Good morning. My name is Audra and I will be your conference operator today. At this time I would like to welcome everyone to the CareMax, Inc. First Quarter 2023 Financial Results and Earnings Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Samantha Swerdlin, Vice President of Investor Relations.

Please go ahead..

Good morning, everyone. Welcome to CareMax's first quarter 2023 earnings call. I'm Samantha Swerdlin, Vice President of Investor Relations. And I'm joined this morning by Carlos de Solo, our Chief Executive Officer and Kevin Wirges, our Chief Financial Officer. During the call we will be discussing certain forward-looking information.

These forward-looking statements are based on assumptions and assessments made by CareMax's management in light of their experience and assessment of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

Any forward-looking statements made during this call are made as of today and CareMax undertakes no duty to update or revise such statements, whether as a result of new information, future events or otherwise.

Important factors that could cause actual results, developments and business decisions to differ materially from the forward-looking statements are described in the company's filings with the SEC, including the section entitled Risk Factors. In today's remarks by management, we will be discussing certain non-GAAP financial metrics.

A reconciliation of these non-GAAP financial metrics to the most comparable GAAP measures can be found in this morning's earnings press release. With that, I'd now like to turn the call over to Carlos..

Thank you, Samantha. Good morning, everyone. And thank you for joining our call. There are three things I plan to review today. An overview of our first quarter performance, the progress we have made expanding our MSO and our general outlook.

Starting with our Q1 financial performance, we had developments that had an unfavorable impact on our revenue and adjusted EBITDA. Specifically, we recognize two prior period developments that together lowered Q1 revenue by $26.6 million and adjusted EBITDA by $14.6 million.

The first development was related to MSL membership with one of our health plans and the second was related to higher acuity admissions in Q4, which Kevin will discuss in more detail. While some prior period development is common for risk based providers like CareMax, we believe the MSO membership PPD was an anomaly in terms of its nature and impact.

And the Q4 acuity was isolated to a period related to an earlier than normal flu season, coupled with RSV, even though overall admissions remained flat during the period. Despite these headwinds, underlying results for the quarter came in ahead of our expectations, reflecting a disciplined execution of our strategy.

We are encouraged by our Q1 runway performance and expect to achieve our 2023 guidance despite the prior period of developments. As of the quarter end, we had approximately $44 million in cash and $95 million of undrawn capacity on our delayed draw term loans.

We believe that this provides us with sufficient capital to bridges to reach sustainable free cash flow by Q4 of 2024. Now turning to some highlights from the quarter. We are pleased to report that our Medicare Advantage platform continues to grow.

But 95,500 lives on our platform as of quarter end, representing approximately $1.3 billion of revenue under management. Of these 62% are currently in partial risk arrangements and 36% are in full risk. By 2026 we expect nearly all of our current MA membership to be in full risk arrangements.

Medical expense ratio for the quarter was 75.2% compared to 72.6% for Q1 last year, due primarily to the impact from prior periods development. As we discussed during our recent Investor Day, we take a prudent approach to taking full risk in new markets, typically with an 18 to 24 month glide path to risk.

This approach allows us to take limited downside risk while our physicians implement medical management practices, and we gain profitable scale in the new markets we enter. It's also worth noting that during the year we may opportunistically shift contracts to full risk early in our MSO network.

If you recall when we shift contracts to flow risk they drive higher revenue and incremental adjusted to dollars but may not yet be mature and could generate MERs above our historical MSO average of 85%.

While the negative MER impact of electing full risk early is not contemplated in our guidance, we may do so when it's accretive to adjusted EBITDA and cash flow. During the quarter we continue to deliver solid operational performance at our centers and remain focused on ensuring our members have access to consistent high quality care.

Our quality initiatives have already resulted in 50% of quality gaps closed in Q1, putting us on track for a sustained five star rating in 2023. Moreover, our investments in patient experience continue to deliver cap survey measures at the 90th percentile among peer groups as of Q1, ensuring timely access to care is key to our operating success.

And we're proud to report that our primary care providers have seen set over -- 75% of our members at our centers as of Q1. Furthermore, our specialty care services are readily accessible both in house and to our preferred network. And we have now expanded our network to offer over 50 different specialties through our multi specialty network.

Last year we expanded our reach beyond our core Florida markets, and the results have been very encouraging. During the new quarter, new member growth was strong. And now we have over 3000 members in our 2022 de novos.

Additionally, we have expanded our dental services across New York and recently signed agreements to add in house cardiology, nutritionist and podiatry services.

By offering these services in house we're able to provide our members with comprehensive care that is designed to lead to best in class outcomes, lower costs, and ultimately healthier members. Now we'd like to provide an update on our MSO expansion.

The integration of our stored VBC acquisition is on track and we are confident that we will achieve our membership growth targets that we announced in March. We are working closely with our affiliate groups and they are excited about the opportunity.

Each market in the MSO network is participating in monthly joint operating committee meetings where we combined the operational and clinical teams to review performance, best practices from our centers that can be implemented into the MSO and what resources they need to effectively practice value based care.

As we discussed in detail at our Investor Day we're also making significant progress on the payer side as we transition stored contracts into CareMax VBC contracts.

We've completed the ingestion of almost all payer data from stored into our care optimized technology platform and have built an internal infrastructure to accelerate the ingestion of new payer contracts and claims data so that we can provide accurate and timely insights to our clinical and operations teams.

Furthermore, we're continually expanding our EMR connector portfolio and are pleased to report that we now have access to data for over 30 EMRs connecting the majority of our provider network to care optimize.

As the year progresses, we expect to see further implementation of our technology platform enabling us to better serve our members and deliver high quality care through efficient and effective data management. In addition, we are improving our capabilities to incorporate recent technology developments.

This quarter we launched a new machine learning module for strict -- for risk stratification, which is designed to enable us to better manage chronic condition acuity and provide even more personalized and efficient care to our members.

Moving forward, we intend to continue enhancing and developing our care optimize technology to drive operational efficiencies and reduce the administrative burden for our care teams.

Although this quarter didn't turn out, as expected, due to the prior period developments, our Q1 run rate gives us confidence in our ability to achieve both our short term and long term objectives.

In CareMax and growing it to where we are today, we have remained dedicated to revolutionizing healthcare delivery through discipline growth in a capital efficient manner. We believe this approach will ultimately deliver the best returns for our shareholders. We look forward to updating you on our progress over the coming months.

With that, I'll now turn things over to Kevin to provide more details on our financial performance in the quarter..

Thanks Carlos. And good morning. We're proud to report meaningful progress in the integration of our acquired MSO business and are well on our way to unlocking the value we envision at our March Investor Day.

Noncurrent developments in membership, revenues and medical expenses are a normal part of VBC, which is why we manage our business and liquidity conservatively.

As of quarter end, we had approximately $44 million in cash and $95 million of undrawn delayed draw term loans, which we continue to believe is sufficient to bridge us to sustainable free cash flow by Q4 2024. Additionally, we have the ability to raise up to $45 million and super priority revolving facilities.

And we believe we have further upside levers from transitioning profitable contracts to full risk earlier than planned. In short, we are comfortable with our current capital position, and we remain bullish on the MSO opportunity ahead of us.

Now I will walk you through the puts and takes of our first quarter results and explain why we believe our full year 2023 guidance is still achievable. As a reminder, a reconciliation of GAAP to non-GAAP metrics like adjusted EBITDA can be found in our earnings release and presentation.

As we began doing last quarter, we are no longer adding back de novo preopening cost or de novo post-opening losses to adjusted EBITDA, and all references I make to adjusted EBITDA pertain to our current definition. We reported first quarter total revenue of $173 million, up 26% year-over-year.

Medicare risk revenue was $122 million, up 13% year-over-year, and Medicaid risk revenue was $26 million, up 27% year-over-year. We've introduced a new line item, government value-based care revenue, which is $10 million, representing our acquired MSSP and ACO REIT businesses.

Finally, other revenue was $16 million, up 75% year-over-year, driven by MSO capitation as well as growth in our in-house pharmacy. Platform contribution was $25 million, up 43% year-over-year despite being fully burdened by the de novo preopening cost and post-opening losses, which together totaled $6 million in Q1.

Net loss was $82.1 million, and adjusted EBITDA was approximately breakeven, largely due to top line headwinds I will explain shortly. Lastly, we recognized a goodwill impairment charge of $98 million, driven by the decline in our stock price during the quarter, partially offset by $36 million from revaluation of earn-out liabilities.

These have no impact to cash or fundamentals of our business. Regularly, we received from our health plan partners updated data on membership revenues and medical expenses, which often contain true-ups to previously reported figures.

In Q1, Medicare risk revenue was impacted by $26.6 million of unfavorable prior period development related to full risk membership at one of our Florida MSO health plans with a corresponding impact of $6.4 million to margin.

We believe this to be an anomaly, both in size and nature of the true-up and isolated to the onboarding of a single MSO contract with limited risk of this sort for other plants. During the quarter, we saw a medical expense ratio of 75.2%, which represents an increase from 72.6% in Q1 2022.

It's worth noting that our Q1 MER was impacted by $8.1 million of unfavorable prior period development and medical expenses. We believe the unfavorable medical expense PPD can be attributed to an earlier-than-normal flu season in South Florida, as well as elevated cases of RSV.

This drove unseasonably high cost per admission in Q4, even as rates of admissions remained relatively stable during the quarter when compared to Q3. It's important to mention that our MER was not materially impacted by the MSO membership we discussed earlier.

As you can see in our earnings presentation, the combined PPD impact was a $27 million revenue headwind and a $15 million medical margin and adjusted EBITDA headwind in the quarter that we believe are not reflective of our run rate profitability.

Even with the PPD, we believe several factors enable us to still achieve our 2023 guidance of $700 million to $750 million revenue and $25 million to $35 million in adjusted EBITDA. First, our medical margin run rate, excluding the PPD, is off to a favorable start to the year compared to our budget.

Second, to the extent that we are able to identify profitable MSO contracts to transition to full risk, we believe doing so may pull forward full risk revenue and positive medical margin earlier than planned.

As a reminder, when we transition to full risk sooner, there may be an unfavorable impact to MER in the near term despite the favorable impact to adjusted EBITDA and cash flow. Moving on. Cash used in operating activities was $22 million in Q1, including $7 million of cash interest and other debt service costs.

Cash add-backs to adjusted EBITDA decreased significantly in Q1 as nonrecurring restructuring and acquisition-related adjustments roll off from prior quarters. We continue to believe our adjustments are useful to illustrate the underlying earnings power of our business.

To the extent we have more limited M&A activity, like in Q1, we expect to see smaller add-backs than experienced in the past. We expect CapEx, however, to continue to increase as we continued build-out of our 2023 pipeline of de novos.

It's important to understand the working capital dynamics around the VBC business, particularly related to accounts receivable. Absolute AR dollars will continue to grow as we accrue MSSP and ACO REIT shared savings, which are recognized in the current performance year, but not paid until almost a year in arrears.

We will also see AR related to MSO Medicare Advantage contracts increase as newer and partners require time to set up the processes to produce and make payments out of our service funds. Finally, as our legacy CarMax business continues to grow, we expect to accrue higher amounts of AR for the midyear adjustment and final settlement.

Remember that AR represents an accrual of net medical margin, so the appropriate denominator for DSO calculations is full risk revenue, less external provider costs.

For appropriate comparisons, Q1 AR should also exclude approximately $60 million related to MSSP receivables and normalized for prior period developments, which may otherwise cause volatility in DSO. In doing so, we find the DSO in the first quarter was materially in line with historical levels.

In terms of AR seasonality, we expect cash flows in the second half of the year to be favorable to those in the first half, driven by the midyear and final sweeps.

Additionally, this fall, we expect to receive the MSSP payment for the 2022 performance year, of which a portion will go towards repayment of the accounts receivable facility entered into as part of the Stewart transaction. Beginning next year, we will be able to keep MSSP shared savings payments.

To reiterate, we remain comfortable with our leverage outlook, our capacity to service our debt and our ability to access our undrawn. We ended Q1 with $44 million in cash and $95 million of undrawn delayed draw -- term loan capacity. Since the end of Q1, we have drawn another $35 million from the DDTL and had $60 million remaining.

We believe we are sufficiently funded to reach cash flow profitability by Q4 of 2024, when we expect to receive our MSSP shared savings payment for performance year 2023. In the meantime, our commitment towards investing prudently in our de novo expansion and MSO capabilities remains unchanged. Operator, we are ready for questions..

[Operator Instructions]. We'll take our first question from Andrew Mokat UBS..

I appreciate all the comments around development, but I wanted to better understand the two dynamics better.

First, what were the underlying drivers of the negative development on the MSO side? And can you help us understand how IBNR estimates are conducted for affiliate members?.

Andrew, it's Kevin. Yes. So occasionally, periodically, we received updated information from our health plan normal course of business for us. We received information as we typically do, that had a decrease in membership.

And so with that information, we pushed that decrease in membership through retrospectively, which obviously created this prior period development. From an IBNR standpoint, the contracts that we use are aggregated together. So when we look at IBNR and setting reserves, we actually look at it on the health plan level.

And so in doing so for the MSO, it's the same process for our wholly owned centers. There's no difference between those 2. The health plan processes plans simultaneously. And it's within the same payment patterns that you would typically see.

And so we're comfortable using -- aggregating the health plan data together when estimating our completion factors..

Got it. Okay. And secondly, you noted that 4Q admissions trended a bit higher due to an earlier an elevated flu and RSV. I understand that experience, but wasn't there also an offsetting benefit from fewer COVID admissions in the quarter that you would have reserved for.

So why is the total respiratory costs coming in so much higher?.

Yes. So total admissions were actually flat to Q3 when we look at the data. So it sounds like there was an elevated number of cases. What we're seeing is that the cost per admission was higher. We are seeing that COVID was relatively consistent among quarters.

But it looks like flu season was just a little sooner than we anticipated, i.e., Q4 instead of Q1. And so we needed to make that adjustment in the financials this quarter..

Yes. Let's say, when we look at that data, the respiratory is right, the RSV along with the fluid led to just higher acuity of those admissions and further complications as we kind of look at the data on a per admission basis.

So generally, when we think about flu season and especially in our core market in South Florida, we typically experienced that in Q1 and what happened this year is we saw that start earlier. And as we look at the data that led to further complications with those admissions heading us towards the end of Q4..

Got it.

So you think the flu season pulled forward from Q1?.

That's right..

Okay. And then finally, it looks like corporate G&A increased about $4 million quarter-over-quarter and $12 million year-over-year.

What are the drivers of that increase? And how should we expect that to trend throughout the year?.

Yes, that's solely attributable to the acquisition of the Steward BBC business. If you remember, we onboarded 65 to 70 FTEs. We have additional operating costs to operate that business. We only had basically a couple of months, 1.5 months or so in Q4. We have the full period.

And I would also say that in Q1, you typically have this seasonality from a payroll standpoint, right, you pay higher payroll taxes or folks knockout. So you have a little bit of seasonality in there. I think from that standpoint, we would assume minor bumps from an SG&A standpoint.

I think we've onboarded and we brought on most of the costs that we need to manage that book of business. The additional cost is going to be incremental to managing the growth at this point..

We'll take our next question from Brian Tanquilut at Jefferies..

You've got on for Brian. So going back to the PPD conversation. If you look at the adjusted numbers, you would have done like $14.5 million of EBITDA, which puts you on track to do roughly half of your EBITDA guidance in Q1, if you're using the midpoint.

So my question is, how much of TBD headwinds did you have baked with the guidance? From what I understand because and from your commentary, this is clearly something that happens. It's not a surprise, but it seems like the magnitude of it was larger than you expected.

And then as a follow-up, how should we be thinking about the seasonality of EBITDA generation throughout the year?.

Yes. Good question. So look, I think we took a prudent approach. We ingested Steward late last year. We wanted to make sure that we came out with guidance that was reasonable and achievable. And so did we bake in prior period development? We didn't. However, we wanted to make sure that we did have some levers that we could pull if we needed to.

What I would say is, this year, if you think about it, essentially, you're recognizing the Q4 kind of flu in Q1. We would also expect Q4 of this year would probably look like Q4 of last year. So the way you think about it is you kind of have a double flu whammy in 2023.

So from a - and typically, I think we've talked about this before in the past is typically medical expense ratio improved throughout the quarter as folks of benefits. You start hitting limitations on the pharmacy side, top loss starts kicking in.

What we would expect to see is, I would say, a relatively consistent EBITDA number quarter-on-quarter, and the reason being is because later in the year, we are going to have the de novos coming on, which will have additional expenses associated with them.

And then in addition to that, we would expect to see maybe a little more flu in Q4 of '23 than we had normally anticipated..

Yes. I just think we've always said, right, we've ingested a tremendous amount of membership with this acquisition. We wanted to make sure that we were being conservative in our guidance and our numbers.

Having said that, there is potential upside in what we've ingested right, and we've discussed that with respect to being able to trigger risk earlier than expected in several contracts in certain key markets. So I think that's encouraging for us as we kind of think about the next year and our long-term guidance as well.

So while this PPD is typically normal and true-ups with health plans as part of this business. Certainly, the one that we experience now, we kind of think about as an anomaly as we ingested a lot of that MSO membership and that true-up, the size and magnitude, we don't expect again from that perspective, we think it's unusual..

Right. I appreciate the color there, Carlos and Kevin. Then my follow-up question is, if I look at your slide deck, you've got it really well laid out, just looking at full risk and like other value-based care.

So just curious, in the other value-based care bucket, can you break out the percentage of MA patients that are in partial risk versus gain share versus capitation and then provide some more details on like the different economics right relative to full risk, right? Like I think you were very clear in your Investor Day what the difference is between partial risk and what that looks like and how it flows through.

But can you maybe talk about the delta between gain share and other capitation as well?.

Yes. That's -- it's market specific, I would say, on those. Each market is going to be unique from that standpoint. Early on, as we enter into new de novo markets, we're not expecting significant dollar amounts from a gain share standpoint. We're ingesting new members. We're educating our positions on CareMax University and value-based care.

And so unlocking that upside or partial risk component, we just - we don't -- we're not putting a lot of value in it as we look from a guidance standpoint. South Florida is obviously a little different, right? But what I would say is most of our contracts, 90-plus percent of our contracts in South Florida are already cured full risk.

I think the other important piece to note is in the government value-based care revenue, that's specifically MSSP and ACO REIT. Other revenue is where you would find the MSO application or bonus accrual, any upside gain share, as well as external revenues from pharmacy and the care the legacy carotid clients..

We'll move next to Joshua Raskin at Nephron Research..

Could you just help us what is the process around revenue verification from these plans? Do you just kind of book what they pay you? Or is there some sort of verification? I'm just curious how there were members.

Like were these patients that you had actually seen or were these patients that you were getting paid for but had never seen in terms of the prior period adjustment?.

Josh, it's Kevin. So as we ingested our MSO Florida business early on last year, we had conversations with the health plans, multiple health plans. Those health plans have provided us information showing that these patients were more profitable than what we've received from an MSO capitation standpoint.

And so we did decide to go ahead and pull the trigger on the full risk component. What I would tell you is that it takes quite a bit of time for health plans to load information, especially when we're talking about the size of the network that we acquired from Steward.

And so loading those tax IDs, NPIs under our tax ID and getting the contracts set up so the reports can start being generated, just takes time from the health plans. So obviously, we have open communication with our health manager constant communication with them.

We reach out to them and request information so that we can appropriately book revenue and medical expense, as well as membership.

And so from this standpoint, we just -- we received updated information in the quarter that we went back and said, okay, we needed to make some prior period adjustments based off of information that we received this quarter..

So were these members that are eventually going to be CareMax members now? Like will this come back?.

No, no. In that particular contract, no. We are working with the health plan though. It's a national health plan. So we are working with them in other areas for potential opportunities to grow membership outside of Florida..

Okay. And then just second question.

How are you working with MA plans for 2024? And specifically, are you expecting any benefit reductions in your service areas where you guys have the clinics? And do you think the plans are going to be willing to negotiate higher cap percentages where you find it necessary?.

I would say go ahead, Kevin. And then....

No, I was going to say, yes, it's a little early right now, but what I would say is that based off of the headwinds that we're seeing from the STAR standpoint, as well as, obviously, there was a win there with kind of phasing in the model over the 3 years.

So I think at the end of the day, there will be slight revisions down from a benefit standpoint, but I think it's a little too early for us to comment on that..

Yes. That's what I was going to say.

It's still a little bit early, but I think initial conversations are, especially as we have kind of this 3-year phase-in is to potentially, especially in South Florida, where benefits are really rich is to potentially reduce some of those supplemental benefits, i.e., gift cards and things like that in a way that it probably wouldn't be that impact or meaningful to kind of a member's overall health outcome, et cetera and still fairly aggressive.

But we do anticipate some potential reduction over the next several years. But I think with CMS spreading this out over a 3-year period, I think those adjustments are a lot easier to make..

We'll move next to Jessica Tassan at Piper Sandler..

So in that other government value-based care revenue line, I just want to make sure I understand, how is it possible that, that includes ACO reach and MSSP, just if I kind of like -- if I look at the PMPM or if I assume all the revenues attributable to ACO reach, it still looks very low from a PMPM perspective.

So just where is the MSSP revenue? And yes, I guess, just why aren't the PMPMs where we would expect them to be for [indiscernible]?.

Yes. Jeff, it's Kevin. So on this contract, we're not taking most of this -- start with most of this is MSSP, right? So 92% of our patients in that line item under the MSSP side. And the ACO REITs, we are not taking full risk on either, right? And so from both of those standpoints, we are booking revenue on a net basis.

So this is essentially the shared savings dollars that we would expect to receive, obviously, 1 quarter of shared savings that we would expect to receive next year..

Okay. Got it. And then just in MSSC are 100% of those slides in the enhanced track.

And can you remind us that does CarMax get to retain the shared savings generated or earned in 2023 and that all obligation to Steward to return share savings generated that's kind of passed with 2022?.

Yes. The MSSP lives are all on the ENHANZE track. And I would say, while the offers more upside, it ccis still not considered a full risk contract but from an accounting perspective, which is why we don't book the full revenue and only book the shared savings.

This year's MSSP payment, part of that payment will go to Steward and then the piece from when we ingested the membership right in November, kind of November, December, then kind of corresponds to us. But the payment corresponding to 2021 dates of service corresponds to Steward..

We'll go to our next question from Jailendra Singh at Truist Securities..

This is Eduardo Ron on for Joe Jailendra. You guys had 95,500 MA lives at the end of the quarter and your target for year-end is 110 to 120,000. Is there anything that's already contracted for? And I guess, how should we expect those lots to roll on throughout the year/.

Yes. So part of that membership is from our core growth in our core markets and the other part is from adding the additional contracts and loading several other provider groups that are coming in from the Steward acquisition coming in over the course of the remainder of the year. So it's a combination of....

And you guys talked about potentially pulling forward some full risk revenue. I mean I guess that wouldn't impact the live count there/.

Well, the transition from partial risk to full risk wouldn't impact the lives, what it would impact is the EBITDA margins and the revenue recognition of that membership that we already have on our platform..

Right. I think the prior outlook, you guys sort of put you at a 72% to 73% MLR.

Is that still the expectation in the updated outlook? Or again, is this like sort of pull forward of some full risk revenue potentially pointing you towards a higher MLR?.

Yes. I think from an MLR standpoint, we're not going to manage the business to the MLR. I think what we're using the MLR for is just to understand where our legacy centers are performing and ensuring there's no deterioration in that performance. We're going to be opportunistic.

If we identify contracts that can generate additional earnings, and we actually identified 1 or 2 this quarter where we were making a small dollar cap percentage. We received the information from the health plan has a few thousand patients. We went ahead and pulled the trigger on that.

And they're at a 93% medical loss ratio, but the incremental PMPM that we're earning off of it is substantial going from, call it, mid-teens to plus $50, $60 PMPM. So it's a pretty meaningful increase, even though the MER will deteriorate or pull down the overall company average MER..

Right. And just last one, I guess on that.

How did your own center MER compared to your affiliate MER in the quarter?.

Are centers returning where we expected them to be in that kind of 70%-ish range. So again, a lot of the PPD, there's a portion of it specifically related to the MSO, but the portion that was not even as we account for that, our clinics were in, I would say, the low 70s, which is typically where we would expect Q1 to end up..

And we'll take our next question from Gary Taylor at Cowen..

Good morning. Two questions. The first -- sorry, I just want to make sure I understand the MSO thing again. All of that revenue and EBITDA contribution was related to '22.

Is that correct?.

Yes, that's correct..

And was that -- I thought in one of your answers, you -- I know you'd said Florida, but I thought you had referenced Steward, but this is not related to the Steward Florida MSO.

Is that correct?.

Yes, Gary, if you recall, early last year, we ran a pilot with Steward specifically where we began managing their space coast lives..

Okay. So I thought Steward only had maybe 6,000 lives and burden that seems to be like almost like half of that. If my math is wrong, I'm happy to take that offline..

Yes, I think the number was north of that. Yes, happy to have that discussion..

Okay. And then last one for me on this topic.

Were there cash flow implications, in other words, like had this fully settled out and you actually had to give cash back and that impacted cash flow? Or is this just sitting in your net AR accrual?.

No. Yes, you're absolutely right. It's sitting in the net AR accrual, unfortunately, it just takes the plans a long time to get everything under one contract, give reports generated and actually process payments. So no cash generated.

I think the other thing I would say is we took a prudent approach when we looked at 2023 cash flows, and we didn't make any estimates on getting payments anytime in the future -- in the near future, specifically for those contracts that flip to risk immediately just because we know it takes such a long time to get those loaded..

Last one for me. On the reiterated revenue and EBITDA guidance, just to confirm, you're going to reach those targets using the -- the GAAP results, the $173 revenue and basically the in the quarter and then still get to those targets.

Is that right?.

That's correct. Yes..

Perfect..

And that does conclude the question-and-answer session. At this time, I would like to turn the conference back over to Carlos de Solo for any closing remarks..

Thank you. So on behalf of the team, I'd just like to thank everybody for joining our call today. We look forward to updating you on our progress, and have a great day..

And that concludes today's conference call. Thank you for your participation. You may now disconnect..