NeueHealth(NEUE) - 2025 Q1 - Quarterly Results

Executive Summary First Quarter 2025 Highlights NeueHealth reported a strong Q1 2025, marked by substantial growth in consumers served and its fifth consecutive quarter of positive Adjusted EBITDA, demonstrating the resonance of its value-driven care model - Delivered strong first quarter performance, with the care model resonating with consumers, providers, and payors[6] - Achieved positive Adjusted EBITDA for the fifth consecutive quarter, establishing a strong foundation for future success[6] Consumer and Patient Metrics (As of March 31): | Metric | 2025 | 2024 | Change (YoY) | | :------------------------ | :------- | :------- | :----------- | | Value-Based Consumers served | 571,000 | 360,000 | +58.6% | | Enablement Services Lives | 138,000 | 109,000 | +26.6% | | Total Consumers Served (approx.) | 709,000 | 469,000 | +51.2% | CEO Commentary CEO Mike Mikan highlighted the company's strong start to 2025, emphasizing substantial consumer growth, Adjusted EBITDA profitability, and the compelling nature of their value-driven, consumer-centric care model. The focus for the year is on long-term, sustainable growth and strengthening industry relationships - Starting 2025 in a very strong position, generating substantial growth in the number of consumers served and delivering another quarter of Adjusted EBITDA profitability[3] - The value-driven, consumer-centric care model is compelling and continues to resonate with the market[3] - Focus for 2025 is on driving long-term, sustainable growth and building on industry relationships[3] Company Overview About NeueHealth NeueHealth is a value-driven healthcare company committed to providing high-quality, coordinated care by aligning the interests of consumers, providers, and payors across ACA Marketplace, Medicare, and Medicaid. It serves over 700,000 health consumers through owned clinics and partnerships with over 3,000 affiliated providers - NeueHealth is a value-driven healthcare company focused on high-quality, coordinated care[8] - Aligns interests of health consumers, providers, and payors to make healthcare accessible and affordable across ACA Marketplace, Medicare, and Medicaid[8] - Delivers clinical care to over 700,000 health consumers through owned clinics and partnerships with over 3,000 affiliated providers[8] Financial Performance Consolidated Results NeueHealth's consolidated financial results for Q1 2025 show a decrease in total revenue but an improvement in operating income and a reduced net loss attributable to common shareholders, alongside significant balance sheet changes Key Financial Metrics Key financial metrics for Q1 2025 show a decrease in total revenue year-over-year, but a significant improvement in Net Income (Loss) from Continuing Operations and a substantial increase in Adjusted EBITDA Key Financial Metrics (Three Months Ended March 31, in thousands): | Metric | 2025 | 2024 | Change (YoY) | | :---------------------------------- | :--------- | :--------- | :----------- | | Revenue | $215,787 | $245,095 | -11.96% | | Net Loss | $(10,848) | $(4,177) | +159.7% | | Net Income (Loss) from Continuing Operations | $(1,438) | $5,688 | -125.3% | | Adjusted EBITDA (non-GAAP) | $13,478 | $3,657 | +268.6% | Consolidated Statements of Income (Loss) Total revenue decreased by 11.96% year-over-year, primarily due to a significant drop in ACO REACH revenue, despite growth in capitated revenue. Operating expenses also decreased, leading to a positive operating income in Q1 2025 compared to a loss in Q1 2024. Net loss attributable to common shareholders improved Revenue Breakdown (Three Months Ended March 31, in thousands): | Revenue Type | 2025 | 2024 | Change (YoY) | | :---------------- | :------- | :------- | :----------- | | Capitated revenue | $80,987 | $61,466 | +31.76% | | ACO REACH revenue | $124,040 | $171,811 | -27.79% | | Service revenue | $9,834 | $11,615 | -15.33% | | Investment income | $926 | $203 | +356.2% | | Total revenue | $215,787 | $245,095 | -11.96% | Operating Expenses (Three Months Ended March 31, in thousands): | Expense Type | 2025 | 2024 | Change (YoY) | | :------------------------ | :------- | :------- | :----------- | | Medical costs | $160,894 | $196,874 | -18.38% | | Operating costs | $48,673 | $66,761 | -27.09% | | Depreciation and amortization | $3,559 | $4,562 | -22.00% | | Total operating expenses | $213,126 | $268,197 | -20.53% | Profitability Metrics (Three Months Ended March 31, in thousands, except per share): | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------ | :--------- | :--------- | :----------- | | Operating income (loss) | $2,661 | $(23,102) | +111.5% | | Net loss attributable to NeueHealth, Inc. common shareholders | $(24,875) | $(28,518) | -12.77% | | Basic and diluted loss per share | $(2.90) | $(3.53) | -17.85% | Consolidated Balance Sheets As of March 31, 2025, total assets significantly increased by 64.5% from December 31, 2024, primarily driven by a substantial rise in ACO REACH performance year receivable. Total liabilities also increased by 38.5%, largely due to the new ACO REACH performance year obligation Balance Sheet Highlights (in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change (QoQ) | | :-------------------------------- | :------------- | :---------------- | :----------- | | Total assets | $895,680 | $544,383 | +64.5% | | Total liabilities | $1,288,652 | $930,491 | +38.5% | | Cash and cash equivalents | $138,101 | $83,295 | +65.8% | | ACO REACH performance year receivable | $468,346 | $95,075 | +392.6% | | ACO REACH performance year obligation | $382,478 | — | N/A | | Total shareholders' equity (deficit) | $(1,361,158) | $(1,355,105) | -0.45% | Consolidated Statements of Cash Flows In Q1 2025, cash used in operating activities decreased significantly year-over-year, while cash provided by investing activities also saw a substantial decrease, mainly due to lower proceeds from the sale of businesses. Cash used in financing activities decreased dramatically due to lower repayments of short-term borrowings Cash Flow Summary (Three Months Ended March 31, in thousands): | Activity | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Net cash used in operating activities | $(21,049) | $(48,717) | -56.8% | | Net cash provided by investing activities | $63,176 | $198,387 | -68.1% | | Net cash used in financing activities | $(2,702) | $(275,520) | -99.0% | | Net increase (decrease) in cash and cash equivalents | $39,425 | $(125,850) | +131.3% | | Cash and cash equivalents – end of period | $224,830 | $249,430 | -9.8% | - Proceeds from sale of business decreased significantly from $196,130 thousand in Q1 2024 to $61,139 thousand in Q1 2025[21] - Repayments of short-term borrowings decreased from $273,636 thousand in Q1 2024 to $1,000 thousand in Q1 2025[21] Segment Performance The NeueCare segment demonstrated strong growth in revenue and operating income, while the NeueSolutions segment experienced a decline in revenue and a slight increase in operating loss NeueCare Segment The NeueCare segment reported a 22.9% increase in total segment revenue and a substantial 134.5% increase in operating income year-over-year, driven by higher capitated revenue and lower operating costs NeueCare Segment Performance (Three Months Ended March 31, in thousands): | Metric | 2025 | 2024 | Change (YoY) | | :-------------------- | :------- | :------- | :----------- | | Capitated revenue | $80,987 | $61,466 | +31.76% | | Total segment revenue | $90,517 | $73,623 | +22.95% | | Medical Costs | $37,518 | $27,436 | +36.75% | | Operating Costs | $27,210 | $32,589 | -16.51% | | Operating income (loss) | $23,007 | $9,812 | +134.47% | NeueSolutions Segment The NeueSolutions segment experienced a 26.7% decrease in total segment revenue, primarily due to lower ACO REACH revenue, resulting in a slight increase in operating loss year-over-year NeueSolutions Segment Performance (Three Months Ended March 31, in thousands): | Metric | 2025 | 2024 | Change (YoY) | | :-------------------- | :-------- | :-------- | :----------- | | ACO REACH revenue | $124,040 | $171,811 | -27.79% | | Total segment revenue | $127,610 | $173,896 | -26.67% | | Medical Costs | $126,285 | $172,065 | -26.50% | | Operating Costs | $4,317 | $4,763 | -9.36% | | Operating income (loss) | $(2,992) | $(2,932) | +2.05% | Non-GAAP Financial Measures The company uses Adjusted EBITDA and Adjusted Operating Cost Ratio as non-GAAP measures to provide a clearer view of core operating performance, excluding certain non-recurring or non-cash items Adjusted EBITDA Reconciliation Adjusted EBITDA for Q1 2025 was $13,478 thousand, a significant increase from $3,657 thousand in Q1 2024, after adjusting for items such as loss from discontinued operations, interest expense, share-based compensation, and the gain on troubled debt restructuring in the prior year Adjusted EBITDA Reconciliation (Three Months Ended March 31, in thousands): | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------ | :--------- | :--------- | :----------- | | Net Loss | $(10,848) | $(4,177) | +159.7% | | Loss from Discontinued Operations | $9,410 | $9,865 | -4.7% | | Interest expense | $6,637 | $2,930 | +126.5% | | Share-based and other long-term incentive compensation expense | $5,644 | $18,627 | -69.7% | | Gain on troubled debt restructuring | — | $(30,311) | N/A | | Adjusted EBITDA | $13,478 | $3,657 | +268.6% | - Adjusted EBITDA definition excludes items like discontinued operations, interest, taxes, D&A, transaction costs, share-based compensation, and impact of troubled debt restructuring[25] Adjusted Operating Cost Ratio Reconciliation The Adjusted Operating Cost Ratio increased to 19.3% in Q1 2025 from 16.7% in Q1 2024, after accounting for share-based compensation and transaction-related costs Adjusted Operating Cost Ratio Reconciliation (Three Months Ended March 31): | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------------ | :----- | :----- | :----------- | | Operating Cost Ratio | 22.6% | 27.2% | -4.6 pp | | Impact of share-based and other long-term incentive compensation expense | (2.6)% | (7.6)% | +5.0 pp | | Impact of held-for-sale operations | 0.0% | (2.4)% | +2.4 pp | | Impact of transaction related costs | (0.7)% | (0.5)% | -0.2 pp | | Adjusted Operating Cost Ratio | 19.3% | 16.7% | +2.6 pp | - Adjusted Operating Cost Ratio is defined as Operating Cost Ratio excluding share-based compensation expense[25] Corporate Developments Proposed Merger Transaction On December 23, 2024, NeueHealth entered into a Merger Agreement to become a wholly-owned subsidiary of NH Holdings 2025, Inc., which is indirectly controlled by private investment funds affiliated with New Enterprise Associates, Inc. (NEA). The company has filed necessary SEC documents, including a preliminary proxy statement and a Schedule 13E-3 - Entered into a Merger Agreement on December 23, 2024, to become a wholly-owned subsidiary of NH Holdings 2025, Inc., controlled by NEA-affiliated funds[9] - Filed a preliminary proxy statement on Schedule 14A and a transaction statement on Schedule 13E-3 with the SEC in connection with the Transaction[10] - Investors are urged to read the Proxy Statement, Schedule 13E-3, and other relevant documents for important information about the transaction[10] Additional Information Earnings Conference Call & Investor Relations NeueHealth hosted an earnings conference call on May 8, 2025, to discuss results, strategy, and outlook. A live webcast and replay are available on the company's Investor Relations page, which also serves as a primary channel for disclosing material non-public information - Hosted an earnings conference call on May 8, 2025, at 8:00 a.m. Eastern Time[5] - A live webcast and replay are accessible from the Investor Relations page of the Company's website (investors.neuethealth.com)[5] - The company routinely posts important information, including SEC filings, on its Investor Relations website and intends to use it for disclosing material, non-public information[5] Forward-Looking Statements & Risk Factors The release contains forward-looking statements subject to various risks, uncertainties, and assumptions. Key risks include the failure to complete the proposed merger, potential litigation, adverse reactions to the transaction, costs associated with the merger, and the ability to continue as a going concern - The release contains "forward-looking statements" regarding future results, business plans, strategies, and the timing/completion of the Transaction[13][14] - Important factors could cause actual outcomes to differ materially, including failure to complete the Transaction, potential litigation, adverse reactions to the announcement, and costs associated with the Transaction[14] - Other risks include the ability to continue as a going concern, comply with credit facility terms, obtain financing, complete the wind-down of certain businesses, and manage regulatory changes[14] Contact Information Contact details are provided for investor and media inquiries - Investor Contact: IR@neuehealth.com[15] - Media Contact: media@neuehealth.com[15]