact on our business of security breaches, loss of data, or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information;

•

the impact on our business of disruptions in our disaster recovery systems or management continuity planning;

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the potential adverse impact of legal proceedings and litigation;

•

the impact of reductions in the quality ratings of the health plans we serve;

•

our ability to maintain and enhance our reputation and brand recognition;

•

our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems;

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our ability to obtain, maintain and enforce intellectual property protection for our technology;

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the potential adverse impact of claims by third parties that we are infringing on or otherwise violating their intellectual property rights;

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our ability to protect the confidentiality of our trade secrets, know-how and other internally developed information;

•

the impact of any restrictions on our use of or ability to license data or our failure to license data and integrate third-party technologies;

•

our ability to protect data, including personal health data, and maintain our information technology systems from cybersecurity breaches and data leakage;

•

our ability to adhere to all of the complex government laws and regulations that apply to our business;

•

the impact on our business if we are unable to effectively adapt to changes in the healthcare industry, including changes to laws and regulations regarding or affecting U.S. healthcare reform;

•

our ability to navigate rules and regulations that govern our licensing and certification, as well as credentialing processes with private payors, before we can receive reimbursement for their services;

•

insolvency, credit problems or other financial difficulties that could confront our counterparties in strategic acquisitions, investments and other collaborations could expose us to significant financial risk and significantly impact our ability to expand our overall profitability;

•

our reliance on strategic relationships with third-parties to implement our growth strategy;

•

that our estimates of market opportunity and forecasts of market and revenue growth may prove to be inaccurate;

•

our operating results and stock price may be volatile;

•

our failure to comply with continued listing requirements of the Nasdaq Global Select Market;

•

risks associated with estimating the amount of revenues that we recognize under our risk agreements with health plans;

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•

our ability to develop and maintain proper and effective internal control over financial reporting; and

•

the impact of any prior period developments.

Due to the uncertain nature of these factors, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Any forward-looking statement speaks only as of the date on which statement is made, and we undertake no obligation to update any of these statements or circumstances occurring after the date of this Report. New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects.

Our Business

As of March 31, 2024, CareMax operated 55 centers in Florida, New York, and Tennessee. CareMax offers a comprehensive range of medical services, including primary and preventative care, specialist services, diagnostic testing, chronic disease management and dental and optometry services under global capitation contracts.

CareMax’s comprehensive, high touch approach to health care delivery is powered by its CareOptimize technology platform. CareOptimize is a purpose-built end-to-end technology platform that aggregates data and analyzes that data using proprietary algorithms and machine learning to support more informed care delivery decisions and to focus care decisions on preventative chronic disease management and the social determinants of health. CareMax believes that CareOptimize is designed to drive better outcomes and lower costs. CareMax has shifted from selling the CareOptimize platform to new outside customers for a software subscription fee and is instead focused on providing the software to affiliated practices of its managed services organization (“MSO”) to further improve financial, clinical and quality outcomes from the affiliated providers.

CareMax’s centers offer 24/7 access to care through employed providers and provide a comprehensive suite of high-touch health care and social services to its patients, including primary care, specialty care, telemedicine, health & wellness, optometry, dental, pharmacy and transportation. CareMax’s differentiated healthcare delivery model is focused on care coordination with vertically integrated ambulatory care and community-centric services. The goal of CareMax is to intercede as early as possible to manage chronic conditions for its patient members in a proactive, holistic, and tailored manner to provide a positive influence on patient outcomes and a reduction in overall healthcare costs. CareMax focuses on providing access to high quality care in underserved communities.

While CareMax’s primary focus is providing care to Medicare eligible seniors who are mostly 65+ (approximately 81% and 76% of revenue for the three months ended March 31, 2024 and 2023, respectively, came from these patients), we also provide services to children and adults through Medicaid programs as well as through commercial insurance plans. Substantially all of the Medicare patients cared for in CareMax’s centers are enrolled in MA plans which are run by private insurance companies and are approved by and under contract with Medicare. With MA, patients get all of the same coverage as original Medicare, including emergency care, and most plans also include prescription drug coverage. In many cases, MA plans offer more benefits than original Medicare, including dental, vision, hearing and wellness programs. We contract with nearly all national and most regional, local Medicare Advantage plans.

In addition to Medicare Advantage contracts, through our MSO we service other Medicare patients through a variety of value-based contracts, such as Medicare Shared Savings Program (“MSSP”) and ACO REACH.

Reverse Stock Split

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exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock. There was no change in the par value of our common stock or preferred stock.

References to number of shares of Class A Common Stock and per share data (except par value) in the accompanying financial statements and notes thereto for all periods presented have been adjusted to reflect the Reverse Split.

Steward Health Care Restructuring

On May 6, 2024, Steward Health Care System LLC (“Steward Health Care System”) and certain of its affiliates commenced an in-court restructuring process through the filing of voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. As previously disclosed, the Company entered into certain agreements with affiliates of Steward Health Care System in connection with the Company’s acquisition (the “Steward Acquisition”) of the Medicare value-based care business of Steward Health Care System (“Steward Value-Based Care”). The Company is currently evaluating the impact that Steward Health Care System’s restructuring may have on the Company’s business.

Key Factors Affecting Our Performance

Our Patients

As discussed above, the Company partners with Medicare, Medicaid, and commercial insurance plans. While CareMax currently services mostly Medicare patients, we also accept Medicare fee-for-service patients.


Patient Count as of*	Mar 31, 2022		Jun 30, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023		Jun 30, 2023		Sep 30, 2023		Dec 31, 2023		Mar 31, 2024
Medicare Advantage		34,000		37,000		39,500		93,500		95,500		102,500		107,000		111,500		107,000
Medicare Government VBC		—		—		—		109,500		107,000		101,000		99,500		97,500		95,000
Medicaid		28,500		29,500		31,500		33,500		33,500		30,500		28,500		25,500		31,000
Commercial		21,500		21,500		22,000		22,000		34,500		38,500		38,000		36,000		17,000
Total Count		84,000		88,000		93,000		258,500		271,000		272,500		273,000		270,000		250,000

* Figures may not sum due to rounding

Because CareMax accepts multiple insurance types, it uses a Medicare-Equivalent Member (“MCREM”) value in reviewing key factors of its performance. To determine the Medicare-Equivalent, CareMax estimates the amount of support typically received by one Medicare patient as equivalent to the level of support received by three Medicaid or Commercial patients. This is due to Medicare patients on average having significantly higher levels of chronic and acute conditions that need higher levels of care. Due to this dynamic, a 3:1 ratio is applied to make year over year comparisons of total membership more comparable. The breakdown of membership for MCREM is below:


MCREM Count as of*	Mar 31, 2022		Jun 30, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023		Jun 30, 2023		Sep 30, 2023		Dec 31, 2023		Mar 31, 2024
Medicare Advantage		34,000		37,000		39,500		93,500		95,500		102,500		107,000		111,500		107,000
Medicare Government VBC		—		—		—		109,500		107,000		101,000		99,500		97,500		95,000
Medicaid		9,400		9,900		10,600		11,100		11,200		10,100		9,500		8,400		10,300
Commercial		7,200		7,100		7,300		7,400		11,400		12,900		12,700		11,900		5,700
Total Count		50,600		54,000		57,400		221,500		225,100		226,500		228,700		229,300		218,000

* Figures may not sum due to rounding

Medicare Advantage Patients

As of March 31, 2024, CareMax had approximately 107,000 MA patients of which 99% were in value-based agreements. Approximately 41% of patients in the Medicare Advantage value-based care agreements were in full-risk contracts. This means CareMax has been selected as the patient’s primary care provider and is financially responsible for some or all of the patient’s medical costs. CareMax is attributed an agreed percentage of the premium the Medicare plan receives from the Centers for Medicare and Medicaid Services (“CMS”) (typically a substantial majority of such premium given the risk assumed by the Company). A reconciliation is performed periodically and if premiums exceed medical costs paid by the MA plan, CareMax receives payment from the Medicare plan. If medical costs paid by the Medicare plan exceed premiums, CareMax is responsible to reimburse the Medicare plan.

Medicare Government Value-Based Care (“VBC”) Programs

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As of March 31, 2024, CareMax had approximately 95,000 patients enrolled in Medicare Government VBC Programs, of which approximately 92% were in the MSSP and 8% were in the ACO REACH program. The MSSP is sponsored by the CMS. The MSSP allows participating Accountable Care Organizations (“ACOs”) to receive a share of cost savings they generate in connection with the management of costs and quality of medical services rendered to Medicare beneficiaries. Payments to the ACO participants, if any, are calculated annually and paid once a year by CMS on cost savings generated by the ACO participant relative to the ACO participants’ CMS benchmark. Under the MSSP, the ACO must meet certain qualifications to receive the full amount of its allocable cost savings or they either receive nothing or are responsible for shared losses. The MSSP rules require CMS to develop a benchmark for savings to be achieved by each participant if the participant is to receive shared savings. An ACO that meets the MSSP’s quality performance standards will be eligible to receive a share of the savings to the extent its assigned beneficiary medical expenditures are below the medical expenditure benchmark provided by CMS. A Minimum Savings Rate (“MSR”), which varies depending on the number of beneficiaries assigned to the ACO, must be achieved before the ACO can receive up to a 75% share of the savings if quality performance standards are met; the ACO is also responsible for 40% of the deficit. Once the MSR is surpassed, all the savings below the benchmark provided by CMS will be shared with the ACO.

Medicaid Patients

As of March 31, 2024, CareMax had approximately 31,000 Medicaid patients of which 100% were in value-based agreements. Approximately 92% of patients in the Medicaid value-based care agreements were in full-risk contracts. Using the MCREM metric, the level of support required to manage these Medicaid patients equates to that of approximately 10,300 Medicare patients. In Florida, most Medicaid recipients are enrolled in the Statewide Medicaid Managed Care program.

Similar to the risk it takes with Medicare, CareMax is attributed an agreed percentage of the premium the Medicaid plan receives from Florida’s Agency for Health Care Administration (“AHCA”) (typically a substantial majority of such premium given the risk assumed by the Company). A reconciliation is performed periodically and if premiums exceed medical costs paid by the Medicaid plan, CareMax receives payment from the Medicaid plan. If medical costs paid by the Medicaid plan exceed premiums, we are responsible to reimburse the Medicaid plan.

Commercial Patients

As of March 31, 2024, CareMax managed approximately 17,000 commercial patients of which 91% were under a value-based agreement that provided upside-only financial incentives for quality and utilization performance. Using the MCREM metric, the level of support required to manage these commercial patients equates to that of approximately 5,700 Medicare patients.

CareMax cares for a number of commercial patients (less than 1% of the Company's total patients) for whom it is reimbursed on a fee-for-service basis via their health plan in situations where it does not have a capitation relationship with that particular health plan.

CareMax fee for-service revenue, received directly from commercial plans, on a per patient basis is typically lower than its per patient revenue for at-risk patients based in part because its fee-for-service revenue covers only the primary care services that it directly provides to the patient, while the risk revenue is intended to compensate it for the services directly performed by CareMax as well as the financial risk that it assumes related to the third-party medical expenses of at-risk patients.

Contracts with Payors

Our economic model relies on its capitated partnerships with payors which manage and market Medicare plans across the United States. CareMax has established strategic value-based relationships with a number of different payors for Medicare Advantage patients, Medicaid patients, and ACA patients. During the three months ended March 31, 2024, our three largest payor relationships were Payor A, Payor C, and Payor D, which generated 19%, 18%, and 13%, of our revenue, respectively. During the three months ended March 31, 2023, our three largest payor relationships were Payor A, Payor B and Payor C, which generated 31%, 22% and 20% of our revenue, respectively. These existing contracts and relationships with our national partners and their understanding of the value of the CareMax model reduces the risk of entering into new markets as CareMax typically seeks to have payor contracts in place before entering a new market. Maintaining, supporting, and growing these relationships, particularly as CareMax enters new markets, are critical to our long-term success. We believe CareMax’s model is well-aligned with that of its payor partners - to drive better health outcomes for their patients, enhance patient satisfaction,

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and drive incremental patient and revenue growth. This alignment of interests helps ensure our continued success with our payor partners.

Effectively Manage the Cost of Care for Our Patients

The capitated nature of our contracting with payors requires us to prudently manage the medical expense of our patients. Our external provider costs are our largest expense category, representing 71% of our total operating expenses for the three months ended March 31, 2024 and 39% of our total operating expenses for the three months ended March 31, 2023. Our care model focuses on leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as acute hospital admissions. Our patients retain the freedom to seek care at emergency rooms or hospitals; we do not restrict their access to care. Therefore, we could be liable for potentially large medical claims should we not effectively manage our patients’ health. We utilize stop-loss insurance for our patients, protecting us from medical claims in excess of certain levels.

Seasonality to our Business

Due to the large number of dual-eligible patients (meaning eligible for both Medicare and Medicaid) we serve, the annual enrollment period does not materially affect our growth during the year. We typically see large increases in ACA patients during the first quarter as a result of the ACA annual enrollment period (October to December). However, this is not a large portion of our business.

Our operational and financial results will experience some variability depending upon the time of year in which they are measured. This variability is most notable in the following areas:

Per-Patient Revenue

The revenue derived from our at-risk patients is a function of the percentage of premium we have negotiated with our payor partners, as well as our ability to accurately and appropriately document the acuity of a patient. We experience some seasonality with respect to our per-patient revenue, as it will generally decline over the course of the year. In January of each year, CMS revises the risk adjustment factor for each patient based upon health conditions documented in the prior year, leading to changes in per-patient revenue. As the year progresses, our per-patient revenue declines as new patients join us, typically with less complete or accurate documentation (and therefore lower risk-adjustment scores), and patient mortality disproportionately impacts our higher-risk (and therefore greater revenue) patients.

External Provider Costs

External Provider Costs will vary seasonally depending on a number of factors, but most significantly the weather. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which can result in an increase in medical expenses during these time periods. We would therefore expect to see higher levels of per-patient medical costs in the first and fourth quarters. Medical costs also depend upon the number of business days in a period. Shorter periods will have lesser medical costs due to fewer business days. Business days can also create year-over-year comparability issues if one year has a different number of business days compared to another. We would also expect to experience an impact in the future should there be another pandemic such as COVID-19, which may result in increased or decreased total medical costs depending upon the severity of the infection, the duration of the infection and the impact to the supply and availability of healthcare services for our patients.

Payor Settlements

As it relates to our MSSP contracts, settlements from the prior year from the CMS typically take place during the fourth quarter of each year, which results in variability of our accounts receivable, cash flow from operations, and cash balances throughout the year.

Investments in Centers

We have invested into new de novo centers both within and outside of Florida. De novo centers require upfront capital and operating expenditures, which typically are not fully offset by revenues in the near-term, as a result of which we expect a period of unprofitability in our de novo centers before they break even. Costs we incur prior to opening of a de novo center include (1) incremental payroll costs from employees specifically associated with the operational, contractual, physical, or regulatory

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infrastructure for de novo centers, prior to their opening; (2) legal costs directly associated with the de novo centers, incurred prior to their opening, which includes services such as execution of leases, health plan contracts and other agreements; (3) other expenses related to diligence, design, permitting, and other “soft costs” at new sites; and (4) rent and facility expenses prior to center opening. Once a de novo center opens, we incur post-opening losses, which consist of center-level operating losses recognized at a de novo center until the center breaks even, up to 18 months after opening. The de novo post-opening losses consist of revenue, external provider costs and cost of care allocated to the de novo center. During the three months ended March 31, 2024 and 2023, we incurred de novo pre-opening costs and post-opening losses, on a combined basis, of $4.8 million and $6.4 million, respectively.

Key Business Metrics

In addition to our financial information which conforms with generally accepted accounting principles in the United States of America (“GAAP”), management reviews a number of operating and financial metrics, including the following key metrics, to evaluate its business, measure its performance, identify trends affecting its business, formulate business plans, and make strategic decisions.

Use of Non-GAAP Financial Information

Certain financial information and data contained in this Report is unaudited and does not conform to Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in, or may be presented differently in, any periodic filing, information or proxy statement, or prospectus or registration statement to be filed by the Company with the SEC. Some of the financial information and data contained in this Report, such as Adjusted EBITDA and Platform Contribution have not been prepared in accordance with GAAP. These non-GAAP measures of financial results are not GAAP measures of our financial results or liquidity and should not be considered as an alternative to net income (loss) as a measure of financial results, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses these non-GAAP measures for trend analyses and for budgeting and planning purposes.

The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing the Company’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. You should review the Company’s GAAP financial statements, which are included in this Report.

Adjusted EBITDA

Beginning with the Company’s Form 10-Q for the three months ended June 30, 2023, for all periods presented, the Company has updated its calculation of the reconciliation of Adjusted EBITDA on a retrospective basis to no longer add back certain compensation costs for stay-on bonuses and duplicative salaries previously included within the Business Combination integration costs adjustment.

Adjusted EBITDA is defined as net income or loss before interest expense, depreciation and amortization, remeasurement of derivative and contingent earnout liabilities, goodwill impairment, stock-based compensation, Business Combination integration costs, acquisition and disposition related costs, income tax expense or benefit, and other income or expenses that are considered one-time in nature as determined by management.

Adjusted EBITDA is intended to be used as a supplemental measure of our performance that is neither required by, nor presented in accordance with GAAP. Management believes that the use of Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measure with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentations of these measures should

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not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion. Due to these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Reconciliation to Adjusted EBITDA


	Three Months Ended March 31,
(in thousands)	2024			2023			Y/Y Change
Net loss	$	(43,408	)	$	(82,082	)	$	38,674
Interest expense		19,756			10,711			9,045
Depreciation and amortization		6,705			6,576			129
Remeasurement of derivative and contingent earnout liabilities		2,381			(37,242	)		39,623
Goodwill impairment		—			98,000			(98,000	)
Stock-based compensation		2,365			2,298			68
Business Combination integration costs (1)		381			716			(335	)
Acquisition and disposition related costs (2)		1,052			622			430
Other (3)		109			(187	)		296
Income tax expense		177			177			—
Adjusted EBITDA	$	(10,482	)	$	(411	)	$	(10,071	)

(1)

Represents initial costs to set up public company processes, incremental vendor expenses identified as temporary or duplicative and expected to be rationalized in the short term, and legal and professional expenses outside of the ordinary course of business, which are being incurred as part of the Company’s efforts as it integrates the two privately held companies that were combined in the Business Combination. Significant components of Business Combination integration costs were as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Consulting and legal fees (a)	$	371	$	282
Other (b)		10		434
	$	381	$	716

(a) Represents consulting and legal costs directly associated with efforts related to integration of the two privately held companies that were combined in the Business Combination.

(b) Represents primarily vendor expenses identified as temporary or duplicative and/or expenses outside the ordinary course of business and not necessary to run the Company’s business.

(2)

Represents legal and incremental compensation payroll costs directly associated with efforts to achieve synergies related to closed transactions and legal and advisory costs related to exploration of potential dispositions. Significant components of the acquisition and disposition related costs were as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Advisor and other professional fees (a)	$	524	$	42
Compensation costs (b)		528		580
	$	1,052	$	622

(a) Includes payments to our third-party transaction advisory firm associated with transaction contracts, including the Steward transaction that closed in November 2022. Also, costs include legal and accounting fees directly associated with contemplated or closed transactions or potential dispositions.

(b) Includes incremental payroll compensation expense for employees directly associated with services to achieve synergies related to closed transactions.

(3)

Components of other were as follows:


	Three Months Ended March 31,
(in thousands)	2024			2023
Interest income	$	(668	)	$	(253	)
Severance costs		694			—
Other		83			66
	$	109		$	(187	)

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Operating Metrics and Non-GAAP Platform Contribution

In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

The following metrics are as of the end of the indicated date, except for Platform Contribution, which is for the three month period ended as of the indicated date:



Non-GAAP Operating Metrics	Mar 31, 2022			Jun 30, 2022			Sep 30, 2022			Dec 31, 2022			Mar 31, 2023			Jun 30, 2023			Sep 30, 2023			Dec 31, 2023			Mar 31, 2024
Centers		48			48			51			62			62			62			62			56			55
Markets		6			6			7			7			7			7			7			7			6
Patients (MCREM)*		50,600			54,000			57,400			221,500			225,100			226,500			228,700			229,300			218,000
Patients in value-based care arrangements (MCREM)		79.8	%		81.0	%		78.2	%		97.6	%		99.0	%		99.4	%		98.8	%		98.8	%		99.1	%
Platform Contribution ($, millions)	$	17.2		$	21.6		$	20.6		$	25.6		$	24.7		$	28.6		$	21.1		$	(55.6	)	$	9.1
* MCREM defined as Medicare Equivalent Members, which assumes the level of support received by a Medicare patient is equivalent to that received by three Medicaid or Commercial patients.

Centers

We define our centers as those primary care centers open for business and open for enrollment of patients at the end of a particular period.

Patients (MCREM)

MCREM patients include both at-risk MA patients (those patients for whom we are financially responsible for their total healthcare costs) as well as risk and non-risk, non-MA patients. We define our total at-risk patients as patients who have selected us as their provider of primary care medical services as of the end of a particular period and for whom we take responsibility for at least some degree of downside risk in capitated contracts. At-risk patient remains active in our system until we are informed by the health plan the patient is no longer active. As discussed above, CareMax calculates the amount of support typically received by one Medicare patient as equivalent to the level of support received by three Medicaid or Commercial patients.

Platform Contribution

We define Platform Contribution as gross profit plus depreciation and amortization, stock-based compensation recognized within cost of care and other adjustments, as disclosed below. Gross profit is defined as revenue less the sum of (i) external provider costs; (ii) cost of care, including stock-based compensation, and (iii) depreciation and amortization expense. We believe this metric best reflects the economics of our care model as it includes all medical claims expense associated with our patients’ care as well as the costs we incur to care for our patients at our centers. As a center matures, we expect the Platform Contribution from that center to increase both in terms of absolute dollars as well as a percentage of revenue. This increase will be driven by improving patient contribution economics over time, as well as our ability to generate operating leverage on the costs of our centers. Our aggregate Platform Contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers.

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to Platform Contribution:

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	Three Months Ended
(in millions)	Mar 31, 2022		Jun 30, 2022		Sep 30, 2022		Dec 31, 2022		Mar 31, 2023		Jun 30, 2023		Sep 30, 2023		Dec 31, 2023			Mar 31, 2024
Gross profit (a)	$	11.2	$	15.4	$	14.8	$	17.2	$	17.1	$	20.4	$	12.0	$	(63.5	)	$	1.5
Depreciation and amortization		5.1		4.9		4.6		7.2		6.6		6.8		6.8		7.6			6.7
Stock-based compensation		0.4		1.3		1.2		1.2		1.0		1.3		1.2		0.1			0.7
Other adjustments (b)		0.5		0.1		0.1		—		—		—		1.0		0.2			0.2
Platform Contribution	$	17.2	$	21.6	$	20.6	$	25.6	$	24.7	$	28.6	$	21.1	$	(55.6	)	$	9.1

(a) Gross profit reflects the reclassification of stock-based compensation expense previously included in corporate, general and administrative expenses, which decreased gross profit by $0.4 million during the three months ended March 31, 2022, $1.3 million during the three months ended June 30, 2022, $1.2 million during the three months ended September 30, 2022, and $1.2 million during the three months ended December 31, 2022.
(b) Other adjustments include incremental costs related to post-Business Combination integration initiatives and other one-time center-level costs. Other adjustments reflected during the three months ended March 31, 2022, include $0.3 million of costs for a pilot project regarding outsourcing. During the three months ended September 30, 2023, December 31, 2023, and March 31, 2024, other adjustments include $1.0 million, $0.2 million and $0.2 million, respectively, of severance costs related to center staff.

Components of Results of Operations

Revenue

Medicare Risk-Based Revenue and Medicaid Risk-Based Revenue. Our Medicare and Medicaid risk-based revenue consists primarily of capitation fees for medical services provided by us or managed by our MSO under a global capitation arrangement made directly with various MA payors. Capitation is a fixed amount of money per patient per month paid in advance for the delivery of health care services, whereby we are generally liable for medical costs in excess of the fixed payment and are able to retain any surplus created if medical costs are less than the fixed payment. A portion of our capitated revenues are typically prepaid monthly to us based on the number of MA patients selecting us as their primary care provider. Our capitated rates are determined as a percentage of the premium the MA plan receives from CMS for our at-risk members. Those premiums are determined via a competitive bidding process with CMS and are based upon the cost of care in a local market and the average utilization of services by the patients enrolled. Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient. Payors with higher acuity patients receive more in premium, and those with lower acuity patients receive less in premium. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after the final data is compiled. As premiums are adjusted via this risk adjustment model, our capitation payments will correlate with how our payor partners’ premiums change with CMS. Risk adjustment in future periods may be impacted by COVID-19 and our inability to accurately document the health needs of our patients, which may have an adverse impact on our revenue.

For Medicaid, premiums are determined by Florida’s AHCA and base rates are adjusted annually using historical utilization data projected forward by a third-party actuarial firm. The rates are established based on specific cohorts by age and sex and geographical location. AHCA uses a “zero sum” risk adjustment model that establishes acuity for certain cohorts of patients quarterly, and depending on the scoring of that acuity, may periodically shift premiums from health plans with lower acuity members to health plans with higher acuity members.

Government Value-Based Care Revenue. Government value-based care revenue consists primarily of revenue derived from the MSSP. The MSSP is sponsored by the CMS. The MSSP allows ACOs to receive a share in cost savings they generate in connection with the managing of costs and quality of medical services rendered to Medicare beneficiaries. Payments to ACO participants, if any, are calculated annually and paid once a year by CMS on cost savings generated by the ACO participant relative to the ACO participants’ CMS benchmark. Under the MSSP, an ACO must meet certain qualifications to receive the full amount of its allocable cost savings or they either receive nothing or are responsible for shared losses. The MSSP rules require CMS to develop a benchmark for savings to be achieved by each ACO if the ACO is to receive shared savings. An ACO that meets the MSSP’s quality performance standards will be eligible to receive a share of the savings to the extent its assigned beneficiary medical expenditures are below the medical expenditure benchmark provided by CMS. A Minimum Savings Rate (“MSR”) must be achieved before the ACO can receive a share of the savings. Once the MSR is surpassed, all the savings below the benchmark provided by CMS will be shared at a certain percentage with the ACO. The MSR varies depending on the number of beneficiaries assigned to the ACO.

Other Revenue. Other revenue consists primarily of professional capitation payments and pharmacy revenue. These revenues are a fixed amount of money per patient per month paid in advance for the delivery of primary care services only, whereby

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CareMax is not liable for medical costs in excess of the fixed payment. Capitated revenues are typically paid monthly to CareMax based on the number of patients selecting us as their primary care provider. Our capitated rates are fixed, contractual rates. Incentive payments for Healthcare Effectiveness Data and Information Set (“HEDIS”) and any services paid on a fee-for-service basis by a health plan are also included in other revenue. Other revenue also includes ancillary fees earned under contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether those patients receive their care from our affiliated medical groups. Revenue for primary care service for patients in partial risk or upside-only contracts, pharmacy revenue and revenue generated from CareOptimize are reported in other revenue.

Operating Expenses

External Provider Costs. External provider costs include services at-risk patients utilize that are rendered by providers other than CareMax. These include claims paid by the health plan and estimates for unpaid claims. The estimated reserve for incurred but not paid claims is included as a reduction to accounts receivable as we do not pay medical claims. Actual claims expense will differ from the estimated liability due to differences in estimated and actual patient utilization of health care services, the amount of charges, and other factors. We typically reconcile our medical claims expense with our payor partners on a monthly basis and adjust our estimate of incurred but not paid claims if necessary. To the extent we revise our estimates of incurred but not paid claims for prior periods up or down, there would be a correspondingly favorable or unfavorable effect on our current period results that may or may not reflect changes in long term trends in our performance. We expect our medical claims expenses to increase in both absolute dollar terms as well as on a PMPM basis given the healthcare spending trends within the Medicare population and the increasing disease burden of patients as they age.


	Three Months Ended March 31,
Increase (decrease)	2024			2023
Revenue	$	(540	)	$	(26,913	)
External provider costs		(7,363	)		(12,413	)
Short-term and long-term accounts receivable, net		(2,680	)		(14,500	)
Risk settlement liabilities		(9,503	)		—

Cost of Care. Cost of care includes the costs of additional medical services we provide to patients that are not paid by the plan. These services include patient transportation, medical supplies, auto insurance and other specialty costs, like dental or vision. In some instances, we have negotiated better rates than the health plans for these health plan covered services. In addition, cost of care includes rent, utilities and facilities costs required to maintain and operate our centers, and compensation of the clinic and support staff.

Cost of care also includes distributions to affiliate IPA physicians and physician groups. Expenses from our physician groups that contract with our MSO are consolidated with other clinical and MSO expenses to determine profitability for our at-risk and fee-for-service arrangements. Physician group economics are not evaluated on an individual provider basis, as MSO related medical expenses are consolidated at the contract level.

We measure the incremental cost of our capitation agreements by starting with our center-level expenses, which are calculated based upon actual expenses incurred at a specific center for a given period of time and expenses that are incurred centrally and allocated to centers on a ratable basis. These expenses are allocated to our at-risk patients based upon the number of visit slots these patients utilized compared to the total slots utilized by all of our patients. All visits, however, are not identical and do not require the same level of effort and expense on our part. Certain types of visits are more time and resource intensive and therefore result in higher expenses for services provided internally. Generally, patients who are earlier in their tenure with CareMax utilize a higher percentage of these more intensive visits, as we get to know the patient and properly assess and document such patient’s health condition.

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Sales and Marketing Expenses. Sales and marketing expenses represent employee-related expenses, such as salaries, commissions and related benefits, including stock-based compensation for sales and marketing departments. These expenses also include marketing and community relations related costs, such as radio and television advertising, events and promotional items.

Corporate, General and Administrative Expenses. Corporate, general, and administrative expenses represent employee-related expenses, such as salaries and related benefits, including stock-based compensation for support functions like finance, legal, human resources, and business developments. In addition, these expenses include corporate technology, third party professional services and corporate occupancy costs.

Depreciation and Amortization Expenses. Depreciation and amortization expenses are primarily attributable to our capital investments and consist of fixed asset depreciation and amortization of intangibles considered to have definite lives.

Nonoperating Income (Expenses)

Interest expense. Interest expense consists primarily of interest payments, paid-in-kind interest, amortization of debt issuance costs and debt discount on our outstanding borrowings.

Change in fair value of derivative liabilities. Change in fair value of derivative liabilities consists of changes in fair value of the public warrants and private placement warrants and Credit Agreement embedded derivatives.

Gain on remeasurement of contingent earnout liabilities. Gain on remeasurement of contingent earnout liabilities consists of changes in the fair value of contingent earnout liabilities.

Other income (expense), net. Other income (expense), net, consists of miscellaneous non-operating corporate expenses and gains.

Results of Operations

Three Months Ended March 31, 2024 compared to Three Months Ended March 31, 2023

The following table sets forth our condensed consolidated statements of operations data for the periods indicated:


	Three Months Ended March 31,
(in thousands)	2024			2023			$ Change			% Change
Revenue
Medicare risk-based revenue	$	168,502		$	121,593		$	46,909			38.6	%
Medicaid risk-based revenue		37,653			25,626			12,028			46.9	%
Government value-based care revenue		18,815			10,010			8,805			88.0	%
Other revenue		7,276			15,754			(8,479	)		(53.8	%)
Total revenue		232,246			172,983			59,262			34.3	%
Operating expenses
External provider costs		180,941			110,673			70,268			63.5	%
Cost of care		43,133			38,627			4,507			11.7	%
Sales and marketing		3,064			3,765			(701	)		(18.6	%)
Corporate, general and administrative		20,108			23,965			(3,857	)		(16.1	%)
Depreciation and amortization		6,705			6,576			129			2.0	%
Goodwill impairment		—			98,000			(98,000	)		(100.0	%)
Total operating expenses		253,951			281,606			(27,655	)		(9.8	%)
Operating loss		(21,705	)		(108,623	)		86,918			80.0	%
Nonoperating (expenses) income
Interest expense		(19,756	)		(10,711	)		(9,045	)		(84.4	%)
Change in fair value of derivative liabilities		(2,381	)		1,107			(3,487	)		(315.1	%)
Gain on remeasurement of contingent earnout liabilities		—			36,136			(36,136	)		(100.0	%)
Other income, net		610			187			424			227.2	%
Total nonoperating (expenses) income		(21,526	)		26,718			(48,244	)		(180.6	%)
Loss before income taxes		(43,231	)		(81,904	)		38,673			47.2	%
Income tax expense		(177	)		(177	)		—			0.0	%
Net loss	$	(43,408	)	$	(82,082	)	$	38,674			47.1	%

* Figures may not sum due to rounding

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Medicare risk-based revenue. Medicare risk-based revenue was $168.5 million for the three months ended March 31, 2024, an increase of $46.9 million, or 38.6%, compared to $121.6 million for the three months ended March 31, 2023. This increase was driven primarily by a 23.5% increase in the total number of at-risk Medicare patients and a 12.2% increase in rates.

Medicaid risk-based revenue. Medicaid risk-based revenue was $37.7 million for the three months ended March 31, 2024, an increase of $12.0 million, or 46.9%, compared to $25.6 million for the three months ended March 31, 2023. This increase was driven primarily by a 64.8% increase in rates and $3.7 million of favorable net prior period development, partially offset by 10.8% decrease in the total number of at-risk Medicaid patients.

Government value-based care revenue. Government value-based care revenue was $18.8 million for the three months ended March 31, 2024, an increase of $8.8 million, or 88.0%, compared to $10.0 million for the three months ended March 31, 2023. The increase is the result of higher estimated MSSP shared savings, as compared to the prior year.

Other revenue. Other revenue was $7.3 million for the three months ended March 31, 2024, a decrease of $8.5 million, or 53.8%, compared to $15.8 million for the three months ended March 31, 2023. The decrease is primarily due to a decrease in capitation and partial risk revenue, as risk contracts are converted to full risk, and the impact of unfavorable net prior period development of $3.9 million, partially offset by an increase in pharmacy revenue.

External provider costs. External provider costs were $180.9 million for the three months ended March 31, 2024, an increase of $70.3 million, or 63.5%, compared to $110.7 million for the three months ended March 31, 2023. This increase was driven primarily by an increase in claim costs and a 15.7% increase in the total number of at-risk patients, partially offset by $7.4 million of favorable net prior period development.

Cost of care. Cost of care expenses were $43.1 million for the three months ended March 31, 2024, an increase of $4.5 million, or 11.7%, compared to $38.6 million for the three months ended March 31, 2023. The increase was due to increases in pharmacy costs, partially offset by a reduction in headcount and payroll related costs in the current period, as compared to the prior period.

Sales and marketing expenses. Sales and marketing expenses were $3.1 million for the three months ended March 31, 2024, a decrease of $0.7 million, or 18.6%, compared to $3.8 million for the three months ended March 31, 2023. The decrease is due to a reduction in our sales staff and marketing efforts in 2024 as compared to 2023, related to our effort to reduce operating expenses.

Corporate, general and administrative expenses. Corporate, general and administrative expenses were $20.1 million for the three months ended March 31, 2024, a decrease of $3.9 million, or 16.1%, compared to $24.0 million for the three months ended March 31, 2023. The decrease is primarily due to lower payroll-related expenses, related to our initiative to reduce operating expenses.

Depreciation and amortization expenses. Depreciation and amortization expenses were $6.7 million for the three months ended March 31, 2024, an increase of $0.1 million, or 2.0%, compared to $6.6 million for the three months ended March 31, 2023.

Goodwill impairment. During the three months ended March 31, 2024, the Company recognized a goodwill impairment of $0, a decrease of $98.0 million, or 100.0%, compared to $98.0 million for the three months ended March 31, 2023. This decrease is mainly driven by a reduction of the market value of the Company's Class A Common Stock in the prior period. Refer to Note 5, Goodwill And Other Intangibles Assets, in the Notes to the condensed financial statements within this report.

Interest expenses. Interest expenses were $19.8 million for the three months ended March 31, 2024, an increase of $9.0 million, or 84.4%, compared to $10.7 million for the three months ended March 31, 2023. This increase was due to the increased borrowings and higher weighted-average interest rate. Refer to Note 7, Debt and Related Party Debt, in our condensed consolidated financial statements included in this Report for additional information on the borrowings outstanding as of March 31, 2024.

Change in fair value of derivative liabilities. The Company recorded a loss on fair value of derivative liabilities of $2.4 million for the three months ended March 31, 2024, a decrease of $3.5 million, or 315.1%, compared to a gain of $1.1 million for the three months ended March 31, 2023. This decrease was driven by the increase in the fair value of Credit Agreement embedded derivative liabilities, partially offset by the decrease in market value of Company's Class A Common Stock, which caused the gain in the fair value of the derivative warrant liabilities during the three months ended March 31, 2023.

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Gain on remeasurement of contingent earnout liabilities. We recorded a gain of $36.1 million for the three months ended March 31, 2023. This gain was driven by the decrease in the market value of the Company's Class A Common Stock from December 31, 2022. There was no activity during the three months ended March 31, 2024 due to the contingent earnout consideration being reclassified into additional paid-in-capital as of June 30, 2023.

Other income, net. Other income, net was $0.6 million for the three months ended March 31, 2024, an increase of $0.4 million, or 227.2%, as compared to other income, net of $0.2 million for the three months ended March 31, 2023. This increase was mainly due to interest income earned in 2024 on our money market investments.

Liquidity and Capital Resources

Overview

As of March 31, 2024, we had cash and cash equivalents of $41.5 million.

Our principal sources of liquidity have been cash generated by our centers and MSO operations, and borrowings under our credit facilities. We have used these funds to meet our capital requirements, which consist of salaries and labor, benefits and other employee-related costs, product and supply costs, third-party customer service, billing and collections and logistics costs, capital expenditures including patient equipment, center and office lease expenses, insurance premiums, acquisitions, and debt service.

Our future capital expenditures will depend on many factors, including patient volume, revenue growth rates, the pace and scale of our expansion in new and existing markets and any future acquisitions. Many of our capital expenditures are made in advance of patients beginning service. Certain operating costs are incurred at the beginning of the equipment service period and during initial patient set up. We may be required to seek additional equity or debt financing, in addition to cash on hand and borrowings under our credit facilities in connection with operating or growing our business, including debt financing that may be available to us from certain health plans for each new center that we open under the terms of our agreements with those health plans. In the event that additional financing is required from outside sources, we may not be able to raise it on acceptable terms or at all. If additional capital is unavailable when desired, our business, results of operations, and financial condition would be materially and adversely affected.

Refer to Note 1, Description of Business and Going Concern, to the condensed consolidated financial statements that appear elsewhere in this Quarterly Report on Form 10-Q for details regarding our going concern considerations. As a result of our recent financial performance and current projections, we do not expect to be in compliance with the maximum leverage ratio and minimum liquidity covenants specified in the Credit Agreement or with financial covenants on certain lease agreements for the twelve months from the date of issuance of the condensed consolidated financial statements that appear elsewhere in this Quarterly Report on Form 10-Q. As a result, the indebtedness outstanding under the Credit Agreement, and certain operating and finance lease liabilities related to agreements with which we were in default, were classified as current within the condensed consolidated balance sheets.

Credit Facilities

Credit Agreement

In May 2022, the Company entered into a credit agreement (the “Credit Agreement”) that provided for an aggregate of up to $300 million in term loans, comprised of (i) initial term loans in the aggregate principal amount of $190 million (the “Initial Term Loans”) and (ii) a delayed term loan facility in the aggregate principal amount of $110 million (the “Delayed Draw Term Loans”). The Credit Agreement permits the Company to enter into certain incremental facilities subject to compliance with the terms, conditions and covenants set forth therein. In May 2022, the Company drew $190.0 million of the Initial Term Loans and used approximately $121.0 million of the net proceeds from this borrowing to repay its outstanding obligations under Existing Credit Agreement and recognized related debt extinguishment losses of $6.2 million.

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instrument. The Company has concluded that certain embedded derivatives within the Credit Agreement meet these criteria and, as such, are valued separate and apart from the Credit Agreement and are recorded at fair value each reporting period.

In March 2023, the Company entered into the Second Amendment to the Credit Agreement. The Second Amendment amended the Credit Agreement to, among other things, (i) provide for a new incremental delayed draw term loan B facility in an aggregate principal amount of $60.0 million; (ii) revise the commitment expiration date for the Company’s existing $110.0 million Delayed Draw Term Loan to forty-five days following the Amendment Closing Date, (iii) extend the commencement of amortization payments on loans under the Credit Agreement from March 31, 2024 to May 31, 2025; (iv) reduce the amount of interest that the Company may elect to capitalize from 4.00% to 3.50% beginning on the second anniversary of the execution date of the Credit Agreement, 3.00% beginning on the third anniversary of the execution date of the Credit Agreement, and 1.50% beginning on December 10, 2025; (v) increase the amount of the super-priority revolving credit facility that is permitted to be added to the Credit Agreement to $45.0 million and provide that the entirety of such facility may be used for general corporate purposes; and (vi) amend the prepayment provisions of the Credit Agreement, including to have such provisions run as of the Amendment Closing Date.

The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, liens or encumbrances, to make certain investments, to enter into sale-leaseback transactions or sell certain assets, to make certain restricted payments or pay dividends, to enter into consolidations, to transact with affiliates and to amend certain agreements, subject in each case to the exceptions and other qualifications as provided in the Credit Agreement. The Credit Agreement also contains covenants that require the Company to satisfy a minimum liquidity requirement of $50.0 million, which may be decreased to $25.0 million if the Company achieves a certain adjusted EBITDA, and maintain a maximum total net leverage ratio based on the Company’s consolidated EBITDA, as defined in the Credit Agreement, with de novo losses excluded from the calculation of such ratio for up to 36 months after the opening of a de novo center, which maximum total leverage ratio will initially be 8.50 to 1.00, commencing with the fiscal quarter ended September 30, 2022 and is subject to a series of step-downs. For the fiscal quarters ending September 30, 2026 and thereafter the Company must maintain a maximum total net leverage ratio no greater than 5.50 to 1.00.

On March 15, 2024 (the “Third Amendment Effective Date”), the Company entered into a Waiver and Third Amendment to Credit Agreement (the “Third Amendment”) among us, certain of our subsidiaries, as guarantors, the lenders party thereto and Jefferies Finance LLC, as administrative agent and collateral agent. The Third Amendment amended the Credit Agreement to, among other things, (i) waive certain events of default under the Credit Agreement in the limited manner set forth therein through May 15, 2024 (the “Third Amendment Specified Period”), subject to an earlier termination of the waiver upon the occurrence of certain specified events; (ii) increase the applicable margin rate by 2.00% during the Third Amendment Specified Period, which additional interest we may elect to capitalize as principal amount on the outstanding loans; and (iii) modify certain covenants contained in the Credit Agreement, including, but not limited to, reducing the minimum liquidity requirement to $10 million during the Third Amendment Specified Period and providing for additional reporting to the lenders.

During the three months ended March 31, 2024 and 2023, the Company drew $0 and $30.0 million of the Delayed Draw Term Loans, respectively. As of March 31, 2024, there was no remaining availability under the Delayed Draw Term Loans.

Based on the elections made by the Company, as of March 31, 2024, borrowings under the Credit Agreement bore interest of Term SOFR (calculated as the Secured Overnight Financing Rate published on the Federal Reserve Bank of New York’s website, plus the applicable credit spread adjustment based on the elected interest period) plus an applicable margin rate of 11.00%. As permitted under the Credit Agreement, the Company elected to capitalize 6.00% of the interest as principal amount. As a result of this election, the cash interest component of the applicable margin increased by 0.50%. Amortization payments under the Credit Agreement are payable in quarterly installments, commencing on May 31, 2025, in aggregate principal amounts equal to 0.25% of the aggregate outstanding principal amount of Initial Term Loans and Delayed Draw Term Loans. All amounts owed under the Credit Agreement are due in May 2027.

As of March 31, 2024, the Company was in compliance with all of the financial covenants under the Credit Agreement, as amended through the Third Amendment.

Loan and Security Agreement

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liability company and wholly-owned subsidiary of the Company (“Merger LLC I”), Sparta Merger Sub II LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (together with Merger LLC I, the “Guarantors”), Steward Accountable Care Network, Inc. (n/k/a as Steward Accountable Care Network, LLC) and Steward National Care Network, Inc. (n/k/a Steward National Care Network, LLC), as borrowers (the “Borrowers”), CAJ Lending LLC (“CAJ”) and Deerfield Partners L.P., as lenders (the “Lenders”), and CAJ, as administrative agent and collateral agent (in such capacity, the “Agent”). Mr. Carlos A. de Solo, a director of the Company and the Company’s President and Chief Executive Officer, Mr. Alberto de Solo, the Company’s Executive Vice President and Chief Operating Officer, and Mr. Joseph N. De Vera, the Company’s Senior Vice President and Legal Counsel, have interests in CAJ.

The Term Loan bore an interest rate at 12.0% per annum. In addition, the Borrowers paid a facility fee equal to 3.0% of the aggregate principal amount of the Term Loan.

The Loan and Security Agreement matured on the earlier of November 30, 2023, or three business days after the Borrowers receive payment for the Financed Net Pre-Closing Medicare AR from the federal government. In October 2023, the Company paid off all outstanding indebtedness of $35.5 million due under the Loan and Security Agreement with the proceeds of the MSSP payment from the federal government, and the Loan and Security Agreement was terminated.

Elevance Health Collaboration Agreement

In connection with our collaboration agreement with Elevance Health, Elevance Health has agreed to provide debt financing of up to $1.0 million for each new center opened in partnership with Elevance Health.

In October 2022, in connection with the Elevance Health Collaboration Agreement we entered into a promissory note for an amount of $1.0 million due in October 2032. Funds received from Elevance Health pursuant to the aforementioned promissory note will be used to finance costs of one new center that was opened in partnership with Elevance Health.

Finance Leases

We lease certain of our center facilities under non-cancelable finance lease agreements. Refer to Note 12, Leases, in the Notes to the Condensed Consolidated Financial Statements for additional information, including the schedule of remaining lease payments. The remaining duration of such leases ranges from 19 to 20 years.

Our finance leases and two of our operating leases require us to satisfy certain financial maintenance tests, such as maintaining minimum stockholder’s equity of $100.0 million and a minimum cash balance of $25.0 million. Refer to Note 12, Leases, in the Notes to the Condensed Consolidated Financial Statements for information regarding events of default on certain of our leases. In addition, refer to Note 16, Subsequent Events, in the Notes to the Condensed Consolidated Financial Statements for additional activity related to our leases subsequent to March 31, 2024.

Cash Flows

The following table summarizes our cash flows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024			2023
Net cash used in operating activities	$	(23,802	)	$	(21,746	)
Net cash used in investing activities		(126	)		(2,286	)
Net cash (used in) provided by financing activities		(119	)		26,627

Operating Activities. Net cash used in operating activities for the three months ended March 31, 2024 was $23.8 million, an increase of $2.1 million, as compared to $21.7 million used in operating activities during the three months ended March 31, 2023. This increase is primarily the result of slower collections on receivables as compared to the prior year period, due to MSSP arrangements that have longer payment cycles, and due to the disbursement of a MSSP surety bond payment of $7.0 million during the three months ended March 31, 2024 (none in 2023).

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Investing Activities. Net cash used in investing activities was $0.1 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively, driven by investments in leasehold improvements and medical equipment for our centers.

Financing Activities. Net cash used in financing activities was $0.1 million, during the three months ended March 31, 2024, which consisted of payments related to financed equipment purchases. Net cash provided by financing activities was $26.6 million during the three months ended March 31, 2023, driven mainly by the $27.0 million drawn on our Delayed Draw Term Facility, net of the related discount.

Contractual Obligations and Commitments

Our principal commitments consist of obligations under the Credit Agreement and operating and finance leases for our centers.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2024, or 2023, other than operating or finance leases which have not yet commenced.

JOBS Act

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, as an emerging growth company, we can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our consolidated financial statements with a public company which is neither an emerging growth company, nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 18, 2024.

Interim Goodwill Assessment

Based on this analysis, although there was no headroom, no goodwill impairment was identified. The Company estimates that a decrease of 1% in the control premium or a decrease of 1% in the value of the Company’s Class A common stock would result in goodwill impairment of approximately $0.2 million, with all other factors remaining constant.

Recent Accounting Pronouncements

Refer to Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Report, for additional information.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of March 31, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls were not effective as of March 31, 2024, based on the material weaknesses in internal control over financial reporting described below.

Notwithstanding the identified material weaknesses described further below, we believe the condensed consolidated financial statements included in this Form 10-Q fairly represent in all material respects the financial condition, results of operations and cash flows of the Company for the periods presented.

Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses we identified include that we lack a sufficient complement of professionals with the appropriate level of knowledge, training and experience to appropriately analyze, record and disclose accounting matters commensurate with our accounting and reporting requirements as a public company. This material weakness contributed to the Company not designing and maintaining formal controls to analyze, account for and disclose complex transactions, including the accounting for financial instruments and contingent earnout liabilities. These material weaknesses resulted in:

•

the restatement of the Company’s previously filed consolidated financial statements as of and for the year ended December 31, 2020, as well as the quarterly condensed consolidated financial information for the 2020 interim period ended September 30, 2020 related to derivative warrant liabilities, Class A ordinary shares subject to possible redemption, additional paid-in-capital, retained earnings/(deficit), fair value adjustment on derivative warrant liabilities, earnings per share and the related disclosures;

•

the restatement of the Company’s previously filed quarterly condensed consolidated financial information for the 2021 interim periods ended June 30, 2021 and September 30, 2021 related to goodwill, contingent earnout liabilities, additional paid-in capital, retained earnings/(deficit), gain/(loss) on remeasurement of earnout liabilities, earnings per share and the related disclosures; and

•

the restatement of the Company’s previously filed consolidated financial statements as of and for the year ended December 31, 2021, as well as the quarterly condensed consolidated financial information for the 2021 interim period ended September 30, 2021 and the 2022 interim periods ended March 31, 2022, June 30, 2022, and September 30, 2022 related to other current assets and other assets.

Additionally, these material weaknesses could result in misstatements of substantially all accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan for the Material Weaknesses

Since identifying the material weaknesses, management has developed a remediation plan and implemented measures to address the underlying causes of each material weakness. Our efforts to date included the following:

•

We engaged an external advisor to assist in evaluating and documenting the design and operating effectiveness of our internal control over financial reporting.

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•

In 2022, we hired a Vice President of Financial Reporting and Technical Accounting and a Chief Accounting Officer, both with technical public company accounting and financial reporting experience.

•

We enhanced access to accounting training, literature, research materials and documents for our finance and accounting departments.

•

During the second and third quarters of 2023, we performed a financial statement risk assessment and identified areas where new key controls are needed, or existing controls needed to be enhanced.

•

During the second and third quarters of 2023, we designed and implemented controls to address the entity level and financial reporting risks identified, including those involving accounting for complex transactions, including financial instruments and contingent earnout liabilities.

•

During the second and third quarters of 2023, together with our external advisor, we designed a formal testing program to evaluate the design and operating effectiveness of key controls and began executing the formal testing program.

•

During the third and fourth quarters of 2023, our external advisor performed key control testing consistent with our formal testing program.

Although we have implemented controls as of March 31, 2024, the controls have not been in place and operating effectively for a sufficient period to evaluate if the material weaknesses have been remediated. Although no assurance can be made that such remediation will occur, or that additional material weaknesses will not be identified, we believe we are making progress toward achieving the effectiveness of our internal control over financial reporting and disclosure controls and procedures. The actions that we are taking are subject to ongoing senior management review, as well as Audit Committee oversight. We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting, which may necessitate additional changes to the design and implementation of controls.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, CareMax may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of litigation and claims are inherently unpredictable and uncertain, CareMax is not currently a party to any legal proceedings the outcome of which, if determined adversely to CareMax, are believed to, either individually or taken together, have a material adverse effect on CareMax’s business, operating results, cash flows or financial condition, except as set forth in “Litigation” of Note 14, Commitments and Contingencies, to our condensed consolidated financial statements included in this Report. Regardless of the outcome, litigation has the potential to have an adverse impact on CareMax because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

There have been no material changes to the principal risks that we believe to be material to our business, results of operations and financial condition, from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Securities trading plans of Directors and Executive Officers

During the last fiscal quarter, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption and termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Report.


No.		Description of Exhibit
10.1*		Letter Agreement, dated March 14, 2024, by and between CareMax, Inc. and Kevin Wirges.
10.2†+*		Limited Waiver and Third Amendment to Credit Agreement, dated March 15, 2024 by and among CareMax, Inc., the subsidiary guarantors party thereto, the lenders party thereto and Jefferies Finance LLC, as administrative agent and collateral agent.
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

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+ Certain portions of this exhibit have been omitted pursuant to Regulation S-K, Item (601)(b)(10).
† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CareMax Inc.

Date: May 9, 2024		/s/ Carlos A. de Solo
	Name:	Carlos A. de Solo
	Title:	President, Chief Executive Officer, and Director (Principal Executive Officer)

Date: May 9, 2024		/s/ Kevin Wirges
	Name:	Kevin Wirges
	Title:	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer)