
Forward-Looking Statements This section outlines that statements in the report are forward-looking and subject to risks and uncertainties, potentially causing actual outcomes to differ - Statements in this report are forward-looking and subject to various risks, uncertainties, and assumptions that could cause actual outcomes to differ materially from those indicated9 - Key factors affecting forward-looking statements include the ability to continue as a going concern, expectations related to the NEA Merger Agreement, compliance with credit facilities, timely receipt of proceeds from the Medicare Advantage business sale, and ability to obtain financing9 - The company operates in a competitive and rapidly changing environment, making it impossible for management to predict all risks or assess the full impact of all factors10 PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements for Q1 2025, detailing financial position, performance, and cash flows, while noting a net loss and going concern uncertainty Condensed Consolidated Balance Sheets (Unaudited) This section provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 Total Assets | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------- | :------------------------------ | :------------------------------- | | Total Assets | $895,680 | $544,383 | | Change | +64.5% | | Total Liabilities | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------- | :------------------------------ | :------------------------------- | | Total Liabilities | $1,288,652 | $930,491 | | Change | +38.5% | | Shareholders' Equity (Deficit) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------- | :------------------------------ | :------------------------------- | | Total Shareholders' Equity (Deficit) | $(1,361,158) | $(1,355,105) | | Change | -0.4% | | Condensed Consolidated Statements of Income (Loss) (Unaudited) This section details the company's revenues, expenses, and net loss for the three months ended March 31, 2025, and 2024 Revenue (Q1 2025 vs. Q1 2024) | Revenue Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Capitated revenue | $80,987 | $61,466 | +$19,521 | +31.8% | | ACO REACH revenue | $124,040 | $171,811 | -$47,771 | -27.8% | | Service revenue | $9,834 | $11,615 | -$1,781 | -15.3% | | Investment income | $926 | $203 | +$723 | +356.1% | | Total revenue | $215,787 | $245,095 | -$29,308 | -12.0% | Operating Expenses (Q1 2025 vs. Q1 2024) | Expense Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Medical costs | $160,894 | $196,874 | -$35,980 | -18.3% | | Operating costs | $48,673 | $66,761 | -$18,088 | -27.1% | | Depreciation & amortization | $3,559 | $4,562 | -$1,003 | -22.0% | | Total operating expenses| $213,126 | $268,197 | -$55,071 | -20.5% | Net Loss & EPS (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands, except EPS) | Q1 2024 (in thousands, except EPS) | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Operating income (loss) | $2,661 | $(23,102) | | Net Loss | $(10,848) | $(4,177) | | Net loss attributable to NeueHealth, Inc. common shareholders | $(24,875) | $(28,518) | | Basic and diluted loss per share | $(2.90) | $(3.53) | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) This section presents the company's comprehensive loss, including net loss and other comprehensive income, for Q1 2025 and Q1 2024 Comprehensive Loss (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :---------------------------------------------- | :--------------------- | :--------------------- | | Net loss | $(10,848) | $(4,177) | | Other comprehensive income | — | $18 | | Comprehensive loss | $(10,848) | $(4,159) | | Comprehensive income attributable to noncontrolling interests | $(891) | $(11,737) | | Comprehensive loss attributable to NeueHealth, Inc. common shareholders | $(11,739) | $(15,896) | Condensed Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders' Equity (Deficit) (Unaudited) This section outlines changes in redeemable preferred stock and shareholders' equity (deficit) for the three months ended March 31, 2025, and 2024 Shareholders' Equity (Deficit) Changes (Q1 2025) | Item | Balance at Jan 1, 2025 (in thousands) | Net Loss (in thousands) | Share-based compensation (in thousands) | Balance at Mar 31, 2025 (in thousands) | | :------------------------------------ | :------------------------------------ | :---------------------- | :-------------------------------------- | :------------------------------------- | | Total Shareholders' Equity (Deficit) | $(1,355,105) | $(11,739) | $5,686 | $(1,361,158) | Shareholders' Equity (Deficit) Changes (Q1 2024) | Item | Balance at Jan 1, 2024 (in thousands) | Net Loss (in thousands) | Share-based compensation (in thousands) | Balance at Mar 31, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :---------------------- | :-------------------------------------- | :------------------------------------- | | Total Shareholders' Equity (Deficit) | $(1,263,943) | $(15,914) | $18,627 | $(1,261,212) | Condensed Consolidated Statements of Cash Flows (Unaudited) This section summarizes cash flows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Cash Flow Summary (Q1 2025 vs. Q1 2024) | Activity Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net cash used in operating activities | $(21,049) | $(48,717) | +$27,668 | | Net cash provided by investing activities | $63,176 | $198,387 | -$135,211 | | Net cash used in financing activities | $(2,702) | $(275,520) | +$272,818 | | Net increase (decrease) in cash and cash equivalents | $39,425 | $(125,850) | +$165,275 | | Cash and cash equivalents – end of period | $224,830 | $249,430 | -$24,600 | - Net cash used in operating activities decreased by $27.7 million, primarily due to larger payments on medical costs payable and risk adjustment principal balances of discontinued operations in Q1 2024, and decreased cash used in ACO REACH operations in Q1 2025253 - Net cash provided by investing activities decreased by $135.2 million, mainly because Q1 2024 included non-contingent net proceeds from the California Medicare Advantage business sale, while Q1 2025 included the release of the Consolidation and Escrow Adjustment from the same sale254 Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes supporting the condensed consolidated financial statements, offering further context and disclosures NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION This note describes the company's business segments, recent merger agreement, and the basis for financial statement presentation, including going concern uncertainty - NeueHealth operates two market-facing segments: NeueCare (value-driven care delivery) and NeueSolutions (provider enablement)26 - NeueSolutions began participating in the Medicare Shared Savings Program (MSSP) on January 1, 2025, and elected to participate in the ACO Primary Care Flex Model payment mechanism starting July 1, 202528 - The company entered into the NEA Merger Agreement on December 23, 2024, to become a wholly-owned subsidiary of NH Holdings 2025, Inc., with stockholder approval obtained on May 7, 2025, but other closing conditions pending3335 - Substantial doubt exists about the company's ability to continue as a going concern due to historical net losses, negative operating cash flows, and significant risk adjustment program obligations, with management's plans subject to conditions outside its control384345 NOTE 2. INTANGIBLE ASSETS This note details the net carrying value and estimated amortization expense for the company's intangible assets, including customer relationships and trade names Net Carrying Value of Intangible Assets | Asset Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :---------------------------- | :------------------------------- | | Customer relationships | $38,094 | $39,901 | | Trade names | $30,482 | $31,163 | | Total | $68,576 | $71,064 | Estimated Amortization Expense (in thousands) | Period | Amount | | :-------------------- | :----- | | 2025 (April-December) | $7,464 | | 2026 | $9,952 | | 2027 | $9,952 | | 2028 | $8,673 | | 2029 | $8,673 | | 2030 | $8,673 | - Amortization expense for definite-lived intangible assets was $2.5 million for Q1 2025, down from $2.9 million for Q1 202451 NOTE 3. MEDICAL COSTS PAYABLE This note provides an analysis of medical costs payable, including incurred but not reported (IBNR) claims and changes over the period Medical Costs Payable Activity (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | | Medical costs payable - January 1 | $124,360 | $157,903 | | Total incurred | $160,894 | $196,874 | | Total paid | $171,404 | $197,176 | | Medical costs payable - March 31 | $113,850 | $157,601 | - Medical costs payable attributable to prior years increased by $2.6 million in Q1 2025, compared to a decrease of $4.5 million in Q1 202452 Components of Medical Costs Payable (March 31, 2025 vs. December 31, 2024) | Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------- | :---------------------------- | :------------------------------- | | Claims unpaid | $2,489 | $638 | | Payables due to CMS | $22,858 | $17,846 | | Provider incentive payable | $13,468 | $15,985 | | Incurred but not reported (IBNR) | $75,035 | $89,891 | | Total medical costs payable | $113,850 | $124,360 | NOTE 4. BORROWINGS AND COMMON STOCK WARRANTS This note details the company's long-term borrowings, credit facilities, and the fair value of common stock warrant liabilities - A gain on troubled debt restructuring of $30.3 million was recognized in Q1 2024, decreasing basic and diluted loss per share by $3.68, with no such gain in Q1 202557 Long-term Borrowings (March 31, 2025) | Credit Facility | Term Principal (in thousands) | Accrued PIK Principal Additions (in thousands) | Total Long-term Borrowings (in thousands) | Maturity Date | | :-------------------------- | :---------------------------- | :--------------------------------------------- | :---------------------------------------- | :------------ | | 2023 Credit Agreement | $96,400 | $20,838 | $96,400 (principal) + $20,838 (PIK) | Aug 2028 | | Hercules Credit Agreement | $30,000 | $532 | $30,000 (principal) + $532 (PIK) | June 2028 | | Centrum Promissory Note | $63,950 | — | $63,950 | Oct 2028 | | Centrum P-units | $7,000 | — | $7,000 | Oct 2028 | | Total Long-term Borrowings | $197,350 | $21,370 | $207,400 | | - The Hercules Credit Agreement provides up to $150.0 million in term loans across four tranches, with $30.0 million drawn at closing and $120.0 million of unused borrowing commitments remaining as of March 31, 20257176 Warrant Liability (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Balance at January 1 | $29,738 | $13,971 | | Change in fair value of outstanding warrants | $(2,649) | $(2,072) | | Balance at March 31 | $27,089 | $11,899 | NOTE 5. SHARE-BASED COMPENSATION This note outlines the share-based compensation expense, unvested awards, and unrecognized compensation expense for the period - Share-based compensation expense decreased significantly to $5.6 million in Q1 2025 from $18.6 million in Q1 202492 - As of March 31, 2025, there were 2.261 million unvested Restricted Stock Units (RSUs) with $9.5 million of unrecognized compensation expense, expected to be recognized over 1.6 years97 Liability for Share-based Awards (in thousands) | Metric | Fair Value | | :------------------------ | :--------- | | Balance at January 1, 2025 | $6,402 | | Payments | $(5,542) | | Balance at March 31, 2025 | $819 | NOTE 6. REDEEMABLE CONVERTIBLE PREFERRED STOCK This note describes the terms, accrued dividends, and conversion features of the company's Series A and B redeemable convertible preferred stock - The Series A Preferred Stock, issued for $750.0 million, had accrued compounded dividends of $130.9 million as of March 31, 2025, and is convertible into common stock with a company redemption option after January 3, 2027106107112 - The Series B Preferred Stock, issued for $175.0 million, had accrued compounded dividends of $22.7 million as of March 31, 2025, and is convertible into common stock with a company redemption option after October 17, 2027113114119 - Both Series A and B Preferred Stock rank senior to common stock regarding dividend rights and asset distribution upon liquidation105107114 NOTE 7. NET LOSS PER SHARE This note presents the basic and diluted net loss per share, explaining the exclusion of anti-dilutive securities from calculations Net Loss Per Share (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :---------------------------------------------- | :------ | :------ | | Basic and diluted loss per share attributable to NeueHealth, Inc. common shareholders | $(2.90) | $(3.53) | - 10.080 million potentially dilutive securities (redeemable convertible preferred stock, common stock warrants, stock options, and restricted stock units) were excluded from diluted net loss per share calculation for Q1 2025 due to their anti-dilutive effect122 NOTE 8. COMMITMENTS AND CONTINGENCIES This note discloses the company's involvement in legal proceedings, letters of credit, and surety bonds, along with restricted cash collateral - The company is involved in a securities class action lawsuit (Marquez v. Bright Health Group, Inc. et al.) and three lawsuits related to the NEA Merger, with no estimable losses accrued as of March 31, 2025124125126 - As of March 31, 2025, the company had $7.5 million in letters of credit and $19.5 million in surety bonds, with $24.8 million of cash and cash equivalents and $7.0 million of short-term investments restricted as collateral127 NOTE 9. SEGMENTS AND GEOGRAPHIC INFORMATION This note provides financial and operational information for the company's NeueCare and NeueSolutions segments, including revenue and operating income - The company has two operating segments within its continuing operations: NeueCare (care services in clinics, serving 569,000 consumers) and NeueSolutions (provider enablement, serving 33,000 ACO REACH, 8,000 MSSP, and 138,000 enablement services lives) as of March 31, 2025128130131 Segment Operating Income (Loss) (Q1 2025 vs. Q1 2024, in thousands) | Segment | Q1 2025 Operating Income (Loss) | Q1 2024 Operating Income (Loss) | | :------------------ | :------------------------------ | :------------------------------ | | NeueCare | $23,007 | $9,812 | | NeueSolutions | $(2,992) | $(2,932) |\ | Corporate & Eliminations | $(17,354) | $(29,982) | | Consolidated | $2,661 | $(23,102) | - NeueCare's capitated revenue increased by $19.5 million (31.8%) in Q1 2025 due to increased membership through third-party payor contracts211 - NeueSolutions's ACO REACH revenue decreased by $47.8 million (27.8%) in Q1 2025 due to a decrease of approximately 13,000 beneficiaries aligned to REACH ACOs218 NOTE 10. INCOME TAXES This note details income tax expense and the impact of valuation allowances on deferred tax assets due to cumulative losses - Income tax expense was $0.1 million in Q1 2025, down from $0.7 million in Q1 2024, primarily related to estimated state income taxes138 - A valuation allowance is recorded for deferred tax assets due to cumulative losses, limiting the ability to recognize federal tax benefits139 NOTE 11. REDEEMABLE NONCONTROLLING INTEREST This note outlines the changes in redeemable noncontrolling interest, including earnings attributable and distributions to holders Redeemable Noncontrolling Interest Activity (in thousands) | Metric | 2025 (Q1) | 2024 (Q1) | | :------------------------------------ | :-------- | :-------- | | Balance at January 1 | $48,580 | $88,908 | | Earnings attributable to noncontrolling interest | $770 | $4,227 | | Distribution to noncontrolling interest holders | $(1,702) | $(1,884) | | Measurement adjustment | $121 | $7,510 | | Balance at March 31 | $47,769 | $98,761 | NOTE 12. ACO REACH This note describes the company's participation in the CMS ACO REACH Model, including performance year receivables and obligations - The company participates in the CMS ACO REACH Model with three REACH ACOs, assuming full risk for aligned beneficiaries and guaranteeing provider performance to CMS142143 ACO REACH Financial Impact (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | ACO REACH performance year receivable | $468,346 | $95,075 | | ACO REACH performance year obligation | $382,478 | — | ACO REACH Revenue Amortization (Q1 2025 vs. Q1 2024, in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------------------ | :------ | :------ | | Amortization of ACO REACH performance year receivable | $136,699 | $175,460 | | Amortization of ACO REACH performance year obligation | $(127,493) | $(176,552) | | ACO REACH revenue | $124,040 | $171,811 | NOTE 13. DECONSOLIDATION OF BRIGHT HEALTHCARE INSURANCE COMPANY OF TEXAS This note explains the deconsolidation of BHIC-Texas, the resulting risk share payable, and the valuation allowance on the investment - Bright HealthCare Insurance Company of Texas (BHIC-Texas) was deconsolidated on November 29, 2023, after being placed into liquidation, as the company no longer controlled the subsidiary148 - Upon deconsolidation, a $124.0 million risk share payable to the deconsolidated entity was recorded on the Consolidated Balance Sheet149 - A full valuation allowance was recorded on the investment in BHIC-Texas due to uncertainties related to the collection of the risk share receivable153 NOTE 14. DISCONTINUED OPERATIONS This note details the financial results, assets, and liabilities related to the company's discontinued operations, including the California MA business - Discontinued operations include the California Medicare Advantage business (sold January 1, 2024) and the Commercial healthcare financing and distribution business (exited December 31, 2022)154155 - The company received $61.1 million from the Consolidation and Adjustment Escrow related to the California MA sale on March 17, 2025, with an additional $10.0 million Indemnity Escrow Amount subject to contingencies until July 1, 2025154162163164 Financial Results from Discontinued Operations (Q1 2025 vs. Q1 2024, in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------------------ | :------ | :------ | | Total revenue from discontinued operations | $620 | $1,353 | | Total operating expenses from discontinued operations | $801 | $2,447 | | Net loss from discontinued operations | $(9,410) | $(9,865) | Assets and Liabilities of Discontinued Operations (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :---------------------------------- | :------------- | :---------------- | | Current assets of discontinued operations | $94,467 | $173,006 | | Current liabilities of discontinued operations | $335,181 | $344,651 | | Risk adjustment payable | $271,839 | $276,835 | - Modified repayment agreements with CMS for $271.8 million in risk adjustment obligations are due September 15, 2026, bearing 11.5% interest179 - Certain regulated insurance legal entities are out of compliance with minimum risk-based capital levels as of March 31, 2025180 NOTE 15. SUBSEQUENT EVENTS This note confirms no additional material events or transactions requiring adjustment or disclosure have occurred since the reporting period - No additional material events or transactions requiring adjustment or disclosure have occurred through the date the financial statements were issued, beyond those already described in other footnotes181 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operations, liquidity, and capital resources, focusing on value-based care strategy amidst net losses and going concern uncertainty - NeueHealth's business strategy focuses on transforming healthcare through its value-driven, consumer-centric model, primarily via NeueCare (care delivery) and NeueSolutions (provider enablement)183 - Strategic growth areas include diversifying populations served, expanding into new geographies, deepening payor partnerships, and strengthening provider collaborations188 Key Metrics (As of March 31, 2025 vs. 2024) | Metric | March 31, 2025 | March 31, 2024 | Change | Change (%) | | :-------------------------- | :------------- | :------------- | :------- | :--------- | | Value-Based Consumers served | 571,000 | 360,000 | +211,000 | +58.6% | | Enablement Services Lives | 138,000 | 109,000 | +29,000 | +26.6% | Adjusted EBITDA (Q1 2025 vs. Q1 2024, in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------- | :------ | :------ | | Adjusted EBITDA | $13,478 | $3,657 | - The company faces substantial doubt about its ability to continue as a going concern, as existing cash and investments are not sufficient for the next twelve months, and plans for additional liquidity are subject to external conditions222 - As of March 31, 2025, $24.8 million of non-regulated cash and cash equivalents and $7.0 million of non-regulated short-term investments are restricted as collateral. Regulated insurance entities hold $86.7 million in cash and $7.5 million in short-term investments, subject to regulatory restrictions250251 Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there are no applicable disclosures regarding quantitative and qualitative market risk for the company - Not applicable257 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025260 - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025261 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any litigation that, if determined adversely, would have a material adverse effect on its business, operating results, cash flows, or financial condition, beyond those already described in Note 8 - No material adverse legal proceedings beyond those described in Note 8, Commitments and Contingencies262 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K263 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section reports no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None264 Item 3. Defaults upon Senior Securities The company reported no defaults upon senior securities during the period - None265 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable266 Item 5. Other Information No other information is reported in this section - None267 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the merger agreement, certificates of incorporation, repayment agreements with CMS, and certifications - Key exhibits include the Agreement and Plan of Merger (December 23, 2024), Certificates of Designations for Series A and B Preferred Stock, Modified Repayment Plan Approvals with CMS (March 13, 2025), and Sarbanes-Oxley Act certifications268