Segment Reporting

9 Months Ended

Sep. 30, 2022

Segment Reporting

Segment Reporting

16.    Segment Reporting

The Company operates its business through two segments. As discussed in Note 3 above, the divestiture of the PrescribeWellness Business and the planned divestitures of the DoseMe and SinfoníaRx businesses, which collectively comprised the majority of the Company’s MedWise HealthCare segment, represent a strategic business shift in the Company’s operations. The Company determined that these businesses met the requirements of discontinued operations as of March 31, 2022 and continued to meet the requirements as of September 30, 2022. As a result, these businesses are excluded from the Company’s segment reporting. The Company presents continuing operations of the remaining components of the MedWise HealthCare segment combined with its shared services as Shared Services and Other.

The Company's chief operating decision maker (“CODM”), the Chief Executive Officer, allocates resources and assesses performance based upon financial information at the reportable segment level. Substantially all revenues are generated and substantially all tangible assets are held in the U.S.

CareVention HealthCare primarily provides services to PACE organizations that include medication fulfillment pharmacy services and PACE solutions, such as medication safety services, PBM solutions, and health plan management services.

MedWise HealthCare primarily generates revenues from medication safety services and software subscription solutions, which identify individuals with high medication-related risk and optimize medication therapy.

Shared services primarily consist of unallocated corporate sales and marketing expenses and general and administrative expenses associated with the management and administration of the Company’s business objectives.

The CODM uses revenue in accordance with GAAP and Adjusted EBITDA as the relevant segment performance measures to evaluate the performance of the segments and allocate resources.

Adjusted EBITDA is a segment performance financial measure that offers a useful view of the overall operation of the Company’s businesses and may be different from similarly titled segment performance financial measures used by other companies.

Adjusted EBITDA consists of net loss plus certain other expenses, which include interest expense, provision for income taxes, depreciation and amortization, impairment charges, business optimization expenses, severance costs, executive transition costs, cooperation agreement costs, divestiture-related expense, acquisition-related expense, stock-based compensation expense, loss on disposal of business, and settlement costs. The Company considers business optimization expenses to include contract termination payments, severance, retention payments, and other employee and non-recurring vendor costs incurred related to its business optimization initiatives during 2022. The Company considers severance costs to include severance payments related to the realignment of its resources. The Company considers executive transition costs to include nonrecurring costs related to the hiring and onboarding of new named executive officers and separation costs related to former named executive officers. The Company considers cooperation agreement costs to include legal, professional services, and other non-recurring costs related to the Company’s cooperation agreement with Indaba Capital Management. The Company considers divestiture-related expense to include nonrecurring direct transaction costs. The Company considers acquisition-related expense to include nonrecurring direct transaction and integration costs. The Company considers loss on disposal of business to include nonrecurring loss resulting from the sale of PrescribeWellness Business. The Company considers settlement costs to include amounts payable by the Company or reductions to amounts owed to the Company as a result of a contractual settlement.

Management considers revenue and Adjusted EBITDA to be the appropriate metric to evaluate and compare the ongoing operating performance of the Company’s segments on a consistent basis across reporting periods as it eliminates the effect of items which are not indicative of each segment’s core operating performance.

The following tables present the Company’s segment information:

	CareVention HealthCare		Shared Services and Other		Consolidated
Revenue:
Three Months Ended September 30, 2022
Product revenue	$	59,780	$	—	$	59,780
Service revenue
PACE solutions		16,416		—		16,416
Medication safety services		—		843		843
Software subscription and services		—		62		62
Total service revenue		16,416		905		17,321
Total revenue	$	76,196	$	905	$	77,101
Three Months Ended September 30, 2021
Product revenue	$	50,321	$	—	$	50,321
Service revenue
PACE solutions		14,707		—		14,707
Medication safety services		—		2,820		2,820
Software subscription and services		—		62		62
Total service revenue		14,707		2,882		17,589
Total revenue	$	65,028	$	2,882	$	67,910
Nine Months Ended September 30, 2022
Product revenue	$	166,645	$	—	$	166,645
Service revenue
PACE solutions		47,604		—		47,604
Medication safety services		—		2,336		2,336
Software subscription and services		—		223		223
Total service revenue		47,604		2,559		50,163
Total revenue	$	214,249	$	2,559	$	216,808
Nine Months Ended September 30, 2021
Product revenue	$	139,021	$	—	$	139,021
Service revenue
PACE solutions		42,973		—		42,973
Medication safety services		—		8,817		8,817
Software subscription and services		—		174		174
Total service revenue		42,973		8,991		51,964
Total revenue	$	181,994	$	8,991	$	190,985

	CareVention HealthCare		Shared Services and Other		Consolidated
Adjusted EBITDA (loss) from Continuing Operations:
Three Months Ended September 30, 2022
Adjusted EBITDA (loss)	$	14,051	$	(11,998)	$	2,053
Three Months Ended September 30, 2021
Adjusted EBITDA (loss)	$	14,014	$	(10,875)	$	3,139
Nine Months Ended September 30, 2022
Adjusted EBITDA (loss)	$	39,531	$	(34,339)	$	5,192
Nine Months Ended September 30, 2021
Adjusted EBITDA (loss)	$	40,983	$	(32,998)	$	7,985

The following table presents the Company’s reconciliation net loss as presented in the consolidated statements of operations to the segments’ total Adjusted EBITDA:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations
Net loss	$	(40,065)	$	(17,111)	$	(117,868)	$	(57,684)
Add:
Interest expense, net		2,717		2,230		7,430		6,959
Income tax (benefit) expense		(7)		82		368		284
Depreciation and amortization		5,723		5,328		16,954		15,109
Impairment charges		—		—		4,062		—
Business optimization expenses		—		—		787		—
Severance costs		122		354		697		516
Executive transition		1,821		—		1,971		—
Cooperation agreement costs		1,122		—		1,122		—
Divestiture-related expense		1,057		—		2,591		—
Acquisition-related expense		—		—		—		217
Stock-based compensation expense		15,378		6,901		28,173		24,100
Loss from discontinued operations		14,185		5,355		58,905		18,484
Adjusted EBITDA from continuing operations	$	2,053	$	3,139	$	5,192	$	7,985
Adjusted EBITDA (loss) from discontinued operations		(3,593)		2,578		(1,036)		7,294
Total Adjusted EBITDA (loss)	$	(1,540)	$	5,717	$	4,156	$	15,279

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Reconciliation of Net Loss from Discontinued Operations, net of tax to Adjusted EBITDA (Loss) from Discontinued Operations
Net loss from discontinued operations, net of tax	$	(14,185)	$	(5,355)	$	(58,905)	$	(18,484)
Add:
Income tax (benefit) expense		(94)		52		(662)		182
Depreciation and amortization		—		6,771		7,331		20,234
Impairment charges		5,845		—		42,293		—
Loss on disposal of business		2,879		—		2,879		—
Settlement		—		—		1,448		500
Divestiture-related expense		104		—		216		—
Stock-based compensation expense		1,858		1,110		4,364		4,862
Adjusted EBITDA (loss) from discontinued operations	$	(3,593)	$	2,578	$	(1,036)	$	7,294

Asset information by segment is not a key measure of performance used by the CODM. Accordingly, the Company has not disclosed asset information by segment.