Sharecare (Nasdaq: SHCR), the digital health company that helps people manage all their health in one place, today announced financial results for the quarter ended June 30, 2024.

“We began the second half of 2024 executing on our Enterprise channel strategy to expand into additional verticals with the successful launch of our new platform purpose-built for Medicaid to 750,000 members on July 1,” said Brent Layton, CEO of Sharecare. “I am very enthusiastic about the opportunity to drive activation, engagement, and positive impact in these verticals at scale, leveraging our highly configurable digital capabilities, data, and services while continuing to deepen our relationships with large employers, health plans, and value-based companies, which remain important cornerstones for the company’s continued growth.”

Second Quarter 2024 Financial Results
All comparisons, unless otherwise noted, are to the three months ended June 30, 2023.

• Revenue of $94.3 million compared to $110.4 million, a decrease of $16.1 million, or 14.6%.

• Net loss attributable to Sharecare of $42.0 million compared to $35.1 million, an increase to net loss attributable to Sharecare of $6.9 million. Net loss attributable to Sharecare in the second quarter of 2024 included $15.8 million in non-cash stock compensation; $1.8 million in non-operating, non-recurring costs; $2.6 million of reorganizational and severance costs; $4.7 million of acquisition related costs; and $3.0 million of other non-cash or non-operational expense. Excluding these amounts, the adjusted net loss was $14.1 million in the current quarter.

• Adjusted EBITDA of near break-even compared to $3.3 million, a decrease to adjusted EBITDA of $3.3 million.

• Net loss per share of $0.12 compared to $0.10, an increase to net loss per share of $0.02.

• Adjusted net loss per share, which excludes the impact of non-cash and non-operational amounts, was $0.04 compared to $0.03, an increase to adjusted net loss per share of $0.01.

“In addition to the positive progress in the Enterprise channel, we continued to drive top and bottom-line growth across our Provider and Life Sciences channels which was reflected in our Q2 earnings,” said Justin Ferrero, president and chief financial officer of Sharecare. “Our focus for the second half of the year is to accelerate growth and maximize profitability by delivering our proven solutions at higher operating margins, while continuing to invest in innovation to drive consumerism in healthcare.”

Proposed Acquisition by Altaris
As previously announced on June 21, 2024, Sharecare entered into a definitive agreement to be acquired by an affiliate of Altaris, LLC, an investment firm exclusively focused on the healthcare industry. Under the terms of the definitive merger agreement, Sharecare stockholders will receive $1.43 in cash per common share upon closing. The expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with the pending acquisition occurred at 11:59 p.m. ET on August 8, 2024. The expiration of the waiting period satisfies one of the conditions necessary for the consummation of the transaction, which is expected to occur by the end of 2024, subject to approval by Sharecare stockholders and satisfaction of the other remaining closing conditions. The transaction is not subject to a financing condition.

Conference Call and Financial Outlook
Due to the recently announced pending acquisition of Sharecare by Altaris, Sharecare will not host an earnings conference call or provide financial guidance in conjunction with its second quarter 2024 earnings release.

Non-GAAP Financial Measures
In addition to our financial results determined in accordance with U.S. GAAP, we believe the non-GAAP measures adjusted EBITDA, adjusted net loss, and adjusted loss per share are useful in evaluating our operating performance. We use adjusted EBITDA, adjusted net loss, and adjusted loss per share to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. In particular, we believe that the use of these non-GAAP measures is helpful to our investors as these metrics are used by management in assessing the health of our business and our operating performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures.

The calculations and reconciliations of historic adjusted EBITDA, adjusted net loss, and adjusted loss per share to net loss, the most directly comparable financial measure stated in accordance with GAAP, are provided below and in the accompanying financial tables. Investors are encouraged to review the reconciliations and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA
We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation and amortization, (ii) interest income, (iii) interest expense, (iv) income tax (benefit) expense, (v) other (income) expense (non-operating), (vi) share-based compensation, (vii) warrants issued with revenue contracts, (viii) amortization of non-cash payment for research and development, (ix) non-operating, non-recurring costs, (x) reorganizational and severance costs, and (xi) acquisition-related costs. We do not view the items excluded as representative of normal, recurring, cash operating expenses necessary to operate the Company’s lines of business and services.

Non-operating, non-recurring costs for the three and six months ended June 30, 2024 include costs related to legal matters involving prior acquisitions and in connection with the contractual obligation with a financially distressed vendor and are recorded in general and administrative operating expense.

Non-operating, non-recurring costs for the three and six months ended June 30, 2023 include costs of our enterprise resource planning (“ERP”) system implementation, costs of contractual obligations associated with a financially distressed vendor, and costs related to legal matters. The ERP and legal matter costs are recorded in general and administrative operating expense and the financially distressed vendor costs are recorded in cost of revenue in the Consolidated Statement of Operations and Comprehensive Loss for each respective period presented.

Legal matter costs include attorney fees associated with a dispute that arose from a prior acquisition, attorney fees associated with the submission of an unsolicited acquisition offer as filed in the Schedule 13D with the SEC on October 11, 2023, and attorney fees related to contractual obligations associated with a financially distressed vendor. These matters have unique facts and circumstance that are not directly related to our operations. We do not consider these costs to be normal, recurring, cash operating expenses necessary to operate our business.

The ERP implementation is viewed as a transformational undertaking due to the extensive scope and inherent change management involved to transition to a new single-solution ERP system from the disparate legacy systems. These costs consist of internal and third-party costs of the ERP implementation and do not include capitalized costs, depreciation and/or amortization, or costs to support or maintain software applications or systems once they are in productive use. The ERP system was fully implemented as planned in 2023, and such costs are not expected to recur in the foreseeable future. We do not consider these costs to be normal, recurring, cash operating expenses necessary to operate our business.

Financially distressed vendor costs include financial support from us to a vendor in response to the vendor’s financial difficulties, which absent such support would have resulted in an interruption of our service to our customers. Because we are committed to providing uninterrupted service to our customers, and to minimizing the risk of such a disruption, we made additional, advance payments to the vendor beyond those that were due to the vendor in association with services procured from the vendor. We ceased procuring services from the vendor in Q2 2023 and subsequent to that period no further amounts were paid. Because the costs of the additional payments made to the vendor were incremental to the costs incurred by us to deliver service to our customers, we do not consider them to be normal, recurring, cash operating expenses necessary to operate our business.

Reorganizational and severance costs are a component of our Globalization Efforts and Cost Savings as described in Key Factors and Trends Affecting our Operating Performance. These costs are due to efforts to globalize and centralize our workforce through the creation of the global shared service center. We have never had a global shared service center and view this undertaking as outside the scope of normal operations. Costs include salary, benefits, equity and bonus compensation, and other employee costs for those who were identified to be terminated. These costs were recorded in sales and marketing, product and technology, and general and administrative operating expenses in the Consolidated Statement of Operations and Comprehensive Loss for the periods presented, based on the employee’s respective job function. Because these costs are part of a specific and unprecedented initiative, we do not consider these expenses to be normal, recurring, cash operating expenses necessary to operate our business.

Certain prior period adjusted EBITDA add-back amounts have been reclassified to new add-back line items in order to conform to the current period presentation and to more accurately describe the nature of the amounts year-over-year.

In conformance with the SEC’s clarified guidance around – and recent focus on – non-GAAP financial measures, our adjusted EBITDA now includes costs related to an exited contract, abandoned leases, and certain staff reorganization expenses, all of which were previously disclosed but excluded from our historical adjusted EBITDA calculations and guidance. Further details can be found below in footnote (e) in the reconciliation table for adjusted EBITDA.