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Signify Health Announces Second Quarter and Six Months 2021 Results, Raises Full Year 2021 Financial Guidance

By Signify Health News on 8/10/21 3:47 PM

Financial Highlights

Second Quarter

  • Revenue of $212.8 million, an increase of 63% from second quarter 2020
  • GAAP net loss of $(0.1) million compared to net income of $7.0 million in second quarter 2020
  • Non-GAAP adjusted EBITDA1 of $54.6 million, an increase of 55% from second quarter 2020

Six months ended June 30, 2021

  • Revenue of $392.8 million, a 50% increase from six months ended June 30, 2020
  • GAAP net loss total of $51.8 million compared to a net loss of $1.9 million in first six months of 2020
  • Non-GAAP adjusted EBITDA1 of $89.0 million, an increase of 56% from six months ended June 30, 2020

DALLAS and NEW YORK – August 10, 2021Signify Health, Inc. (NYSE: SGFY), a leading healthcare platform that leverages advanced analytics, technology and nationwide healthcare networks to create and power value-based payment programs, today announced the Company’s financial results for the second quarter and six months ended June 30, 2021.  

“I am proud to say that we are touching the lives of more people in their homes than ever before and helping to make recovery in the home a realization for a growing number of individuals across the country.  As a result, we achieved strong financial results in the second quarter and for the six months ended June 30, 2021,” said Kyle Armbrester, Chief Executive Officer of Signify Health. "Accelerated customer demand for our comprehensive member in-home evaluations supplemented by diagnostic and preventative testing services drove strong Home & Community Services results. Additionally, we continue to gain traction in our Transition to Home solution, further demonstrating the synergies between Episodes of Care and Home & Community Services.”

Mr. Armbrester continued, “In our Episodes of Care Services segment, we have delivered strong savings to our customers and ensured superior care to individuals during their episodes despite COVID-19 headwinds.  We remain on track to deliver a 2021 program size exit run rate of approximately $6 billion in our episodes business and we believe as the COVID-19 impact becomes less prevalent, savings rates will resume their previous growth trajectory.” 

Second Quarter 2021 Financial Results
  • Total revenue for the second quarter increased 63% to $212.8 million, up from $130.7 million in the same period a year ago. Overall growth in the second quarter of 2021 was driven by strength in Home & Community Services (HCS).              
  • The strong HCS revenue of $175.4 million in the second quarter, an increase of 109% over the same period a year ago, was due to record in-home evaluation (IHE) volume in the quarter of approximately 497,000 compared to approximately 298,000 in the second quarter of 2020. 
  • Second quarter revenue was $37.4 million for the Episodes of Care Services (ECS) segment, a 20% decrease from $46.7 million in the same period a year ago. The decline was primarily due to a decrease in program size reflecting the COVID-19 reduction in elective procedures. Based on the BPCI-A reconciliation received in the second quarter, there was a reduction in the savings rate primarily related to the impact of COVID-19 in two specific areas. The first area related to missing comorbidity diagnosis codes that did not properly reflect patient acuity, thereby impacting patient case mix adjustments and reducing episode pricing.  The second area relates to patients being discharged during the pandemic from an acute care facility to inpatient rehabilitation facilities and other high-cost next sites of care when lower-cost skilled nursing facilities were facing COVID-19 outbreaks and staffing shortages.  
  • Second quarter total net loss was $0.1 million compared to net income of $7.0 million for the same period a year ago as an improvement in operating income was offset by the quarterly revaluation of customer Equity Appreciation Rights (EAR) of $14.5 million and a $5.0 million loss on the extinguishment of debt related to the June 2021 debt refinancing. 
  • Non-GAAP Adjusted EBITDA1 for the second quarter increased 55% to $54.6 million, compared to $35.4 million for the second quarter of 2020, driven primarily by HCS revenue growth. Non-GAAP Adjusted EBITDA margin1 for the second quarter was 25.6%.

Six Months Ended June 30, 2021 Financial Results

  • Total revenue for the six months ended June 30, 2021 increased 50% to $392.8 million, up from $262.4 million in the same period a year ago.  Overall growth for the six-month period ended June 30, 2021 was driven by momentum in HCS.
  • HCS revenue for the six months ended June 30, 2021 was $327.8 million, a 75% increase from the six-months ended 2020, due to an increase in IHE volume to approximately 959,000 compared to approximately 601,000 in the same period of 2020.
  • ECS revenue for the six months ended June 30, 2021 decreased 14% to $65.0 million due primarily to the aforementioned decrease in the BPCI-A program size.
  • Total net loss for the six months ended June 30, 2021 was $51.8 million compared to a net loss of $1.9 million in the comparable period a year ago.  An improvement in operating income for the period was offset by $71.3 million of other expense related to the remeasurement of the fair value of our customer EAR reflecting the Company’s post IPO valuation.
  • Non-GAAP Adjusted EBITDA1 for the six months ended June 30, 2021 increased 56% to $89.0 million, compared to $57.3 million for the same period in 2020, driven primarily by HCS revenue growth.  Non-GAAP Adjusted EBITDA margin1 for the six months ended June 30, 2021 was 22.7%. 

2021 Outlook
Signify Health is raising its total revenue and adjusted EBITDA guidance ranges for 2021 as follows:

  • Total GAAP revenue in the range of $745 million to $765 million; and
  • Total adjusted EBITDA1 in the range of $155 million to $165 million.

The revised financial guidance assumes that the COVID-19 situation will not worsen and negatively impact IHE volume and BPCI-A weighted average savings rate or program size for the balance of 2021.

Signify Health is also updating estimates for the following key performance indicators for the full year 2021 reflecting continued strength in HCS and the impact of COVID-19 on ECS:

  • HCS segment IHEs of approximately 1.785 to 1.815 million;
  • ECS segment weighted average program size of approximately $4.9 to $5.1 billion; and 
  • ECS segment weighted average savings rate of approximately 6.1% to 6.4%

1Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Refer to the reconciliation in “Non-GAAP Financial Measures.”  We have not reconciled 2021 guidance for adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, and have not provided forward-looking guidance for net income (loss) because of the uncertainty around certain items that may impact net income (loss), including, among others, stock-based compensation and the fair valuation of the EARs, that are not within our control or cannot be reasonably predicted.

Conference Call Information
Signify Health will host a conference call to discuss the Company’s second quarter 2021 results on August 11, 2021 at 8:30am ET.  A live audio webcast of the conference call may be accessed through the investor relations section of Signify Health’s website at investors.signifyhealth.com/events/default.aspx and will be available for replay through October 11, 2021.

About Signify Health
Signify Health is a leading healthcare platform that leverages advanced analytics, technology, and nationwide healthcare provider networks to create and power value-based payment programs. Our mission is to transform how care is paid for and delivered so that people can enjoy more healthy, happy days at home. Our solutions support value-based payment programs by aligning financial incentives around outcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, coordination and cost-savings. Through our platform, we coordinate what we believe is a holistic suite of clinical, social, and behavioral services to address an individual’s healthcare needs and prevent adverse events that drive excess cost, all while shifting services towards the home. 

Forward Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact included in this press release are forward-looking statements. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business, our plan to drive better patient outcomes, our 2021 Outlook, including our 2021 estimates for total GAAP revenue, total Adjusted EBITDA, in-home evaluations, program size and weighted average savings rate improvements, , our ability to continue to gain traction in our Transition to Home solution, the ability of our Transition to Home solution to positively impact savings rates in both the BPCI-A program and on non-BPCI-A episodes, and our plan to utilize the proceeds from our IPO to expand our investment in value-based payment programs and in our product portfolio. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include: the COVID-19 pandemic and whether the pandemic will continue to subside in 2021; our dependence upon a limited number of key customers; our dependence on certain key government programs; our failure to maintain and grow our network of high-quality providers; our failure to continue to innovate and provide services that are useful to customers and achieve and maintain market acceptance; our limited operating history with certain of our solutions; our failure to compete effectively; the length and unpredictability of our sales cycle; failure of our existing customers to continue or renew their contracts with us; failure of service providers to meet its obligations to us; seasonality that may cause fluctuations in our sales, cash flows and results of operations; our failure to achieve or maintain profitability; our revenue not growing at the rates they historically have, or at all; our failure to successfully execute on our growth initiatives, business strategies, or operating plans, including growth in our Commercial Episodes business; our failure to successfully launch new products; our failure to diversify sources of revenues and earnings; inaccurate estimates and assumptions used to determine the size of our total addressable market; changes in accounting principles applicable to us; incorrect estimates or judgments relating to our critical accounting policies; increases in our level of indebtedness; our failure to effectively adapt to changes in the healthcare industry, including changes in the rules governing Medicare or other federal healthcare programs; our failure to adhere to complex and evolving governmental laws and regulations; our failure to comply with current and future federal and state privacy, security and data protection laws, regulations or standards; our employment of and contractual relationships with our providers subjecting us to licensing or other regulatory risks, including recharacterization of our contracted providers as employees; adverse findings from inspections, reviews, audits and investigations from health plans; inadequate investment in or maintenance of our operating platform and other information technology and business systems; our ability to develop and/or enhance information technology systems and platforms to meet our changing customer needs; higher than expected investments in our business including, but not limited to, investments in our technology and operating platform, which could reduce our profitability; security breaches or incidents, loss or misuse of data, a failure in or breach of our operational or security systems or other disruptions; disruptions in our disaster recovery systems or management continuity planning; our ability to comply with, and changes to, laws, regulations and standards relating to privacy or data protection; our ability to obtain, maintain, protect and enforce our intellectual property; our dependence on distributions from Cure TopCo, LLC, our operating subsidiary, to fund dividend payments, if any, and to pay our taxes and expenses, including payments under the Tax Receivable Agreement; the control certain equity holders have over us and our status as a controlled company; our ability to realize any benefit from our organizational structure; risks associated with acquiring other businesses including our ability to effectively integrate the operations and technologies of the acquired business; risks associated with an increase in our indebtedness; and the other risk factors described under “Risk Factors” in our filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which are available free of charge on the SEC's website at: www.sec.gov

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this press release. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

About Non-GAAP Financial Measures 
This press release contains certain financial measures not presented in accordance with generally accepted accounting principles in the United State (“GAAP”), including Adjusted EBITDA and Adjusted EBITDA margin, which are used by management in making operating decisions, allocating financial resources, and internal planning and forecasting and for business strategy purposes. Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to GAAP measures. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly-titled measures used by other companies. Management believes that such measures are commonly reported by issuers and widely used by investors as indicators of a company’s operating performance. Please refer to the reconciliations of Adjusted EBITDA and Adjusted EBITDA margin to the most directly comparable financial measures prepared in accordance with GAAP below.

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