QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | |||||
March 31, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Operating lease liabilities, current portion | |||||||||||
Finance lease obligations, current portion | |||||||||||
Deferred revenue, current portion | |||||||||||
Term loans, current portion | |||||||||||
Total current liabilities | |||||||||||
Operating lease liabilities, net of current portion | |||||||||||
Finance leases obligations, net of current portion | |||||||||||
Deferred taxes, net | |||||||||||
Term loans, net of current portion | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 15) | |||||||||||
Shareholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Net revenues: | |||||||||||
Services | $ | $ | |||||||||
Products | |||||||||||
Net revenues | |||||||||||
Operating expenses: | |||||||||||
Cost of services(1) | |||||||||||
Cost of products(1) | |||||||||||
Selling, general and administrative | |||||||||||
Depreciation and amortization | |||||||||||
Transaction related costs | |||||||||||
Total operating expenses | |||||||||||
Operating income (loss) | |||||||||||
Other income (expense): | |||||||||||
Interest expense | ( | ( | |||||||||
Total other expense, net | ( | ( | |||||||||
Income (loss) before income taxes | ( | ( | |||||||||
Income tax (expense) benefit | |||||||||||
Net income (loss) | $ | ( | $ | ( | |||||||
Income (loss) per common share – Basic and diluted | |||||||||||
Net income (loss) per common share | $ | ( | $ | ( | |||||||
Net income (loss) | $ | ( | $ | ( | |||||||
Foreign currency translation adjustments | ( | ( | |||||||||
Comprehensive income (loss) | $ | ( | $ | ( |
Common stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
December 31, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
March 31, 2022 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Common stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||
December 31, 2020 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Dividend | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
March 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
For the Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
Depreciation expense | |||||||||||
Amortization expense | |||||||||||
Write off capitalized software costs | |||||||||||
Provision for bad debt | |||||||||||
Provision for inventory reserve | |||||||||||
(Gain) loss from disposal of assets | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Amortization of debt issuance costs | |||||||||||
Share-based compensation | |||||||||||
Non-cash lease expense | |||||||||||
Inventory step-up | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventory | ( | ( | |||||||||
Prepaid expenses and other assets | |||||||||||
Accounts payable and other accrued liabilities | ( | ( | |||||||||
Deferred revenue | ( | ||||||||||
Operating lease liabilities | ( | ||||||||||
Net cash (used in) provided by operating activities | ( | ( | |||||||||
Cash flows from investing activities | |||||||||||
Acquisition, net of cash received | ( | ||||||||||
Purchases of property and equipment, net | ( | ( | |||||||||
Capitalized software development costs | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of debt | |||||||||||
Payment of debt issuance cost | ( | ( | |||||||||
Principal payment on term loan | ( | ||||||||||
Payment on finance leases | ( | ( | |||||||||
Dividend | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash | ( | ( | |||||||||
Net (decrease) increase in cash and cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Cash, cash equivalents and restricted cash as of the end of the period | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Restricted cash, non-current | |||||||||||
Cash, cash equivalents and restricted cash | $ | $ | |||||||||
For the Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for taxes | $ | $ | |||||||||
Cash paid for interest | $ | $ | |||||||||
Non-cash investing and financing activities: | |||||||||||
Capitalized software and property and equipment, net included in accounts payable | $ | $ |
Revenues | |||||||||||
For the Three Months Ended March 31, | |||||||||||
(in thousands, except percentages) | 2022 | 2021 | |||||||||
Customer A | $ | $ | |||||||||
% of total revenue | % | % | |||||||||
Customer B | $ | $ | |||||||||
% of total revenue | % | % |
Accounts Receivable | |||||||||||
(in thousands, except percentages) | March 31, 2022 | December 31, 2021 | |||||||||
Customer A | $ | $ | |||||||||
% of total accounts receivable | % | % | |||||||||
Customer B | $ | $ | |||||||||
% of total accounts receivable | % | % |
(in thousands) | |||||
Balance at December 31, 2021 | $ | ||||
Fair value of contingent consideration in connection with the HealthSmart acquisition | |||||
Payments | |||||
Change in fair value | |||||
Balance at March 31, 2022 | $ |
(in thousands) | |||||
Balance at December 31, 2020 | $ | ||||
Payments | |||||
Change in fair value | |||||
Balance at March 31, 2021 | $ |
For the Three Months Ended March 31, | |||||||||||
(in thousands, except per share data) | 2022 | 2021 | |||||||||
Net income (loss) attributable to common shareholders | |||||||||||
Net income (loss) | $ | ( | $ | ( | |||||||
Net income (loss) attributable to common shareholders | $ | ( | $ | ( | |||||||
Weighted-average common shares outstanding: | |||||||||||
Basic and diluted | |||||||||||
Net income (loss) per share: | |||||||||||
Basic and diluted | $ | ( | $ | ( | |||||||
(in thousands) | For the Three Months Ended March 31, 2022 | ||||||||||||||||
Technology Enabled Solutions | Advisory Services | Total | |||||||||||||||
Supplemental Benefit Services | $ | $ | $ | ||||||||||||||
Health Plan Management | |||||||||||||||||
Consulting Services | |||||||||||||||||
Software Services | |||||||||||||||||
Data Analytics | |||||||||||||||||
Total | $ | $ | $ |
(in thousands) | For the Three Months Ended March 31, 2021 | ||||||||||||||||
Technology Enabled Solutions | Advisory Services | Total | |||||||||||||||
Supplemental Benefit Services | $ | $ | $ | ||||||||||||||
Health Plan Management | |||||||||||||||||
Consulting Services | |||||||||||||||||
Software Services | |||||||||||||||||
Data Analytics | |||||||||||||||||
Total | $ | $ | $ |
Estimated Fair Value | |||||
(in thousands) | |||||
ASSETS ACQUIRED | |||||
Cash | $ | ||||
Accounts receivable | |||||
Inventories | |||||
Prepaid expenses and other current assets | |||||
Property and equipment | |||||
Operating lease right-of-use-assets | |||||
Total identifiable assets acquired | |||||
Fair value of intangible assets | |||||
Trade names | |||||
Customer relationships | |||||
Total fair value of intangible assets acquired | |||||
Total assets acquired | $ | ||||
LIABILITIES ASSUMED | |||||
Accounts payable | $ | ||||
Accrued expenses | |||||
Operating lease liabilities, current portion | |||||
Deferred taxes | |||||
Operating lease liabilities, net of current portion | |||||
Total liabilities assumed | |||||
Net identifiable assets | |||||
Goodwill | |||||
Total consideration | $ |
(in thousands) | March 31, 2022 | ||||
Initial purchase price | $ | ||||
Earn-out (contingent consideration) | |||||
Total consideration | $ |
For the Three Months Ended March 31 | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Net revenue | |||||||||||
Net income (loss) | ( |
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Prepaid expenses and other advances | $ | $ | |||||||||
Software licenses | |||||||||||
Insurance | |||||||||||
Inventory purchase advances | |||||||||||
Cloud computing subscription & implementation costs | |||||||||||
Other current assets | |||||||||||
Total prepaid expenses and other current assets | $ | $ |
(in thousands) | Estimated Life (in years) | March 31, 2022 | December 31, 2021 | ||||||||||||||
Office and computer equipment | $ | $ | |||||||||||||||
Leasehold improvements | Up to | ||||||||||||||||
Furniture and fixtures | |||||||||||||||||
Software | |||||||||||||||||
Less: accumulated depreciation | ( | ( | |||||||||||||||
Property and equipment, net | $ | $ |
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Office and computer equipment | $ | $ | |||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Total financing leases included in property and equipment | $ | $ |
(in thousands) | |||||
Balance at December 31, 2021 | $ | ||||
Measurement period adjustments | |||||
Acquisitions (see Note 4) | |||||
Impairment | |||||
Balance at March 31, 2022 | $ |
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||
Amortized intangible assets | |||||||||||||||||
Trade names | $ | $ | ( | $ | |||||||||||||
Customer relationships | ( | ||||||||||||||||
Technology | ( | ||||||||||||||||
Capitalized software development costs | ( | ||||||||||||||||
Total intangible assets | $ | $ | ( | $ |
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||
Amortized intangible assets | |||||||||||||||||
Trade names | $ | $ | ( | $ | |||||||||||||
Customer relationships | ( | ||||||||||||||||
Technology | ( | ||||||||||||||||
Capitalized software development costs | ( | ||||||||||||||||
Total intangible assets | $ | $ | ( | $ |
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Incentive bonus | $ | $ | |||||||||
Employee related | |||||||||||
Sales and use tax | |||||||||||
Rebates | |||||||||||
Accrued interest | |||||||||||
Accrued professional fees | |||||||||||
Refundable deposits | |||||||||||
Other | |||||||||||
Total accrued expenses | $ | $ |
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Term loans | $ | $ | |||||||||
Less: deferred financing costs | ( | ( | |||||||||
Term loans, net of deferred financing costs | |||||||||||
Less: current portion | ( | ||||||||||
$ | $ |
(in thousands) | |||||
For the nine months ending December 31, 2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Total | $ |
For the Three Months Ended March 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Selling, general and administrative | $ | $ | |||||||||
Total stock-based compensation expense | $ | $ |
Stock Option Awards | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||
Outstanding at December 31, 2021 | $ | ||||||||||||||||
Granted | — | ||||||||||||||||
Exercised | — | ||||||||||||||||
Forfeited | — | ||||||||||||||||
Outstanding at March 31, 2022 | |||||||||||||||||
Vested or expect to vest as of March 31, 2022 | |||||||||||||||||
Vested and Exercisable as of March 31, 2022 |
Restricted Stock Units | Weighted Average Grant Date Fair Value (in thousands) | ||||||||||
Outstanding at December 31, 2021 | $ | ||||||||||
Granted | |||||||||||
Vested | |||||||||||
Forfeited | |||||||||||
Outstanding at March 31, 2022 | $ |
LTI Awards | |||||
Outstanding as of December 31, 2021 | |||||
Forfeited | ( | ||||
Outstanding as of March 31, 2022 |
For the Three Months Ended March 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Mergers and acquisitions related costs | $ | $ | |||||||||
Public company readiness costs | |||||||||||
Total | $ | $ |
For the Three Months Ended March 31, 2022 | |||||||||||
(in thousands) | Technology Enabled Solutions | Advisory Services | |||||||||
Revenue | $ | $ | |||||||||
Segment Adjusted EBITDA | $ | $ |
For the Three Months Ended March 31, 2021 | |||||||||||
(in thousands) | Technology Enabled Solutions | Advisory Services | |||||||||
Revenue | $ | $ | |||||||||
Segment Adjusted EBITDA | $ | $ |
(in thousands) | For the Three Months Ended March 31, | ||||||||||
2022 | 2021 | ||||||||||
Technology Enabled Solutions Segment Adjusted EBITDA | $ | $ | |||||||||
Advisory Services Segment Adjusted EBITDA | |||||||||||
Total | $ | $ | |||||||||
Unallocated(1) | $ | ( | $ | ( | |||||||
Adjustments to reconcile to U.S. GAAP net income (loss) | |||||||||||
Depreciation and amortization | ( | ( | |||||||||
Interest, net | ( | ( | |||||||||
Income tax provision | |||||||||||
Cost of COVID-19(2) | ( | ( | |||||||||
Sales and use tax | ( | ||||||||||
Non-cash stock compensation expense | ( | ( | |||||||||
Transaction related costs | ( | ( | |||||||||
Acquisition bonus expense | ( | ( | |||||||||
Inventory step-up(3) | ( | ||||||||||
Other(4) | ( | ( | |||||||||
Net income (loss) | $ | ( | $ | ( |
(in thousands) | Three Months Ended March 31, 2022 | ||||
Operating lease costs | $ | ||||
Variable lease costs | |||||
Short-term lease costs | |||||
Finance lease cost | |||||
Amortization of right-of-use assets | |||||
Interest on lease liabilities | |||||
Total lease expense | $ | ||||
(in thousands) | Operating Leases | Finance Leases | |||||||||
For the nine months ending December 31, 2022 | $ | $ | |||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ | |||||||||
Less: amounts representing interest | $ | ( | $ | ( | |||||||
Net present value of lease obligations | $ | $ |
(in thousands) | Classification | March 31, 2022 | |||||||||
Assets | |||||||||||
Operating lease assets | Right-of-use assets | $ | |||||||||
Finance lease assets | |||||||||||
Total lease assets | $ | ||||||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
Operating lease liabilities | Operating lease liabilities | $ | |||||||||
Finance lease liabilities | Finance lease obligations | ||||||||||
Non-current liabilities | |||||||||||
Operating lease liabilities | Operating lease liabilities | ||||||||||
Finance lease liabilities | Finance lease obligations | ||||||||||
Total lease liabilities | $ |
(in thousands) | Three Months Ended March 31, 2022 | ||||
Supplemental cash flow information and non-cash activity: | |||||
Cash paid for amounts related to lease liabilities: | |||||
Operating cash flows from finance leases (interest) | $ | ||||
Operating cash flows from operating leases | $ | ||||
Financing cash flows from finance leases (principal payments) | $ | ||||
Weighted Average Remaining Lease Term (in years): | |||||
Operating leases | |||||
Finance leases | |||||
Weighted Average Discount Rate: | |||||
Operating leases | % | ||||
Finance leases | % |
(in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||
Net income (loss) | $ | (1,154) | $ | (934) | ||||||||||
Interest, net | 3,719 | 5,467 | ||||||||||||
Income tax expense (benefit) | (676) | (1,007) | ||||||||||||
Depreciation and amortization expense | 8,252 | 7,372 | ||||||||||||
EBITDA | 10,141 | 10,898 | ||||||||||||
Cost of COVID-19(1) | 274 | 1,185 | ||||||||||||
Non-cash stock compensation expense(2) | 1,264 | 990 | ||||||||||||
Transaction related costs(3) | 640 | 1,086 | ||||||||||||
Acquisition bonus expense | 58 | 192 | ||||||||||||
Inventory step-up(4) | 1,892 | — | ||||||||||||
Other(5) | 1,047 | 1,517 | ||||||||||||
Adjusted EBITDA | $ | 15,316 | $ | 15,868 |
For the Three Months Ended March 31, | Change | ||||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | $ | % | |||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
Services | $ | 46,480 | $ | 43,527 | $ | 2,953 | 7 | % | |||||||||||||||
Products | 50,228 | 39,104 | 11,124 | 28 | % | ||||||||||||||||||
Net revenues | 96,708 | 82,631 | 14,077 | 17 | % | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of services | 25,477 | 24,021 | 1,456 | 6 | % | ||||||||||||||||||
Cost of products | 37,236 | 26,527 | 10,709 | 40 | % | ||||||||||||||||||
Selling, general and administrative | 23,214 | 20,099 | 3,115 | 15 | % | ||||||||||||||||||
Depreciation and amortization | 8,252 | 7,372 | 880 | 12 | % | ||||||||||||||||||
Transaction related costs | 640 | 1,086 | (446) | (41) | % | ||||||||||||||||||
Total operating expenses | 94,819 | 79,105 | 15,714 | 20 | % | ||||||||||||||||||
Operating income | 1,889 | 3,526 | (1,637) | (46) | % | ||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense | (3,719) | (5,467) | 1,748 | (32) | % | ||||||||||||||||||
Total other expense, net | (3,719) | (5,467) | 1,748 | (32) | % | ||||||||||||||||||
Income (loss) before income taxes | (1,830) | (1,941) | 111 | (6) | % | ||||||||||||||||||
Income tax (expense) benefit | 676 | 1,007 | (331) | (33) | % | ||||||||||||||||||
Net income (loss) | $ | (1,154) | $ | (934) | $ | (220) | 24 | % |
For the Three Months Ended March 31, | Change | |||||||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | $ | % | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Technology Enabled Solutions | $ | 83,166 | $ | 69,582 | $ | 13,584 | 20 | % | ||||||||||||||||||
Advisory Services | 13,542 | 13,049 | 493 | 4 | % | |||||||||||||||||||||
Total | $ | 96,708 | $ | 82,631 | $ | 14,077 | 17 | % | ||||||||||||||||||
Segment Adjusted EBITDA | ||||||||||||||||||||||||||
Technology Enabled Solutions | $ | 12,370 | $ | 16,307 | $ | (3,937) | (24) | % | ||||||||||||||||||
Advisory Services | 5,323 | 3,338 | 1,985 | 59 | % | |||||||||||||||||||||
Total | $ | 17,693 | $ | 19,645 | $ | (1,952) | (10) | % |
(in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||
Net cash (used in) provided by operating activities | $ | (15,660) | $ | (12,626) | ||||||||||
Net cash used in investing activities | $ | (77,554) | $ | (4,350) | ||||||||||
Net cash provided by financing activities | $ | 75,283 | $ | 515 |
Payments Due by Period | ||||||||||||||||||||||||||||||||
(in thousands) | Total | Less than 1 year | 1-3 Years | 4-5 Years | More than 5 years | |||||||||||||||||||||||||||
Operating leases for facilities | 26,512 | 4,735 | 16,168 | 3,602 | 2,007 | |||||||||||||||||||||||||||
Finance leases | 993 | 397 | 596 | — | — | |||||||||||||||||||||||||||
Long-term debt obligations(1) | 270,631 | 585 | 2,340 | 267,706 | — | |||||||||||||||||||||||||||
Purchase commitments | 6,910 | 6,910 | — | — | — | |||||||||||||||||||||||||||
Total contractual obligations | $ | 305,046 | $ | 12,627 | $ | 19,104 | $ | 271,308 | $ | 2,007 |
Exhibit Number | Exhibit Description | |||||||
Amendment No. 5 to First Lien Credit Agreement, dated as of February 1, 2022, by and among Convey Health Solutions, Inc., as borrower, Ares Capital Corporation, as administrative agent and collateral agent, and the term lenders party thereto (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed by Convey Health Solutions Holdings, Inc. on February 1, 2022 (File No. 001-40506)). | ||||||||
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101). |
Convey Health Solutions Holdings, Inc. | |||||||||||
Date: | May 10, 2022 | By: | /s/ Stephen C. Farrell | ||||||||
Name: Stephen C. Farrell | |||||||||||
Title: Chief Executive Officer and Director | |||||||||||
(Principal Executive Officer) | |||||||||||
Convey Health Solutions Holdings, Inc. | |||||||||||
Date: | May 10, 2022 | By: | /s/ Timothy Fairbanks | ||||||||
Name: Timothy Fairbanks | |||||||||||
Title: Chief Financial Officer & Executive Vice President | |||||||||||
(Principal Financial Officer) |
/s/ STEPHEN C. FARRELL | |||||
Stephen C. Farrell | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: May 10, 2022 |
/s/ TIMOTHY FAIRBANKS | |||||
Timothy Fairbanks | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
Date: May 10, 2022 |
/s/ STEPHEN C. FARRELL | |||||
Stephen C. Farrell | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: May 10, 2022 |
/s/ TIMOTHY FAIRBANKS | |||||
Timothy Fairbanks | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
Date: May 10, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 69 | $ 69 |
Preferred stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 25,000,000 | 0 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 73,194,171 | 73,194,171 |
Common stock shares outstanding | 73,194,171 | 73,194,171 |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands |
Total |
Common stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
---|---|---|---|---|---|
Beginning Balance (in shares) at Dec. 31, 2020 | 61,321,424 | ||||
Beginning Balance at Dec. 31, 2020 | $ 470,150 | $ 613 | $ 492,747 | $ 78 | $ (23,288) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation | 990 | 990 | |||
Foreign currency translation adjustments | (7) | (7) | |||
Dividend | (74,500) | (74,500) | |||
Net loss | (934) | (934) | |||
Ending Balance (in shares) at Mar. 31, 2021 | 61,321,424,000 | ||||
Ending Balance at Mar. 31, 2021 | 395,699 | $ 613 | 419,237 | 71 | 24,222 |
Beginning Balance (in shares) at Dec. 31, 2021 | 73,194,171 | ||||
Beginning Balance at Dec. 31, 2021 | 537,749 | $ 732 | 570,252 | 31 | (33,266) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation | 1,264 | 1,264 | |||
Foreign currency translation adjustments | (14) | (14) | |||
Net loss | (1,154) | (1,154) | |||
Ending Balance (in shares) at Mar. 31, 2022 | 73,194,171 | ||||
Ending Balance at Mar. 31, 2022 | $ 537,845 | $ 732 | $ 571,516 | $ 17 | $ (34,420) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Cash Flows [Abstract] | ||
Net loss | $ (1,154) | $ (934) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation expense | 1,550 | 1,386 |
Amortization expense | 6,702 | 5,986 |
Write off capitalized software costs | 253 | 0 |
Provision for bad debt | 0 | 342 |
Provision for inventory reserve | 90 | 399 |
(Gain) loss from disposal of assets | 10 | 0 |
Deferred income taxes | (1,120) | (963) |
Amortization of debt issuance costs | 309 | 328 |
Share-based compensation | 1,264 | 990 |
Non-cash lease expense | 1,246 | 0 |
Inventory step-up | 1,892 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,414) | 4,662 |
Inventory | (1,450) | (3,207) |
Prepaid expenses and other assets | 3,903 | 843 |
Accounts payable and other accrued liabilities | (26,222) | (22,100) |
Deferred revenue | 2,022 | (358) |
Operating lease liabilities | (1,541) | 0 |
Net cash (used in) provided by operating activities | (15,660) | (12,626) |
Cash flows from investing activities | ||
Acquisition, net of cash received | (74,613) | 0 |
Purchases of property and equipment, net | (1,836) | (3,063) |
Capitalized software development costs | (1,105) | (1,287) |
Net cash used in investing activities | (77,554) | (4,350) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 78,000 | 78,000 |
Payment of debt issuance cost | (2,631) | (2,133) |
Principal payment on term loan | 0 | (821) |
Payment on finance leases | (86) | (31) |
Dividend | 0 | (74,500) |
Net cash provided by financing activities | 75,283 | 515 |
Effect of exchange rate changes on cash | (14) | (7) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (17,945) | (16,468) |
Cash, cash equivalents and restricted cash at beginning of period | 38,811 | 49,086 |
Cash, cash equivalents and restricted cash at end of period | 20,866 | 32,618 |
Cash, cash equivalents and restricted cash as of the end of the period | ||
Cash and cash equivalents | 20,866 | 28,938 |
Restricted cash | 0 | 3,560 |
Restricted cash, non-current | 0 | 120 |
Cash, cash equivalents and restricted cash | 20,866 | 32,618 |
Supplemental disclosures of cash flow information: | ||
Cash paid for taxes | 250 | 216 |
Cash paid for interest | 3,986 | 4,961 |
Non-cash investing and financial activities: | ||
Capitalized software and property and equipment, net included in accounts payable | $ 672 | $ 471 |
BUSINESS AND BASIS OF PRESENTATION |
3 Months Ended |
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Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION Business Convey Health Solutions Holdings, Inc. (collectively with its subsidiaries, which includes our main operating subsidiary, Convey Health Solutions, Inc., “we”, “us”, “our”, “Convey” or the “Company”) provides technology enabled solutions to payors within the large and growing government sponsored health plan market. Our platform combines proprietary modular technology and end-to-end solutions to serve as an extension of our clients’ operations and core systems. Our clients are primarily Medicare Advantage, Medicare Part D and Employer Group Waiver Plans, as well as Pharmacy Benefit Managers. Convey is a United States (“U.S.”) based holding company incorporated in Delaware. Our principal executive offices are located in Fort Lauderdale, Florida. Acquisition On February 1, 2022, Convey’s indirect wholly-owned subsidiary, D-M-S Holdings Parent, LLC (f/k/a Dragon Holdings Parent, LLC), a Delaware limited liability company, acquired all of the issued and outstanding capital stock of D-M-S Holdings, Inc. d/b/a HealthSmart International, a Delaware corporation (“HealthSmart”). HealthSmart provides a diverse portfolio of health, wellness and diagnostic products centered on home based care outcomes. See Note 4. Acquisitions for additional information. Stock Split Prior to the IPO (as defined below), in June 2021, Convey’s Board of Directors (the “Board”) and stockholders approved a forward split of shares of Convey’s common stock, par value $0.01 per share, on a 126-for-1 basis (the “Stock Split”), which became effective as of June 4, 2021. Prior to the Stock Split, we were authorized to issue 1,000,000 shares of common stock of which (i) 915,000 shares were designated as voting common stock and (ii) 85,000 shares were designated as non-voting common stock. In connection with the Stock Split, the total number of authorized shares of common stock was proportionately increased and the par value of the common stock was not adjusted as a result of the Stock Split. In addition, all authorized shares of common stock were designated voting common stock. All references to common stock, options to purchase common stock, per share data and related information contained in our condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Stock Split. Initial Public Offering On June 18, 2021, we closed our initial public offering (“IPO”) of our common stock through an underwritten sale of 13,333,334 shares of our common stock at a price of $14.00 per share. In the offering, we sold 11,666,667 shares and a selling stockholder sold 1,666,667 shares. The aggregate net proceeds to us from the offering after deducting underwriting discounts and commissions and other offering expenses payable by us, were approximately $146.1 million. We used approximately $131.5 million of the net proceeds from the IPO to repay outstanding indebtedness under our credit agreement. We did not receive any of the proceeds from the sale by the selling stockholder. Prior to the closing of the IPO, on June 17, 2021, our Second Amended and Restated Certificate of Incorporation (the “Charter”) and our Second Amended and Restated Bylaws, became effective. The Charter, among other things, provides that our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.01 per share and 25,000,000 shares of preferred stock, par value $0.01 per share. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are unaudited and include the accounts of Convey and our wholly-owned subsidiaries. They have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Our condensed consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for the three months ended March 31, 2022, and 2021, and the condensed consolidated balance sheet as of March 31, 2022, reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair statement of the results for the periods shown. Our condensed consolidated balance sheet as of December 31, 2021, has been derived from our audited consolidated financial statements as of that date. Our condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2021, which include a complete set of footnote disclosures, including our significant accounting policies, and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 23, 2022 (“Form 10-K”). The results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. All significant intercompany balances and transactions have been eliminated in consolidation. COVID-19 Pandemic During the first quarter ended March 31, 2020, concerns related to the spread of novel coronavirus (“COVID-19”) began to create global business disruptions as well as disruptions in our operations. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. Governments at the national, state and local level in the U.S., and globally, have implemented varying measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings of people, work from home and supply chain logistical changes. While some of these actions have eased, escalating transmission rates (including of the Delta and Omicron variants of COVID-19), uneven vaccination and vaccination booster rates and further governmental guidance and orders may result in having to reimplement certain of these measures or implementing new and additional ones. The spread of COVID-19 has also caused significant volatility in the U.S. and international markets and has had and continues to have widespread, rapidly evolving and unpredictable impacts on global society, economics, financial markets and business practices. The impact of COVID-19 on our business has resulted in elongated sales cycles, postponement of customer contract renewals, and slower implementation of software solutions for our clients, as well as a reduction in billable hours in one of our reportable segments, the Advisory Services segment. The full extent to which the COVID-19 pandemic and the various responses to the COVID-19 pandemic continues to impact our business, operations or financial condition will depend on numerous evolving factors that we may not be able to accurately predict, including, but not limited to, the duration, severity and scope of the COVID-19 pandemic (including due to new variants, such as Delta and Omicron); actions by governmental entities, businesses and individuals that have been and continue to be taken in response to the pandemic; the effect on our clients and demand by clients, clients and our clients’ members for and ability to pay for our solutions and services; and disruptions or restrictions on our employees’ ability to work and travel. The impact of these factors and others on our suppliers and clients could persist for some time after governments ease their restrictions and after the overall number of COVID-19 cases in the United States decreases. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context with the unknown future impacts of COVID-19 using information that is reasonably available to us at this time. While our current assessment of our estimates did not have a material impact on our condensed consolidated financial statements as of and for the three months ended March 31, 2022, as additional information becomes available to us, our future assessment of our estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our consolidated financial statements in future reporting periods.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information currently available to us and based on various other assumptions that we conclude to be reasonable under the circumstances. While management concludes that such estimates are reasonable when considered in conjunction with our condensed consolidated balance sheets and statements of operations and comprehensive income (loss) taken as a whole, actual results could differ materially from those estimates. Acquisitions We allocate the purchase consideration to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition. The excess of the fair value of the purchase consideration over the fair value of the identifiable assets and liabilities, if any, is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, we may adjust provisional amounts that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to the condensed consolidated statements of operations and comprehensive income (loss). Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies which techniques include the royalty method, the multi-period excess earnings method, the cost approach, the market approach, and the probability weighted assessment method as considered necessary. Significant assumptions used in those methodologies include, but are not limited to, growth rates, discount rates, customer attrition rates, expected levels of revenues, earnings, cash flows and tax rates. The use of different valuation methodologies and assumptions is highly subjective and inherently uncertain and, as a result, actual results may differ materially from estimates. Customer Concentrations Revenue and Accounts receivable from our major customers are as follows:
Our customer base is highly concentrated. Revenue may significantly decline if we were to lose one or more of our major customers. However, our risk is reduced due to our significant customers having multiple product delivery solutions under separate contracts. Contingent Consideration We recognized an earn-out liability in connection with the November 2018 acquisition of HealthScape Advisors, LLC (“HealthScape Advisors”) and Pareto Intelligence LLC (“Pareto Intelligence”), which represented contingent consideration. The initial fair value of the earn-out liability was determined by employing a Monte-Carlo simulation model. The underlying simulated variable was adjusted revenue discounted by the market price of risk embedded in the revenue metrics. The revenue volatility estimate was based on a study of historical asset volatility and implied volatility for a set of comparable public companies, adjusted by our operating leverage. The earn-out payments were calculated based on simulated revenue metrics and payment thresholds as set forth in the HealthScape Advisors and Pareto Intelligence purchase agreement. The calculated payments were further discounted back to present value using cost of debt reflecting our credit risk. The fair value of the earn-out liability at each reporting date subsequent to the acquisition was measured using a probability weighted approach. Any change in fair value was recognized in the condensed consolidated statements of operations and comprehensive income (loss). On September 4, 2019, Cannes Parent, Inc. (“Cannes”), a direct subsidiary of Convey, entered into an agreement to acquire all of the outstanding stock of Convey Health Solutions, Inc. through the merger of Cannes Merger Sub, Inc. (“Merger Sub”) and Convey Health Parent, Inc. (“Parent”) (the “Merger”) with Parent surviving as a direct subsidiary of Cannes. The Merger principally occurred through an investment from TPG Cannes Aggregation, L.P., which is primarily funded by partners of TPG Partners VIII, L.P. and TPG Healthcare Partners, L.P. or any parallel fund or their alternative investment vehicles (collectively, “TPG”). In connection with the Merger, we recognized a holdback liability, which represented contingent consideration. The initial fair value of the holdback liabilities and at each subsequent reporting date was measured using a probability weighted approach. Any change in fair value was recognized in the consolidated statements of operations and comprehensive income (loss). In connection with the acquisition of HealthSmart in February 2022, we recognized an earn-out liability which represented contingent consideration. The initial fair value of the earn-out liability was determined by employing a Black-Scholes Merton model. The earn-out payments were calculated based on projected revenue metrics and payment thresholds as set forth in the HealthSmart purchase agreement. The calculated payments were further discounted back to present value using the cost of debt reflecting our credit risk. The following table provides a reconciliation of our Level 3 earn-out and holdback liabilities for the three months ended March 31, 2022:
The following table provides a reconciliation of our Level 3 earn-out and holdback liabilities for the three months ended March 31, 2021:
Net Income (Loss) Per Common Share Basic income (loss) per share is computed by dividing net income (loss) attributable to common shareholders (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted net income (loss) per common share attributable to common shareholders is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period adjusted for the dilutive effects of common stock equivalents. In periods when losses from operations are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
For the three months ended March 31, 2022, and 2021, 9,534,119 and 5,690,664 of potentially dilutive share-based awards outstanding, respectively, were excluded from the computation of diluted net income (loss) per share related to common shareholders as their effect was anti-dilutive. See Note 11. Share-Based Compensation. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes the previous guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases except those which meet the definition of a short-term lease. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or financing. Classification is based on criteria that are similar to those applied in previous lease accounting, but without explicit bright lines. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, have not significantly changed from previous U.S. GAAP requirements. The Company adopted the provisions of Topic 842 on January 1, 2022, using the modified retrospective approach. All comparative periods prior to January 1, 2022 are not adjusted and continue to be reported in accordance with Topic 840. The Company elected to utilize the package of practical expedients permitted within the new standard, which among other things, allowed the Company not to reassess prior conclusions about lease identification, classification and initial direct costs of existing leases as of the date of adoption. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of the Company’s condensed consolidated balance sheet which resulted in recognizing those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. Adoption of the new standard resulted in the recording of right-of-use assets and corresponding lease liabilities of $14.7 million and $20.7 million, respectively, as of January 1, 2022. The difference between the right-of-use assets and the lease liabilities was recorded to eliminate existing deferred rent balances and remaining balances of lease incentives recorded under Topic 840. The adoption of the new standard did not materially impact the Company's condensed consolidated statements of operations and had no impact on the Company's condensed consolidated statements of cash flows. See Note 18. Leases for further information. Accounting Pronouncements Issued Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. Entities will be required to use a model that will result in the earlier recognition of allowances for losses for trade and other receivables, held-to-maturity debt securities, loans, and other instruments. For available-for-sale debt securities with unrealized losses, the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the new guidance to determine the impact it will have on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), subsequently clarified in January 2021 by ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The main provisions of this update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022. We are currently evaluating the new guidance to determine the impact ASU 2020-04 and ASU 2021-01 will have on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) (“ASU 2021-08”). The new guidance creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. Under this exception, an acquirer applies Topic 606 to recognize and measure contract assets and contract liabilities on the acquisition date. Topic 805 generally requires the acquirer in a business combination to recognize and measure the assets it acquires and liabilities it assumes at fair value on the acquisition date. This generally will result in companies recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date. This new guidance is effective for emerging growth companies following private business adoption dates, for the fiscal years beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the new guidance to determine the impact it will have on our consolidated financial statements.
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REVENUE FROM CONTRACTS WITH CUSTOMERS |
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REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS We provide technology enabled solutions and advisory services to assist our clients with workflows across product developments, sales, member experience, clinical management, core operations and business intelligence and analytics. We generate our revenues through our two reporting segments: (i) Technology Enabled Solutions and (ii) Advisory Services. Technology Enabled Solutions We help health plans grow membership and revenue as well as operate more effectively and efficiently. We also assist our clients in managing the compliance and administrative requirements imposed under government sponsored health plans. Our technology solutions are primarily delivered through a web-based customizable application. This application is used to identify, track, and administer contractual services, or benefits provided under a client’s plan to its Medicare and Medicaid beneficiaries. We also provide analytics over healthcare data to capture and assess gaps in risk documentation, quality, clinical care, and compliance. With our technology enabled solutions, we offer the following services: •Health Plan Management provides technology-enabled plan administration services for government-sponsored health plans. Our service encompasses eligibility and enrollment processing, member services, premium billing, payment processing, reconciliation and other related services. In addition, we provide technology enabled services to manage supplemental benefits provided to members through their Medicare Advantage plans. Our services include benefit design and administration, member eligibility and engagement, analytics and reporting. •Software Services provide additional services to our clients for ad hoc enhancements on their existing software solutions. •Data Analytics provide payment tools and data analytics to improve revenue accuracy and identify gaps in quality, clinical care and compliance. Increasingly we are combining these analytics capabilities with our Health Plan Management offerings. •Supplemental Benefit Services include product fulfillment, as well as catalog development and product distribution. Many of these services are provided through our technology enabled solutions. Advisory Services We provide Advisory Services that complement our technology enabled solutions, including sales and marketing strategies, provider network strategies, compliance, Star ratings, quality, clinical, pharmacy, analytics and risk adjustment. Revenue Recognition We recognize revenue under ASC Topic 606, Revenue from Contracts with Customers. We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for contracts that are within the scope of the standard, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Disaggregation of revenue The following tables present disaggregated revenue by reporting segment:
The revenue recognition pattern, point in time or over time, is consistent within all revenue categories with the exception of Data Analytics which includes revenue recognized on both a point in time and over time basis. The amount of point in time revenue within Data Analytics was $0.6 million and $1.4 million during the three months ended March 31, 2022, and 2021, respectively. Contract Balances The timing of our revenue recognition, invoicing, and cash collections results in billed accounts receivable, unbilled receivables, and deferred revenue. Accounts receivable includes unbilled receivable balances of $17.4 million and $7.0 million as of March 31, 2022, and December 31, 2021, respectively. Deferred revenue represents payments received from our customers in advance of recognition of revenue. Deferred revenue that will be recognized during the succeeding 12 months is recognized as current deferred revenue and the remaining portion is recognized as non-current deferred revenue within Other long-term liabilities. Revenue recognized during the three months ended March 31, 2022, and 2021 that was included in the deferred revenue balance at the beginning of the period was $4.4 million and $3.9 million, respectively. Remaining Performance Obligations Transaction price allocated to remaining performance obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. The timing and amount of revenue recognition for our remaining performance obligations are influenced by several factors and therefore the amount of remaining obligations may not be a meaningful indicator of future results. Total RPO equaled $8.4 million as of March 31, 2022, of which we expect to recognize approximately $4.2 million over the next 12 months. The remaining $4.2 million is expected to be recognized in fiscal years 2023, 2024, 2025, 2026 and 2027 by $3.0 million, $1.1 million, $0.1 million, $7.5 thousand and $7.5 thousand, respectively.
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ACQUISITIONS |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS On January 9, 2022, Convey’s indirect wholly-owned subsidiary, D-M-S Holdings Parent, LLC (f/k/a Dragon Holdings Parent, LLC), a Delaware limited liability company (“Buyer”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Briggs Medical Service Company, a Delaware corporation (“Seller”), and D-M-S Holdings, Inc. d/b/a HealthSmart International, a Delaware corporation (“Target”), pursuant to which, on the terms and subject to the conditions set forth in the Purchase Agreement, Buyer agreed to acquire from Seller all of the issued and outstanding capital stock of Target (the acquisition of such capital stock, the “Acquisition”). Target provides a diverse portfolio of health, wellness and diagnostic products centered on home based care outcomes, and the Company intends to leverage the Target’s supply chain and logistics expertise to get high quality products to members faster and at a lower cost. On February 1, 2022, Buyer completed its acquisition of all of the issued and outstanding capital stock of the Target. The Acquisition was consummated pursuant to the Purchase Agreement. Pursuant to the terms set forth in the Purchase Agreement, at closing Buyer paid to Seller cash in an amount equal to $74.7 million, subject to certain adjustments for, among other things, Target’s cash, indebtedness and net working capital (the “Closing Purchase Price”). If the Target achieves certain amounts of net revenue in calendar year 2022, Buyer will pay to Seller cash up to an additional $15 million. A portion of the Closing Purchase Price was deposited into an escrow account held by an escrow agent and will be released to Buyer or Seller, as applicable, following the final determination of any purchase price adjustment. In connection with the Purchase Agreement, CHS obtained a first lien incremental term loan facility under CHS’s existing First Lien Credit Agreement in an aggregate principal amount of $78 million, for the purpose of financing the Acquisition and paying fees and expenses related thereto. See Note 9. Credit Facility for additional information related to the incremental term loan facility. The Acquisition was accounted for using the acquisition method of accounting under which assets and liabilities of the Target were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets. A deferred tax liability has been recorded for the excess of financial statement basis over tax basis of the acquired assets and assumed liabilities with a corresponding increase to goodwill. The goodwill attributable to the Acquisition has been recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment. Such goodwill, which is non-deductible for income tax purposes, is part of the Technology Enabled Solutions segment. The Acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. The estimated fair values of assets acquired and liabilities assumed are considered preliminary and are based on the most recent information available. The Company believes that the information provides a reasonable basis for assigning the fair values of assets acquired and liabilities assumed. Thus, the provisional measurements of fair value set forth below are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date. The following table summarizes the Acquisition date fair value of the allocation of the purchase consideration assigned to each major class of assets acquired and liabilities assumed as of February 1, 2022, the acquisition date:
Indications of fair value of the intangible assets acquired in connection with the Acquisition were determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized. The trade names and customer relationships are being amortized on a straight-line basis over an estimated useful life of twenty years and seventeen years, respectively. The goodwill recognized is primarily attributable to synergies of the business and the acquisition of workforce knowledgeable of product development and supply chain expertise in the healthcare industry. The following table summarizes the purchase consideration transferred in connection with the Acquisition and consists of the following:
Included in the condensed consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2022, are net sales of $7.2 million and net loss of $1.6 million, related to the Target’s operations since the acquisition date of February 1, 2022. Unaudited Supplemental Pro Forma Information The following table presents the unaudited pro forma combined results of operations of the Company and Target for the three months ended March 31, 2022 and 2021, as if the acquisition had occurred on January 1, 2021. The pro forma information presented is for informational purposes only and is not indicative of results of operations that would have been achieved had the Acquisition taken place at the beginning of the period.
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PREPAID EXPENSES AND OTHER CURRENT ASSETS |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following:
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PROPERTY AND EQUIPMENT |
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PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consist of the following:
Depreciation expense for the three months ended March 31, 2022, and 2021 totaled $1.5 million and $1.4 million, respectively. We lease various equipment and software under finance leases. The depreciation expense associated with the assets under finance leases for the three months ended March 31, 2022, and 2021, totaled $89 thousand and $0.1 million, respectively. Assets held under finance leases are included in property and equipment as follows:
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INTANGIBLE ASSETS AND GOODWILL |
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INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL The activity for goodwill as of March 31, 2022 is as follows:
The carrying amount of goodwill by reporting unit as of March 31, 2022 is $88.9 million for Advanced Plan Administration (“APA”), $190.2 million for Supplemental Benefits Administration (“SBA”), $138.2 million for Value Based Payment Assurance (“VBPA”), $37.9 million for Advisory Services (“Advisory”) and $27.4 million for HealthSmart acquisition, respectively. The goodwill allocated to the Technology Enabled Solutions and Advisory Services reportable segments is $444.7 million and $37.9 million, respectively as of March 31, 2022. Goodwill is assessed for impairment on an annual basis (on October 1 of each year) and on an interim basis when indicators of impairment exist. As a result of the decline in our stock price since December 31, 2021, we performed an interim impairment test for goodwill for APA, SBA, VBPA and Advisory reporting units using the quantitative approach as of March 31, 2022. Since HealthSmart was recently acquired, no impairment test was performed on that reporting unit. Based on our evaluation performed, we determined the fair value of each of the reporting units exceeded its respective carrying amount, and therefore, we determined that goodwill was not impaired at any of our reporting units as of March 31, 2022. We define “headroom” as the percentage difference between the fair value of a reporting unit and its carrying value. For the interim impairment test, the headroom for the reporting units ranged between eight percent to sixty-five percent. Our SBA reporting unit and our VBPA reporting unit have headroom at the low-end of that range (8.4% for SBA and 12.5% for VBPA) and could experience impairment in the future if we do not achieve our profitability projections, there is a change in key assumptions underlying the valuation or if we continue to experience a substantial decrease in our stock price. Evaluation of goodwill for impairment requires judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and determination of the fair value of each reporting unit. We estimate the fair value of our reporting units using a combination of an income approach, utilizing a discounted cash flow analysis, and a market approach, using market multiples. Under the income approach, we estimate projected future cash flows, the timing of such cash flows and long-term growth rates, and determine the appropriate discount rate that reflects the risk inherent in the projected future cash flows. The discount rate used is based on a market participant weighted-average cost of capital and may be adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected future cash flows. Under the market approach, we estimate fair value based on market multiples of revenues and earnings derived from comparable publicly-traded companies with characteristics similar to the reporting unit. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. The assumptions and estimates used in determining the fair values of the reporting units contain uncertainties, and any changes to these assumptions and estimates could have a negative impact and result in a future impairment. The carrying value of identifiable intangible assets consisted of the following as of March 31, 2022:
The carrying value of identifiable intangible assets consisted of the following as of December 31, 2021:
Amortization expense for Trade names, Customer relationships and Technology for the three months ended March 31, 2022, and 2021, totaled $6.2 million and $5.9 million, respectively. Amortization expense for Capitalized software development costs for the three months ended March 31, 2022, and 2021, totaled $0.5 million and $0.1 million, respectively.
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ACCRUED EXPENSES |
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ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses and other current liabilities consist of the following:
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CREDIT FACILITY |
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CREDIT FACILITY | CREDIT FACILITY On September 4, 2019, we entered into the First Lien Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for senior secured credit facilities consisting of (i) a $225.0 million closing date term loan (the “Term Facility”) and loans thereunder (the “Term Loans”) and (ii) a $40.0 million revolving credit facility (the “Revolving Facility”) (collectively, the “Credit Facility”). The Term Facility has a seven-year term which expires on September 4, 2026 and the Revolving Facility has a five-year term which expires on September 4, 2024. We paid debt issuance costs of approximately $6.1 million on the closing date of the Credit Facility, $5.2 million is being amortized over the life of the Term Facility (84 months) and $0.9 million is being amortized over the term of the Revolving Facility (60 months) on a straight-line method. The Revolving Facility includes a letter of credit sub-facility (subject to a sublimit not to exceed $10.0 million) and a swing line loan sub-facility (subject to a sublimit not to exceed $10.0 million). On April 8, 2020, we amended the Credit Agreement to establish an incremental loan facility in an aggregate principal amount equal to $25.0 million for an incremental term loan request (the “2020 Incremental Term Loan”) bearing interest at the Eurodollar Rate (as defined in the Credit Agreement) expiring September 4, 2026. We capitalized debt issuance costs of approximately $1.1 million on the closing date of the 2020 Incremental Term Loan. On February 12, 2021, we amended the Credit Agreement to establish an incremental term loan in an aggregate principal amount equal to $78.0 million (the “2021 Incremental Term Loan”) bearing interest at the Eurodollar Rate (as defined in the Credit Agreement) expiring September 4, 2026. We capitalized debt issuance costs of approximately $2.4 million on the closing date of the 2021 Incremental Term Loan. On February 1, 2022, we further amended the Credit Agreement to establish an incremental term loan in an aggregate principal amount equal to $78.0 million (the “2022 Incremental Term Loan”) bearing interest at the Eurodollar Rate (as defined in the Credit Agreement) expiring September 4, 2026. We capitalized debt issuance costs of approximately $2.6 million on the closing date of the 2022 Incremental Term Loan, which is being amortized over the life of the 2022 Incremental Term Loan. The proceeds of the term loans borrowed under the 2022 Incremental Term Loan were used to finance the HealthSmart acquisition (see Note 4) and pay fees and expenses related thereto. The 2022 Incremental Term Loan was accounted for as a debt modification. The Credit Agreement includes an uncommitted incremental facility, which provides that we have the right at any time to request term loan increases, additional term loan facilities, revolving commitment increases and/or additional revolving credit facilities, in an aggregate principal amount, together with the aggregate principal amount of permitted incremental equivalent debt under the Credit Agreement, not to exceed (a) the sum of the greater of (i) $46.9 million and (ii) 100.0% of Consolidated EBITDA (as defined in the Credit Agreement) of CHS and its restricted subsidiaries for the most recently ended period of four consecutive fiscal quarters of CHS (calculated on a pro forma basis), plus (b) certain additional amounts, including an unlimited amount subject to pro forma compliance with a leverage ratio test. Interest Rate and Fees Borrowings under the Credit Agreement (other than borrowings of swing line loans) bear interest at a rate per annum equal to, at our election, either (i) the LIBOR for the relevant interest period (subject to a floor of 1.00% per annum) plus an applicable margin, as defined in the Credit Agreement, or (ii) a base rate plus an applicable margin, as defined in the Credit Agreement. We elected to use the LIBOR rate for the Term Loans and the Revolving Facility. The Credit Agreement provides for the replacement of LIBOR with a successor or alternative index rate in the event LIBOR is phased-out. In addition to paying interest on the outstanding principal of the Credit Facility, we are required to pay a commitment fee in respect of any unused commitments under the Revolving Facility at a rate that is subject to adjustment based upon the First Lien Net Leverage Ratio, as defined in the Credit Agreement (maximum debt to Earnings Before Interest, Income Tax, Depreciation and Amortization (“EBITDA”), as defined in the Credit Agreement) at such time and ranges from 0.375% to 0.500% per annum. We are also required to pay customary letter of credit fees and certain other agency fees. On July 12, 2021, CHS entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”). Amendment No. 4 amends the Credit Agreement to provide for, among other things, (i) the reduction of the Applicable Rate (as defined in the Credit Agreement) for Eurodollar Rate Loans (as defined in the Credit Agreement) from 5.25% to 4.75% and, for Base Rate Loans (as defined in the Credit Agreement), from 4.25% to 3.75%, and (ii) the reduction of the floor for the Eurodollar Rate (as defined in the Credit Agreement) from 1.00% to 0.75% for the Closing Date Term Loans (as defined in the Credit Agreement). Amendment No. 4 was accounted for as a debt modification. Covenants The Credit Facility contains a financial covenant that requires us to maintain as of the last day of each period of four consecutive quarters of the Company, a First Lien Net Leverage Ratio not to exceed 7.4 to 1.0 if, as of the last day of any fiscal quarter of the Company, there are outstanding revolving loans and letters of credit (excluding (i) undrawn letters of credit in an aggregate face amount up to $10.0 million and (ii) letters of credit (whether drawn or undrawn) to the extent reimbursed, cash collateralized or backstopped on terms reasonably acceptable to the applicable issuing bank on or prior to the date that is three business days following the end of the applicable period of four consecutive fiscal quarters of CHS in an aggregate principal amount exceeding 35% of the aggregate principal amount of the Revolving Facility at such time. We were in compliance with our debt covenants at March 31, 2022. Prepayments and Mandatory Prepayment Under the terms of the Credit Agreement, we are permitted to voluntarily prepay outstanding loans or commitments in whole or part without premium or penalty other than certain exceptions described in the Credit Agreement; however, the Credit Agreement requires us to prepay outstanding term loans, subject to certain exceptions and limitations with (i) 50% of our annual excess cash flow, subject to certain step-downs based upon the First Lien Net Leverage Ratio; (ii) 100% of the net cash proceeds of certain asset sales or casualty events; and (iii) 100% of the net cash proceeds of certain incurrences or issuances of indebtedness. We were not required to prepay outstanding term loans based on our 2021 results. Scheduled Repayments In connection with the prepayment noted under the “Extinguishment of Debt” below, no additional scheduled installments of principal are required on the Term Facility. We are required to make scheduled quarterly payments on the 2022 Incremental Term Loan. We are required to make quarterly payments commencing with the quarter ending June 30, 2022, in an amount equal to 0.25% of the aggregate principal amount of the 2022 Incremental Term Loan outstanding on February 1, 2022 with the balance due upon maturity date. Guarantees and Collateral All obligations under the Credit Agreement are unconditionally guaranteed by Parent and certain subsidiaries. All obligations under the Credit Agreement are secured, subject to permitted liens and other exceptions and limitations, by first priority security interests in substantially all the assets of the Company and each guarantor (including all the equity interests of CHS). Extinguishment of Debt On June 18, 2021, $131.5 million from the IPO proceeds (see Note 1) were used to repay the principal balance, accrued but unpaid interest, and prepayment premium under the Credit Agreement. The 2020 Incremental Term Loan and the 2021 Incremental Term Loan were repaid in full and the remainder of the proceeds were used to repay a portion of the Term Facility. The prepayment for the Term Facility was applied to the remaining scheduled installments of principal. Other Information As of March 31, 2022, and December 31, 2021, unamortized deferred financing costs for the Term Loans totaled $5.4 million and $3.0 million, respectively. Amortization of deferred financing costs for the three months ended March 31, 2022, and 2021, totaled $0.3 million and $0.9 million, respectively. As of March 31, 2022, and December 31, 2021, unamortized deferred financing costs associated with the Revolving Facility totaled $0.5 million for each period, and were included in Other assets in the condensed consolidated balance sheets. Amortization of deferred financing costs was approximately $50 thousand for each of the three months ended March 31, 2022, and 2021. Amortization of deferred financing costs is included within Interest expense in the condensed consolidated statement of operations and comprehensive income (loss). For the three months ended March 31, 2022, and 2021, the average interest rate for the Term Facility was 5.5% and 6.3%, respectively. As of March 31, 2022, and December 31, 2021, the aggregate principal balance was $192.6 million for each period. For the three months ended March 31, 2022, the average interest rate for the 2022 Incremental Term Loan was 5.5%. As of March 31, 2022, the aggregate principal balance was $78.0 million. For the three months ended March 31, 2022, and 2021, the average interest rate for the Revolving Facility was 2.75% for each period. As of March 31, 2022, and December 31, 2021, the available balance was $39.4 million. On January 23, 2020, we established an irrevocable transferable letter of credit (“LOC”) in the favor of a lessor totaling $0.5 million. The LOC expired on January 31, 2021, however, per the terms of the agreement, the LOC automatically extends for a one year period upon the expiration date and each anniversary thereafter, unless at least 60 days prior to such expiration date or anniversary written notice is provided that we elect not to extend the LOC. The LOC was automatically extended for a one year period on January 31, 2022. Debt consists of the following as of March 31, 2022, and December 31, 2021:
Debt Maturities Schedule The required principal payments for Term Loans for each of the five years and thereafter following the balance sheet date are as follows:
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SHAREHOLDERS’ EQUITY |
3 Months Ended |
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Mar. 31, 2022 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | SHAREHOLDERS’ EQUITY As of March 31, 2022, we are authorized to issue 500,000,000 shares of common stock, par value $0.01 per share and 25,000,000 shares of preferred stock, par value $0.01 per share. See Note 1 for additional information related to the Stock Split and IPO. In February 2021, our Board, through a unanimous written consent, adopted a written resolution declaring a special dividend of $1.18 per share of common stock totaling $74.5 million in cash (“Special Dividend”) ultimately to be distributed to the shareholders of Convey. Of the Special Dividend, $72.2 million was paid to existing shareholders and $2.3 million was paid to outstanding and vested stock option holders. The Special Dividend was paid out during the three months ended March 31, 2021.
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SHARE-BASED COMPENSATION |
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SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION On September 4, 2019, our Board adopted the Cannes Holding Parent, Inc. 2019 Equity Incentive Plan (the “2019 Equity Plan”). The 2019 Equity Plan was terminated and replaced and superseded by the 2021 Plan (as defined below) on the effective date of the 2021 Plan and no further grant of awards under the 2019 Equity Plan have been made since such effective date. Outstanding awards granted under the 2019 Equity Plan remain in effect pursuant to their terms. On June 4, 2021, in connection with the IPO, the Company adopted the Convey Holding Parent, Inc. 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”). The 2021 Plan has a term of ten years. In March 2021, pursuant to the 2019 Equity Plan, Convey issued option awards to acquire 69,300 shares of Convey’s common stock with an exercise price of $9.92 per share and a term of (10) years. The awards were comprised of time-vesting options which vest 25% on each anniversary date from the vesting commencement date. In June 2021, in connection with the IPO and pursuant to the 2021 Plan, Convey issued option awards to acquire 497,321 shares of Convey’s common stock with an exercise price of $14.00 per share and a term of (10) years. In addition, Convey issued 198,929 restricted stock units (“RSUs”) with a grant date fair value of $13.00 per unit. The option awards and RSUs are time-vesting awards which vest 25% on the first anniversary of the commencement date, and the remainder will vest in 12 equal 3-month installments over the following three years. In August 2021, pursuant to the 2021 Plan, Convey issued option awards to acquire 20,380 shares of Convey’s common stock with an exercise price of $9.20 per share and a term of five (5) years. In addition, Convey issued 8,152 RSUs with a grant date fair value of $9.20 per unit. The option awards and RSUs were fully vested as of the date of the grant. In March 2022, pursuant to the 2021 Plan, the Company issued 2,500,459 RSUs and 1,243,220 performance restricted stock units (“PSUs”) with a grant date fair value of $6.70 per unit. The grants are time-vesting awards which vest 25% on the first anniversary of the commencement date, and the remainder will vest in 12 equal 3-month installments over the following three years. The PSUs have a performance condition that affects vesting and is subject to the Company meeting certain annual Adjusted Earnings Before Interest, Income Tax, Depreciation and Amortization (“Adjusted EBITDA”) target. The following table summarizes the total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss):
Stock Option Modification On February 15, 2021, our Board approved a stock option award modification (the “Modification”) whereby the exercise price of certain previously granted and still outstanding unvested stock option awards held by current employees and certain executives were reduced by $1.18 per award, which represented the cash payment made for the vested awards as part of the Special Dividend. No other terms of the repriced stock options were modified, and the modified stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the Modification, 3,653,837 unvested stock options outstanding with an original exercise price of $7.94 were modified. There was no incremental stock-based compensation expense as there was no incremental fair value generated as a result of the Modification. Stock Option Grants Stock option activity and information about stock options outstanding are summarized in the following table:
The stock options are equity-based awards and their aggregate intrinsic value outstanding and exercisable at March 31, 2022, is $0. As of March 31, 2022, there was approximately $9.4 million total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted average period of 2.11 years. We estimate the fair value of the time-vesting stock option awards on the date of grant using the Black-Scholes Merton model. The time-vesting options have a service condition. Option valuation models, including the Black-Scholes Merton model, require the input of certain assumptions that involve judgment. Changes in the input assumptions can materially affect the fair value estimates and, ultimately, how much we recognize as stock-based compensation expense. Restricted Stock Units Activity and information about non-vested RSUs outstanding are summarized in the following table:
One RSU gives the right to one share of the Company’s common stock. RSUs that vest based on service are measured based on the fair value of the underlying stock on the date of grant. Compensation with respect to RSU awards is expensed on a straight-line basis over the vesting period. As of March 31, 2022, there was approximately $26.6 million total unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted average period of 3.88 years. Long-Term Incentive Awards In March 2020, Convey issued fifty-six (56) Long-Term Incentive (LTI) awards with a total grant-date fair value of $1.1 million to employees. These awards vest upon satisfaction of the performance condition as determined by our Board at its sole discretion, subject to the participants continued employment or service. The performance condition is satisfied by TPG meeting a certain multiple-of-money return, on a scale, prior to or upon (i) TPG in the aggregate beneficially owning less than 20% of the voting equity securities of the Company or (ii) the date on which a change in control occurs. The awards contain a market condition with an implicit performance condition. No awards have vested as of March 31, 2022, as such events did not occur during the three months ended March 31, 2022. No awards have been granted or cancelled during the three months ended March 31, 2022. The awards do not expire. On the date the performance condition is met, any unvested awards will be forfeited.
Settlement of the award can be made, as determined by our Board at its sole discretion, (i) in cash, (ii) common stock, or (iii) in other property acceptable to our Board. The LTIs are treated as liability-based awards under Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation, (“ASC 718”) and the Company shall recognize compensation expense for the LTIs upon the liquidity event occurring.
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EMPLOYEE SAVINGS PLAN |
3 Months Ended |
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Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
EMPLOYEE SAVINGS PLAN | EMPLOYEE SAVINGS PLANWe offer our employees a savings plan pursuant to Section 401(k) of the Internal Revenue Code (the “Code”), whereby employees may contribute a percentage of their compensation, not to exceed the maximum amount allowable under the Code. At the discretion of our Board, we may elect to make matching or other contributions into the savings plan. We made matching contributions of $0.9 million and $0.7 million for the three months ended March 31, 2022, and 2021, respectively, to our employee savings plan, which is included within Selling, general and administrative expenses, Cost of services and Cost of products in the condensed consolidated statement of operations and comprehensive income (loss). |
TAXES |
3 Months Ended |
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Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
TAXES | TAXESOur tax provision or benefit from income taxes for interim periods is determined using an estimate of our global annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to change resulting from several factors, including variability in forecasting our pre-tax and taxable income and loss due to external changes in market conditions, changes in statutes, regulations and administrative practices, principles, and interpretations related to tax. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. Our income tax (expense) benefit for the three months ended March 31, 2022, and 2021, was $0.7 million and $1.0 million, respectively. For the three months ended March 31, 2022, our effective tax rate of 37.0%, before discrete items, was above the U.S. statutory rate of 21.0% primarily due to foreign taxes, state taxes and non-deductible compensation for covered employees. For the three months ended March 31, 2021, our effective tax rate of 22.5%, before discrete items, was slightly above the U.S. statutory rate of 21.0% primarily due to foreign taxes, state taxes, tax on Global Intangible Low-Taxed Income, disallowed wage expense and fringe benefits and certain other non-deductible items. We did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period. No interest or penalties were recorded as a result of tax uncertainties.
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TRANSACTION RELATED COSTS |
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TRANSACTION RELATED COSTS | TRANSACTION RELATED COSTS The following table represents the components of Transaction related costs as reported in the condensed consolidated statements of operations and comprehensive income (loss):
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Employment Agreements We have employment agreements with various executives. The agreements have open-ended terms providing that employment shall continue until terminated by either party in accordance with the agreement. In addition to salary, bonuses, and benefits, the agreements also provide for termination benefits if the agreements are terminated by us for reasons other than cause or by the executives for good reason. Inventory Purchases As of March 31, 2022 and December 31, 2021, we have contractual commitments to purchase inventory from certain manufacturers totaling $3.1 million and $5.2 million, respectively. Legal Proceedings We are involved in various lawsuits, claims, inquiries, and other regulatory and compliance matters, most of which are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should our exposure be materially different from our estimates or should liabilities be incurred that were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities. Because of the uncertainties associated with claims resolution and litigation, future losses to resolve these matters could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range of potential losses. If new information were to become available that allowed us to reasonably estimate a range of potential losses in an amount higher or lower than what we have accrued, we would adjust our accrued liabilities accordingly. Based upon current information, we concluded that the impact of the resolution of these matters would not be, individually or in the aggregate, material to our financial position, results of operations or cash flows. Additional lawsuits, claims, inquiries, and other regulatory and compliance matters could arise in the future. The range of losses for resolving any future matters would be assessed as they arise. Sales Tax Accrual ASC Topic 450, Contingencies, (“ASC 450”) requires an estimated loss to be accrued by a charge to income if it is probable that a liability has been incurred at the date of the financial statements and the amount of the liability can be reasonably estimated. We recognized liabilities for contingencies related to state sales and use tax deemed probable and estimable totaling $6.4 million and $6.9 million at March 31, 2022, and December 31, 2021, respectively. These are included in accrued liabilities in our condensed consolidated balance sheets.
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RELATED PARTY TRANSACTIONS |
3 Months Ended |
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Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS TPG Management Service Agreement On September 4, 2019, in connection with the Merger, we had entered into a management services agreement (“MSA”) with TPG. Under the MSA, TPG agreed to provide certain financial, strategic advisory services, and consulting services in exchange for (i) reimbursement of certain expenses incurred by TPG and (ii) an aggregate annual retainer fee of 1% based on our previous year’s consolidated EBITDA determined by our Board. Additional services may be provided in exchange for the fees structured within the MSA. During the three months ended March 31, 2022, and 2021, we paid management and consulting fees of $0 and $0.2 million, respectively. Also, during the three months ended March 31, 2022, and 2021, we paid TPG a fee of $1.0 million and $1.0 million for services provided in connection with establishing: (i) the 2022 Incremental Term Loan and (ii) the 2021 Incremental Term Loan, respectively. In the event the MSA was terminated by an IPO or business combination and TPG continues to hold at least 10% of equity of the Company upon closing of such transaction, we were required to pay TPG the net present value of the remaining portion of management and consulting fees that would have been incurred until three years after the date of such termination, as well as certain other expenses of TPG. In connection with the IPO completed in June 2021, the MSA was terminated and we paid TPG a $2.3 million termination fee. The termination fee is included within Selling, general and administrative expenses in the condensed consolidated statement of operations and comprehensive income (loss). There were no amounts payable to TPG as of March 31, 2022, or December 31, 2021. EIR Partners Consulting Agreement We have a Consulting Agreement with EIR Partners, LLC (“EIR”), a former member of our Board, and a current shareholder. Under the terms of the Consulting Agreement, EIR provides consulting services for the purpose of analyzing and reviewing potential sellers in the marketplace for the benefit of the Company as agreed to from time-to-time. As compensation for service, the Company remits to EIR $10 thousand monthly, plus reasonable out-of-pocket expenses incurred in the performance of the duties under the Consulting Agreement. The Consulting Agreement may be terminated by either party upon providing 10 days advance written notice and unless terminated, automatically renews for additional terms of one year. For the three months ended March 31, 2022, and 2021, $20 thousand and $30 thousand were paid for services rendered, respectively. The Consulting Agreement is still active with the Company.
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SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION ASC 280 establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in ASC 280, we have determined that we have two reportable segments: Technology Enabled Solutions and Advisory Services. These reportable segments reflect the manner in which the Chief Operating Decision Maker (“CODM”) group assesses information for decision-making purposes. The CODM group consists of our Chief Executive Officer and Chief Financial Officer. The key factors used to identify these reportable segments are the organization and alignment of our internal operations and the nature of our products and services. This reflects how the CODM group monitors performance, allocates resources, and makes strategic and operational decisions. In addition to the reportable segments, we have the “Unallocated” classification which includes those profit and loss items not allocated to either reportable segment. Unallocated includes corporate costs, primarily relating to group wide functions, including but not limited to, finance, tax and legal. We present reportable segment revenue and Segment Adjusted EBITDA. Segment Adjusted EBITDA is the financial measure by which management and the CODM group allocate resources and analyze the performance of the reportable segments. Segment Adjusted EBITDA represents each segment’s earnings before interest, tax, depreciation and amortization and is further adjusted to exclude certain items of a significant or unusual nature, including but not limited to, COVID-19 cost impacts, sales and use tax, non-cash stock compensation expense, transaction related costs, acquisition bonus expense, inventory step-up and other costs. Other includes costs such as management and board of directors fees and fees associated with obtaining the incremental term loans. We do not report assets by reportable segment, as this metric is not used by the CODM group to allocate resources to the segments. Presented in the tables below is revenue and Segment Adjusted EBITDA by reportable segment:
The following table presents a reconciliation of Segment Adjusted EBITDA to the condensed consolidated U.S. GAAP net income (loss) from operations:
(1)Represents certain corporate costs associated with the executive compensation, legal, accounting, finance and other costs not specifically attributable to the segments. (2)Expenses incurred due to the COVID-19 pandemic are primarily related to higher pricing from vendors due to supply chain disruptions and product shortages and higher employee costs due to hazard pay for our employees. While we had previously expected that these costs would not be an adjustment in the calculation of Segment Adjusted EBITDA after 2021, the COVID-19 pandemic has not subsided and during 2022, to a lesser extent, we have continued to incur higher product costs due to higher pricing from vendors for certain items (e.g., masks and other similar high demand products). We now expect that these expenses will not be an adjustment in the calculation of Segment Adjusted EBITDA after 2022. (3)Incremental cost of products associated with the step-up of inventory recognized in purchase accounting for the HealthSmart acquisition. (4)These adjustments include individual adjustments related to management and board of directors fees and fees associated with obtaining the incremental term loans.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES We lease office space, warehouse and distribution space, and equipment under non-cancelable operating and finance leases expiring at various dates through 2029. We determine whether an arrangement is a lease at inception, based on the (1) conveyed rights to obtain substantially all economic benefits from using the asset and (2) the right to direct the uses to which the asset is put. Our lease population does not include any residual value guarantees, and therefore none were considered in the calculation of the lease balances. We have leases with variable payments, most commonly in the form of common area maintenance charges which are based on actual costs incurred. These variable payments were excluded from the right-of-use asset and lease liability balances since they are not fixed or in-substance fixed payments. We have lease agreements with lease and non-lease components. We elected the practical expedient to account for lease and non-lease components as a single lease component. For leases with terms greater than 12 months, right-of-use assets and lease liabilities are recognized at the implementation date of Topic 842 or lease commencement date based on the present value of the future lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate. Our lease agreements generally do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate our incremental borrowing rate based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the condensed consolidated financial statements. The components of lease expense were as follows:
The table below summarizes our scheduled future minimum lease payments under operating and finance leases, recorded on the condensed consolidated balance sheet as of March 31, 2022:
The following table presents the balances for operating and finance right-of-use assets and lease liabilities:
The table below presents additional information related to our leases as of March 31, 2022:
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LEASES | LEASES We lease office space, warehouse and distribution space, and equipment under non-cancelable operating and finance leases expiring at various dates through 2029. We determine whether an arrangement is a lease at inception, based on the (1) conveyed rights to obtain substantially all economic benefits from using the asset and (2) the right to direct the uses to which the asset is put. Our lease population does not include any residual value guarantees, and therefore none were considered in the calculation of the lease balances. We have leases with variable payments, most commonly in the form of common area maintenance charges which are based on actual costs incurred. These variable payments were excluded from the right-of-use asset and lease liability balances since they are not fixed or in-substance fixed payments. We have lease agreements with lease and non-lease components. We elected the practical expedient to account for lease and non-lease components as a single lease component. For leases with terms greater than 12 months, right-of-use assets and lease liabilities are recognized at the implementation date of Topic 842 or lease commencement date based on the present value of the future lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate. Our lease agreements generally do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate our incremental borrowing rate based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the condensed consolidated financial statements. The components of lease expense were as follows:
The table below summarizes our scheduled future minimum lease payments under operating and finance leases, recorded on the condensed consolidated balance sheet as of March 31, 2022:
The following table presents the balances for operating and finance right-of-use assets and lease liabilities:
The table below presents additional information related to our leases as of March 31, 2022:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are unaudited and include the accounts of Convey and our wholly-owned subsidiaries. They have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Our condensed consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for the three months ended March 31, 2022, and 2021, and the condensed consolidated balance sheet as of March 31, 2022, reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair statement of the results for the periods shown.
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Consolidation | Our condensed consolidated balance sheet as of December 31, 2021, has been derived from our audited consolidated financial statements as of that date. Our condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2021, which include a complete set of footnote disclosures, including our significant accounting policies, and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 23, 2022 (“Form 10-K”). The results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information currently available to us and based on various other assumptions that we conclude to be reasonable under the circumstances. While management concludes that such estimates are reasonable when considered in conjunction with our condensed consolidated balance sheets and statements of operations and comprehensive income (loss) taken as a whole, actual results could differ materially from those estimates.
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Acquisitions | Acquisitions We allocate the purchase consideration to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition. The excess of the fair value of the purchase consideration over the fair value of the identifiable assets and liabilities, if any, is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, we may adjust provisional amounts that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to the condensed consolidated statements of operations and comprehensive income (loss). Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies which techniques include the royalty method, the multi-period excess earnings method, the cost approach, the market approach, and the probability weighted assessment method as considered necessary. Significant assumptions used in those methodologies include, but are not limited to, growth rates, discount rates, customer attrition rates, expected levels of revenues, earnings, cash flows and tax rates. The use of different valuation methodologies and assumptions is highly subjective and inherently uncertain and, as a result, actual results may differ materially from estimates.
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Customer Concentrations | Customer Concentrations Revenue and Accounts receivable from our major customers are as follows:
Our customer base is highly concentrated. Revenue may significantly decline if we were to lose one or more of our major customers. However, our risk is reduced due to our significant customers having multiple product delivery solutions under separate contracts.
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Contingent Consideration | Contingent Consideration We recognized an earn-out liability in connection with the November 2018 acquisition of HealthScape Advisors, LLC (“HealthScape Advisors”) and Pareto Intelligence LLC (“Pareto Intelligence”), which represented contingent consideration. The initial fair value of the earn-out liability was determined by employing a Monte-Carlo simulation model. The underlying simulated variable was adjusted revenue discounted by the market price of risk embedded in the revenue metrics. The revenue volatility estimate was based on a study of historical asset volatility and implied volatility for a set of comparable public companies, adjusted by our operating leverage. The earn-out payments were calculated based on simulated revenue metrics and payment thresholds as set forth in the HealthScape Advisors and Pareto Intelligence purchase agreement. The calculated payments were further discounted back to present value using cost of debt reflecting our credit risk. The fair value of the earn-out liability at each reporting date subsequent to the acquisition was measured using a probability weighted approach. Any change in fair value was recognized in the condensed consolidated statements of operations and comprehensive income (loss). On September 4, 2019, Cannes Parent, Inc. (“Cannes”), a direct subsidiary of Convey, entered into an agreement to acquire all of the outstanding stock of Convey Health Solutions, Inc. through the merger of Cannes Merger Sub, Inc. (“Merger Sub”) and Convey Health Parent, Inc. (“Parent”) (the “Merger”) with Parent surviving as a direct subsidiary of Cannes. The Merger principally occurred through an investment from TPG Cannes Aggregation, L.P., which is primarily funded by partners of TPG Partners VIII, L.P. and TPG Healthcare Partners, L.P. or any parallel fund or their alternative investment vehicles (collectively, “TPG”). In connection with the Merger, we recognized a holdback liability, which represented contingent consideration. The initial fair value of the holdback liabilities and at each subsequent reporting date was measured using a probability weighted approach. Any change in fair value was recognized in the consolidated statements of operations and comprehensive income (loss). In connection with the acquisition of HealthSmart in February 2022, we recognized an earn-out liability which represented contingent consideration. The initial fair value of the earn-out liability was determined by employing a Black-Scholes Merton model. The earn-out payments were calculated based on projected revenue metrics and payment thresholds as set forth in the HealthSmart purchase agreement. The calculated payments were further discounted back to present value using the cost of debt reflecting our credit risk.
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Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic income (loss) per share is computed by dividing net income (loss) attributable to common shareholders (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted net income (loss) per common share attributable to common shareholders is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period adjusted for the dilutive effects of common stock equivalents. In periods when losses from operations are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes the previous guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases except those which meet the definition of a short-term lease. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or financing. Classification is based on criteria that are similar to those applied in previous lease accounting, but without explicit bright lines. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, have not significantly changed from previous U.S. GAAP requirements. The Company adopted the provisions of Topic 842 on January 1, 2022, using the modified retrospective approach. All comparative periods prior to January 1, 2022 are not adjusted and continue to be reported in accordance with Topic 840. The Company elected to utilize the package of practical expedients permitted within the new standard, which among other things, allowed the Company not to reassess prior conclusions about lease identification, classification and initial direct costs of existing leases as of the date of adoption. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of the Company’s condensed consolidated balance sheet which resulted in recognizing those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. Adoption of the new standard resulted in the recording of right-of-use assets and corresponding lease liabilities of $14.7 million and $20.7 million, respectively, as of January 1, 2022. The difference between the right-of-use assets and the lease liabilities was recorded to eliminate existing deferred rent balances and remaining balances of lease incentives recorded under Topic 840. The adoption of the new standard did not materially impact the Company's condensed consolidated statements of operations and had no impact on the Company's condensed consolidated statements of cash flows. See Note 18. Leases for further information. Accounting Pronouncements Issued Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. Entities will be required to use a model that will result in the earlier recognition of allowances for losses for trade and other receivables, held-to-maturity debt securities, loans, and other instruments. For available-for-sale debt securities with unrealized losses, the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the new guidance to determine the impact it will have on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), subsequently clarified in January 2021 by ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The main provisions of this update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022. We are currently evaluating the new guidance to determine the impact ASU 2020-04 and ASU 2021-01 will have on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) (“ASU 2021-08”). The new guidance creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. Under this exception, an acquirer applies Topic 606 to recognize and measure contract assets and contract liabilities on the acquisition date. Topic 805 generally requires the acquirer in a business combination to recognize and measure the assets it acquires and liabilities it assumes at fair value on the acquisition date. This generally will result in companies recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date. This new guidance is effective for emerging growth companies following private business adoption dates, for the fiscal years beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the new guidance to determine the impact it will have on our consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | Revenue and Accounts receivable from our major customers are as follows:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of our Level 3 earn-out and holdback liabilities for the three months ended March 31, 2022:
The following table provides a reconciliation of our Level 3 earn-out and holdback liabilities for the three months ended March 31, 2021:
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Schedule of Earnings per Share, Basic and Diluted |
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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
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Disaggregation of Revenue | The following tables present disaggregated revenue by reporting segment:
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ACQUISITIONS (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the Acquisition date fair value of the allocation of the purchase consideration assigned to each major class of assets acquired and liabilities assumed as of February 1, 2022, the acquisition date:
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Schedule of Business Acquisitions, by Acquisition | The following table summarizes the purchase consideration transferred in connection with the Acquisition and consists of the following:
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Business Acquisition, Pro Forma Information | The following table presents the unaudited pro forma combined results of operations of the Company and Target for the three months ended March 31, 2022 and 2021, as if the acquisition had occurred on January 1, 2021. The pro forma information presented is for informational purposes only and is not indicative of results of operations that would have been achieved had the Acquisition taken place at the beginning of the period.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following:
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PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consist of the following:
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Schedule of Finance Leased Assets | Assets held under finance leases are included in property and equipment as follows:
|
INTANGIBLE ASSETS AND GOODWILL (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The activity for goodwill as of March 31, 2022 is as follows:
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Schedule of Finite-Lived Intangible Assets | The carrying value of identifiable intangible assets consisted of the following as of March 31, 2022:
The carrying value of identifiable intangible assets consisted of the following as of December 31, 2021:
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ACCRUED EXPENSES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued expenses and other current liabilities consist of the following:
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CREDIT FACILITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | Debt consists of the following as of March 31, 2022, and December 31, 2021:
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Contractual Obligation, Fiscal Year Maturity | The required principal payments for Term Loans for each of the five years and thereafter following the balance sheet date are as follows:
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SHARE-BASED COMPENSATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | The following table summarizes the total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss):
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Share-based Payment Arrangement, Option, Activity | Stock option activity and information about stock options outstanding are summarized in the following table:
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Share-based Payment Arrangement, Restricted Stock Unit, Activity | Activity and information about non-vested RSUs outstanding are summarized in the following table:
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award |
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TRANSACTION RELATED COSTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Related and Deferred Offering Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquisition Related and Deferred Offering Costs | The following table represents the components of Transaction related costs as reported in the condensed consolidated statements of operations and comprehensive income (loss):
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SEGMENT INFORMATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Presented in the tables below is revenue and Segment Adjusted EBITDA by reportable segment:
The following table presents a reconciliation of Segment Adjusted EBITDA to the condensed consolidated U.S. GAAP net income (loss) from operations:
(1)Represents certain corporate costs associated with the executive compensation, legal, accounting, finance and other costs not specifically attributable to the segments. (2)Expenses incurred due to the COVID-19 pandemic are primarily related to higher pricing from vendors due to supply chain disruptions and product shortages and higher employee costs due to hazard pay for our employees. While we had previously expected that these costs would not be an adjustment in the calculation of Segment Adjusted EBITDA after 2021, the COVID-19 pandemic has not subsided and during 2022, to a lesser extent, we have continued to incur higher product costs due to higher pricing from vendors for certain items (e.g., masks and other similar high demand products). We now expect that these expenses will not be an adjustment in the calculation of Segment Adjusted EBITDA after 2022. (3)Incremental cost of products associated with the step-up of inventory recognized in purchase accounting for the HealthSmart acquisition. (4)These adjustments include individual adjustments related to management and board of directors fees and fees associated with obtaining the incremental term loans.
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The components of lease expense were as follows:
The table below presents additional information related to our leases as of March 31, 2022:
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Lessee, Operating Lease, Liability, Maturity | The table below summarizes our scheduled future minimum lease payments under operating and finance leases, recorded on the condensed consolidated balance sheet as of March 31, 2022:
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Finance Lease, Liability, Fiscal Year Maturity | The table below summarizes our scheduled future minimum lease payments under operating and finance leases, recorded on the condensed consolidated balance sheet as of March 31, 2022:
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Assets And Liabilities, Lessee | The following table presents the balances for operating and finance right-of-use assets and lease liabilities:
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BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Millions |
Jun. 18, 2021
USD ($)
$ / shares
shares
|
Jun. 04, 2021
shares
|
Mar. 31, 2022
$ / shares
shares
|
Dec. 31, 2021
$ / shares
shares
|
---|---|---|---|---|
Class of Stock [Line Items] | ||||
Common stock par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Stock split, conversion ratio | 126 | |||
Common stock shares authorized | 1,000,000 | 500,000,000 | 500,000,000 | |
Sale of stock, net proceeds | $ | $ 131.5 | |||
Preferred stock shares authorized | 25,000,000 | 0 | ||
Preferred stock par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Voting Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock shares authorized | 915,000 | |||
Nonvoting Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock shares authorized | 85,000 | |||
IPO | ||||
Class of Stock [Line Items] | ||||
Sale of stock, number of shares issued in transaction | 13,333,334 | |||
Sale of stock, price per share (in usd per share) | $ / shares | $ 14.00 | |||
Sale of stock, consideration received on transaction | $ | $ 146.1 | |||
IPO - Company Shares | ||||
Class of Stock [Line Items] | ||||
Sale of stock, number of shares issued in transaction | 11,666,667 | |||
IPO - Shares From Existing Shareholders | ||||
Class of Stock [Line Items] | ||||
Sale of stock, number of shares issued in transaction | 1,666,667 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Customer Concentration (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Concentration Risk [Line Items] | |||
Net revenues | $ 96,708 | $ 82,631 | |
Accounts receivable, net of allowance for doubtful accounts of $69 as of March 31, 2022, and December 31, 2021 | 72,707 | $ 62,813 | |
Revenue Benchmark | Customer Concentration Risk | Customer A | |||
Concentration Risk [Line Items] | |||
Net revenues | $ 27,108 | $ 19,626 | |
Concentration risk, percentage | 28.00% | 23.80% | |
Revenue Benchmark | Customer Concentration Risk | Customer B | |||
Concentration Risk [Line Items] | |||
Net revenues | $ 16,712 | $ 16,766 | |
Concentration risk, percentage | 17.30% | 20.30% | |
Accounts Receivable | Customer Concentration Risk | Customer A | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.20% | 21.00% | |
Accounts receivable, net of allowance for doubtful accounts of $69 as of March 31, 2022, and December 31, 2021 | $ 8,119 | $ 13,161 | |
Accounts Receivable | Customer Concentration Risk | Customer B | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 16.10% | 24.20% | |
Accounts receivable, net of allowance for doubtful accounts of $69 as of March 31, 2022, and December 31, 2021 | $ 11,688 | $ 15,174 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earn-Out and Holdback Liabilities Reconciliation (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 0 | $ 20,538 |
Ending balance | 2,254 | 20,538 |
Earn-Out Liabilities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value of contingent consideration in connection with the HealthSmart acquisition | 2,254 | |
Change in fair value of contingent consideration | 0 | 0 |
Holdback Liabilities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value of contingent consideration in connection with the HealthSmart acquisition | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss (income) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Net income (loss) attributable to common shareholders | ||
Net income (loss) | $ (1,154) | $ (934) |
Net income (loss) | $ (1,154) | $ (934) |
Weighted-average common shares outstanding: | ||
Weighted-average common shares outstanding: basic | 73,194,171 | 61,321,424 |
Weighted-average common shares outstanding: diluted | 73,194,171 | 61,321,424 |
Income (loss) per common share – Basic and diluted | ||
Net income (loss) per common share - basic (in usd per share) | $ (0.02) | $ (0.02) |
Net income (loss) per common share - diluted (in usd per share) | $ (0.02) | $ (0.02) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Jan. 01, 2022 |
Dec. 31, 2021 |
|
Accounting Policies [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 9,534,119,000 | 5,690,664,000 | ||
Operating lease right-of-use assets | $ 18,574 | $ 14,700 | $ 0 | |
Net present value of lease obligations | $ 24,228 | $ 20,700 |
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022
USD ($)
segment
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
Disaggregation of Revenue [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Net revenues | $ 96,708,000 | $ 82,631,000 | |
Unbilled receivables, current | 17,400,000 | $ 7,000,000 | |
Contract with customer, liability, revenue recognized | 4,400,000 | 3,900,000 | |
Revenue, remaining performance obligation, amount | $ 8,400,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months | ||
Revenue, remaining performance obligation, amount | $ 4,200,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, remaining performance obligation, amount | $ 3,000,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, remaining performance obligation, amount | $ 1,100,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, remaining performance obligation, amount | $ 100,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, remaining performance obligation, amount | $ 7,500 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, remaining performance obligation, amount | $ 7,500 | ||
Data Analytics | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 2,558,000 | 2,768,000 | |
Data Analytics | Transferred at Point in Time | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | $ 600,000 | $ 1,400,000 |
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 96,708 | $ 82,631 |
Supplemental Benefit Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 50,228 | 39,104 |
Health Plan Management | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 25,862 | 23,942 |
Consulting Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 15,784 | 14,087 |
Software Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,276 | 2,730 |
Data Analytics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,558 | 2,768 |
Technology Enabled Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 83,166 | 69,582 |
Technology Enabled Solutions | Supplemental Benefit Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 50,228 | 39,104 |
Technology Enabled Solutions | Health Plan Management | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 25,862 | 23,942 |
Technology Enabled Solutions | Consulting Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,327 | 1,038 |
Technology Enabled Solutions | Software Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,191 | 2,730 |
Technology Enabled Solutions | Data Analytics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,558 | 2,768 |
Advisory Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 13,542 | 13,049 |
Advisory Services | Supplemental Benefit Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 0 | 0 |
Advisory Services | Health Plan Management | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 0 | 0 |
Advisory Services | Consulting Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 13,457 | 13,049 |
Advisory Services | Software Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 85 | 0 |
Advisory Services | Data Analytics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 0 | $ 0 |
ACQUISITIONS - Narrative (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Feb. 01, 2022 |
Jan. 09, 2022 |
|
Business Acquisition [Line Items] | ||||
Net revenue | $ 101,174,000 | $ 97,567,000 | ||
Net loss | $ (205,000) | $ 299,000 | ||
Trade names | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible asset, useful life | 20 years | |||
Customer relationships | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible asset, useful life | 17 years | |||
D-M-S Holdings, Inc. | ||||
Business Acquisition [Line Items] | ||||
Net revenue | $ 7,200,000 | |||
Net loss | $ 1,600,000 | |||
Purchase Agreement | ||||
Business Acquisition [Line Items] | ||||
Debt instrument, repurchase amount | $ 74,700,000 | |||
Purchase agreement, revenue threshold | $ 15,000,000 | |||
2022 Incremental Term Loans | ||||
Business Acquisition [Line Items] | ||||
Debt instrument, face amount | $ 78,000,000 |
ACQUISITIONS - Assets and Liabilities Acquired (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Feb. 01, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
|
LIABILITIES ASSUMED | |||
Goodwill | $ 482,558 | $ 455,206 | |
D-M-S Holdings, Inc. | |||
ASSETS ACQUIRED | |||
Cash | $ 112 | ||
Accounts receivable | 6,481 | ||
Inventories | 22,879 | ||
Prepaid expenses and other current assets | 1,840 | ||
Property and equipment | 1,269 | ||
Operating lease right-of-use-assets | 4,908 | ||
Total identifiable assets acquired | 37,489 | ||
Total fair value of intangible assets acquired | 34,100 | ||
Total assets acquired | 71,589 | ||
LIABILITIES ASSUMED | |||
Accounts payable | 2,937 | ||
Accrued expenses | 3,895 | ||
Operating lease liabilities, current portion | 1,003 | ||
Deferred taxes | 10,222 | ||
Operating lease liabilities, net of current portion | 3,905 | ||
Total liabilities assumed | 21,962 | ||
Net identifiable assets | 49,627 | ||
Goodwill | 27,352 | ||
Total consideration | 76,979 | $ 76,979 | |
D-M-S Holdings, Inc. | Trade names | |||
ASSETS ACQUIRED | |||
Total fair value of intangible assets acquired | 8,600 | ||
D-M-S Holdings, Inc. | Customer relationships | |||
ASSETS ACQUIRED | |||
Total fair value of intangible assets acquired | $ 25,500 |
ACQUISITIONS - Purchase Consideration (Details) - D-M-S Holdings, Inc. - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Feb. 01, 2022 |
Mar. 31, 2022 |
|
Business Acquisition [Line Items] | ||
Initial purchase price | $ 74,725 | |
Earn-out (contingent consideration) | 2,254 | |
Total consideration | $ 76,979 | $ 76,979 |
ACQUISITIONS - Pro Forma Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Business Combination and Asset Acquisition [Abstract] | ||
Net revenue | $ 101,174 | $ 97,567 |
Net income (loss) | $ 205 | $ (299) |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses and other advances | $ 5,896 | $ 6,904 |
Software licenses | 828 | 2,547 |
Insurance | 527 | 1,271 |
Inventory purchase advances | 1,390 | 23 |
Cloud computing subscription & implementation costs | 822 | 4,841 |
Other current assets | 1,346 | 983 |
Total prepaid expenses and other current assets | $ 10,809 | $ 16,569 |
PROPERTY AND EQUIPMENT - Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 33,371 | $ 31,276 |
Less: accumulated depreciation | (12,419) | (10,876) |
Property and equipment, net | 20,952 | 20,400 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 16,399 | 14,442 |
Office and computer equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 3 years | |
Office and computer equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 7 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 10,542 | 10,503 |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 10 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 4,064 | 4,054 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 7 years | |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 2,366 | $ 2,277 |
Software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 3 years | |
Software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (in years) | 5 years |
PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 1,550 | $ 1,386 |
Capital lease, depreciation expense | $ 89 | $ 100 |
PROPERTY AND EQUIPMENT - Assets Held Under Capital Leases (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (742) | $ (656) |
Total financing leases included in property and equipment | 940 | 1,026 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Office and computer equipment | $ 1,682 | $ 1,682 |
INTANGIBLE ASSETS AND GOODWILL - Goodwill Activity (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 455,206 |
Measurement period adjustments | 0 |
Acquisitions | 27,352 |
Impairment | 0 |
Goodwill, ending balance | $ 482,558 |
INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 482,558 | $ 455,206 | |
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Percentage of fair value in excess of carrying amount | 8.00% | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Percentage of fair value in excess of carrying amount | 65.00% | ||
Advanced Plan Administration | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 88,900 | ||
Supplemental Benefits Administration | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 190,200 | ||
Percentage of fair value in excess of carrying amount | 8.40% | ||
Value Based Analytics | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 138,200 | ||
Percentage of fair value in excess of carrying amount | 12.50% | ||
HealthSmart | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 27,400 | ||
Tradenames, Customer Relationships and Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 6,200 | $ 5,900 | |
Capitalized software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 500 | $ 100 | |
Advisory Services | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | 37,900 | ||
Technology Enabled Solutions | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 444,700 |
INTANGIBLE ASSETS AND GOODWILL - Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 311,226 | $ 276,554 |
Accumulated Amortization | (63,233) | (56,540) |
Net Carrying Amount | 247,993 | 220,014 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 35,900 | 27,300 |
Accumulated Amortization | (3,830) | (3,395) |
Net Carrying Amount | 32,070 | 23,905 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 214,500 | 189,000 |
Accumulated Amortization | (44,636) | (40,091) |
Net Carrying Amount | 169,864 | 148,909 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 47,800 | 47,800 |
Accumulated Amortization | (12,348) | (11,153) |
Net Carrying Amount | 35,452 | 36,647 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 13,026 | 12,454 |
Accumulated Amortization | (2,419) | (1,901) |
Net Carrying Amount | $ 10,607 | $ 10,553 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Payables and Accruals [Abstract] | ||
Incentive bonus | $ 257 | $ 15,214 |
Employee related | 7,784 | 11,154 |
Sales and use tax | 6,365 | 6,865 |
Rebates | 2,372 | 4,276 |
Accrued interest | 83 | 637 |
Accrued professional fees | 5,538 | 7,046 |
Refundable deposits | 4,626 | 0 |
Other | 3,013 | 3,366 |
Total accrued expenses | $ 30,038 | $ 48,558 |
CREDIT FACILITY - Narrative (Details) |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 18, 2021
USD ($)
|
Sep. 04, 2019
USD ($)
|
Mar. 31, 2022
USD ($)
|
Mar. 31, 2021
USD ($)
|
Feb. 01, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Feb. 12, 2021
USD ($)
|
Apr. 08, 2020
USD ($)
|
Jan. 23, 2020
USD ($)
|
|
Line of Credit Facility [Line Items] | |||||||||
Payment of debt issuance cost | $ 6,100,000 | $ 2,631,000 | $ 2,133,000 | ||||||
Amortization of debt issuance costs | 309,000 | 328,000 | |||||||
Consolidated EBITDA, maximum amount | $ 46,900,000 | ||||||||
Consolidated EBITDA, percentage | 1.000 | ||||||||
Debt instrument, leverage ratio | 7.4 | ||||||||
Annual excess cash flow, percentage | 0.50 | ||||||||
Net cash proceeds of certain asset sales or casualty events, percentage | 1 | ||||||||
Net cash proceeds of debt, percentage | 1 | ||||||||
Long-term debt, gross | $ 270,631,000 | $ 192,631,000 | |||||||
Long-term debt, irrevocable letter of credit threshold | $ 500,000 | ||||||||
Long-term debt, irrevocable letter of credit, extension period | 1 year | ||||||||
IPO | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Prepayment premium on early repayment of term loan | $ 131,500,000 | ||||||||
Minimum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 0.375% | ||||||||
Maximum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 0.50% | ||||||||
London Interbank Offered Rate (LIBOR) | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||||
Revolving Credit Facility | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of debt issuance costs | $ 50,000 | $ 50,000 | |||||||
Unamortized debt issuance expense | $ 500,000 | 500,000 | |||||||
Long-term debt, weighted average interest rate, over time | 2.75% | 2.75% | |||||||
Long-term debt, gross | $ 39,400,000 | 39,400,000 | |||||||
Undrawn Letter Of Credit | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, face amount | $ 10,000,000 | ||||||||
Secured Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of debt issuance costs | $ 5,200,000 | ||||||||
Debt issuance costs, amortization period | 84 months | ||||||||
Long-term debt, weighted average interest rate, over time | 5.50% | 6.30% | |||||||
Long-term debt, gross | $ 192,600,000 | 192,600,000 | |||||||
Line of Credit | Revolving Credit Facility | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | $ 40,000,000 | ||||||||
Debt instrument, term | 5 years | ||||||||
Amortization of debt issuance costs | $ 900,000 | ||||||||
Debt issuance costs, amortization period | 60 months | ||||||||
Line of Credit | Bridge Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 | ||||||||
2022 Incremental Term Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Long-term debt, gross | 78,000,000 | ||||||||
Term Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of debt issuance costs | $ 300,000 | $ 900,000 | |||||||
Debt instrument, aggregate principal amount, payment, percentage | 0.0025 | ||||||||
Unamortized debt issuance expense | $ 5,400,000 | $ 3,000,000 | |||||||
Term Loans | Secured Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, face amount | $ 225,000,000 | ||||||||
Debt instrument, term | 7 years | ||||||||
2020 Incremental Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Long-term debt, weighted average interest rate, over time | 5.50% | ||||||||
2020 Incremental Term Loan | Secured Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, face amount | $ 25,000,000 | ||||||||
Debt issuance costs, gross | $ 1,100,000 | ||||||||
2021 Incremental Term Loan | Secured Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, face amount | $ 78,000,000 | ||||||||
Debt issuance costs, gross | $ 2,400,000 | ||||||||
2022 Incremental Term Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, face amount | $ 78,000,000 | ||||||||
2022 Incremental Term Loans | Secured Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt issuance costs, gross | $ 2,600,000 | ||||||||
Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 5.25% | ||||||||
Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 4.75% | ||||||||
Credit Agreement | Base Rate | Minimum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 4.25% | ||||||||
Credit Agreement | Base Rate | Maximum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 3.75% | ||||||||
Credit Agreement | Eurodollar | Minimum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||||
Credit Agreement | Eurodollar | Maximum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 0.75% |
CREDIT FACILITY - Schedule of Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
Long-term debt, gross | $ 270,631 | $ 192,631 |
Less: deferred financing costs | (5,368) | (2,988) |
Term loans, net of deferred financing costs | 265,263 | 189,643 |
Term loans, current portion | (780) | 0 |
Term loans, net of current portion | $ 264,483 | $ 189,643 |
CREDIT FACILITY - Debt Maturities Schedule (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument, Redemption [Line Items] | ||
Term loans, net of deferred financing costs | $ 270,631 | $ 192,631 |
Term Loans | ||
Debt Instrument, Redemption [Line Items] | ||
2022 | 585 | |
2023 | 780 | |
2024 | 780 | |
2025 | 780 | |
2026 | 267,706 | |
Term loans, net of deferred financing costs | $ 270,631 |
SHAREHOLDERS’ EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Feb. 28, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Jun. 04, 2021 |
|
Dividends Payable [Line Items] | |||||
Common stock shares authorized | 500,000,000 | 500,000,000 | 1,000,000 | ||
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 | |||
Preferred stock shares authorized | 25,000,000 | 0 | |||
Preferred stock par value (in usd per share) | $ 0.01 | $ 0.01 | |||
Dividends payable, amount per share (in usd per share) | $ 1.18 | ||||
Dividends payable, current | $ 74,500 | ||||
Payments of dividends | $ 0 | $ 74,500 | |||
Dividends Paid, Existing Shareholders | |||||
Dividends Payable [Line Items] | |||||
Payments of dividends | 2,300 | ||||
Dividends Paid, Outstanding and Vested Option Holders | |||||
Dividends Payable [Line Items] | |||||
Payments of dividends | $ 72,200 |
SHARE-BASED COMPENSATION - Narrative (Details) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 03, 2021 |
Mar. 31, 2022
USD ($)
$ / shares
shares
|
Aug. 31, 2021
$ / shares
shares
|
Jun. 30, 2021
$ / shares
shares
|
Mar. 31, 2021
$ / shares
shares
|
Mar. 31, 2020
award
|
Mar. 31, 2022
USD ($)
installment
segment
$ / shares
shares
|
Dec. 31, 2021
USD ($)
$ / shares
|
Feb. 15, 2021
$ / shares
shares
|
Sep. 30, 2020
USD ($)
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options outstanding, weighted average exercise price (in usd per share) | $ / shares | $ 7.68 | $ 7.68 | $ 7.68 | |||||||
Granted (in shares) | 8,152 | 198,929 | ||||||||
Number of installments | installment | 12 | |||||||||
Installment period | 3 months | |||||||||
Options, nonvested, weighted average grant date fair value, reduction (in usd per share) | $ / shares | $ 1.18 | |||||||||
Options nonvested, number of shares | 3,653,837 | |||||||||
Option, nonvested, weighted average exercise price (in usd per share) | $ / shares | $ 7.94 | |||||||||
Options, outstanding, intrinsic value | $ | $ 0 | $ 0 | ||||||||
Options, exercisable, intrinsic value | $ | 0 | $ 0 | $ 0 | |||||||
Number of awards | segment | 1 | |||||||||
Number of long term incentive awards | award | 56 | |||||||||
2021 Omnibus Incentive Compensation Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based payment award expiration period | 10 years | |||||||||
Share-based Payment Arrangement, Option | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights, percentage | 25.00% | 25.00% | ||||||||
Share-based payment arrangement, nonvested award, option, cost not yet recognized, amount | $ | 9,400 | $ 9,400 | ||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 2 years 1 month 9 days | |||||||||
Share-based Payment Arrangement, Option | 2021 Omnibus Incentive Compensation Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based payment award expiration period | 5 years | |||||||||
Share-based payment award, shares issued in period | 20,380 | 497,321 | ||||||||
Options outstanding, weighted average exercise price (in usd per share) | $ / shares | $ 9.20 | $ 14.00 | ||||||||
Share-based Payment Arrangement, Option | 2019 Equity Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based payment award expiration period | 10 years | 10 years | ||||||||
Share-based payment award, shares issued in period | 69,300 | |||||||||
Options outstanding, weighted average exercise price (in usd per share) | $ / shares | $ 9.92 | |||||||||
Share-based Payment Arrangement, Option | 2021 Equity Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options outstanding, weighted average exercise price (in usd per share) | $ / shares | $ 6.70 | |||||||||
Restricted Stock Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights, percentage | 25.00% | |||||||||
Granted (in shares) | 3,743,679 | |||||||||
Outstanding at beginning of period (in shares) | $ / shares | $ 9.20 | $ 13.00 | ||||||||
Award vesting period | 3 years | |||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 3 years 10 months 17 days | |||||||||
Share-based payment arrangement, nonvested award, excluding option, cost not yet recognized, amount | $ | $ 26,600 | $ 26,600 | ||||||||
Exercised (in shares) | 0 | |||||||||
Restricted Stock Units | 2021 Equity Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Granted (in shares) | 2,500,459 | |||||||||
Performance Shares | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights, percentage | 25.00% | |||||||||
Performance Shares | 2021 Equity Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Granted (in shares) | 1,243,220 | |||||||||
LTI Awards | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Granted (in shares) | 0 | |||||||||
Equity instruments other than options, aggregate intrinsic value, nonvested | $ | $ 1,100 | |||||||||
Exercised (in shares) | 0 | |||||||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, cancelled in period | 0 |
SHARE-BASED COMPENSATION - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 1,264 | $ 990 |
Selling, general and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 1,264 | $ 990 |
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - $ / shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
Stock Option Awards | ||
Beginning balance (in shares) | 5,636,154 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Ending balance (in shares) | 5,636,154 | 5,636,154 |
Vested or expect to vest (in shares) | 5,636,154 | |
Vested or expect to vest (in shares) | 2,876,085 | |
Weighted Average Exercise Price | ||
Beginning balance (in usd per share) | $ 7.68 | |
Granted (in usd per share) | 0 | |
Exercised (in usd per share) | 0 | |
Forfeited (in usd per share) | 0 | |
Ending balance (in usd per share) | 7.68 | $ 7.68 |
Vested or expect to vest at end of period (in usd per share) | 7.68 | |
Vested or expect to vest at end of period (in usd per share) | $ 7.53 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted Average Remaining Contractual Life (Years) | 7 years 11 months 26 days | 8 years 3 months 14 days |
Weighted average remaining contractual life vested or expect to vest | 7 years 11 months 26 days | |
Weighted average remaining contractual life vested or expect to vest | 7 years 10 months 17 days |
SHARE-BASED COMPENSATION - Restricted Stock Activity (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Aug. 31, 2021 |
Jun. 30, 2021 |
Mar. 31, 2022 |
|
Restricted Stock Units | |||
Granted (in shares) | 8,152 | 198,929 | |
Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding at beginning of period (in shares) | 154,286 | ||
Granted (in shares) | 3,743,679 | ||
Exercised (in shares) | 0 | ||
Forfeited (in shares) | 0 | ||
Outstanding at end of period (in shares) | 3,897,965 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding at beginning of period (in usd per share) | $ 2,006 | ||
Granted (in usd per share) | 25,083 | ||
Exercised (in usd per share) | 0 | ||
Forfeited (in usd per share) | 0 | ||
Outstanding at end of period (in usd per share) | $ 27,089 |
SHARE-BASED COMPENSATION - Long Term Incentive Activity (Details) - LTI Awards |
3 Months Ended |
---|---|
Mar. 31, 2022
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding at beginning of period (in shares) | 43 |
Forfeited (in shares) | (4) |
Outstanding at end of period (in shares) | 39 |
EMPLOYEE SAVINGS PLAN (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Retirement Benefits [Abstract] | ||
Defined contribution plan, cost | $ 0.9 | $ 0.7 |
TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Income tax (expense) benefit | $ 676 | $ 1,007 |
Effective income tax rate reconciliation, percent | 37.00% | 22.50% |
TRANSACTION RELATED COSTS (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Acquisition Related and Deferred Offering Costs [Abstract] | ||
Mergers and acquisitions related costs | $ 640 | $ 30 |
Public company readiness costs | 0 | 1,056 |
Total | $ 640 | $ 1,086 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Contractual obligation | $ 3.1 | $ 5.2 |
Loss contingency accrual | $ 6.4 | $ 6.9 |
RELATED PARTY TRANSACTIONS (Details) |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021
USD ($)
|
Mar. 31, 2022
USD ($)
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
Related Party Transaction [Line Items] | ||||
Related party, equity held, percent | 0.10 | |||
Related party, payment, term | 3 years | |||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Annual retainer fee | 0.01 | |||
Affiliated Entity | TPG Management and Consulting Fees | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | $ 0 | $ 200,000 | ||
Affiliated Entity | TPG Management Service Agreement | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | 1,000,000 | 1,000,000 | ||
Loss on contract termination | $ 2,300,000 | |||
Due from related parties, current | $ 0 | |||
Affiliated Entity | EIR Partners Consulting Agreement | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | $ 20,000 | $ 30,000 | ||
Related party transaction, renewal term | 1 year | |||
Affiliated Entity | EIR Partners Monthly Consulting Agreement | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | $ 10,000 |
SEGMENT INFORMATION - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Segment Reporting Information [Line Items] | ||
Net revenues | $ 96,708 | $ 82,631 |
Segment Adjusted EBITDA | 17,693 | 19,645 |
Unallocated | (2,377) | (2,048) |
Adjustments to reconcile to U.S. GAAP net income (loss) | ||
Depreciation and amortization | (8,252) | (7,372) |
Interest expense | (3,719) | (5,467) |
Income tax provision | 676 | 1,007 |
Cost of COVID-19 | (274) | (1,185) |
Sales and use tax | 0 | (1,498) |
Non-cash stock compensation expense | (1,264) | (990) |
Transaction related costs | (640) | (1,086) |
Acquisition bonus expense | (58) | (192) |
Inventory step-up | (1,892) | 0 |
Other | (1,047) | (1,748) |
Net income (loss) | (1,154) | (934) |
Technology Enabled Solutions | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 83,166 | 69,582 |
Segment Adjusted EBITDA | 12,370 | 16,307 |
Advisory Services | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 13,542 | 13,049 |
Segment Adjusted EBITDA | $ 5,323 | $ 3,338 |
LEASES - Components of Lease Expense (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Leases [Abstract] | |
Operating lease costs | $ 1,246 |
Variable lease costs | 760 |
Short-term lease costs | 326 |
Finance lease cost | |
Amortization of right-of-use assets | 89 |
Interest on lease liabilities | 6 |
Total lease expense | $ 2,427 |
LEASES - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Jan. 01, 2022 |
---|---|---|
Operating Leases | ||
For the nine months ending December 31, 2022 | $ 4,852 | |
2023 | 6,469 | |
2024 | 5,694 | |
2025 | 4,150 | |
2026 | 2,316 | |
Thereafter | 3,297 | |
Total | 26,778 | |
Less: amounts representing interest | (2,550) | |
Net present value of lease obligations | 24,228 | $ 20,700 |
Finance Leases | ||
For the nine months ending December 31, 2022 | 397 | |
2023 | 368 | |
2024 | 139 | |
2025 | 89 | |
2026 | 0 | |
Thereafter | 0 | |
Total | 993 | |
Less: amounts representing interest | (52) | |
Net present value of lease obligations | $ 941 |
LEASES - Lease Balances (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Jan. 01, 2022 |
Dec. 31, 2021 |
---|---|---|---|
ASSETS | |||
Operating lease right-of-use assets | $ 18,574 | $ 14,700 | $ 0 |
Finance lease assets | 940 | ||
Total lease assets | $ 19,514 | ||
Finance lease, right-of-use asset, statement of financial position | Property and equipment, net | ||
Current liabilities | |||
Operating lease liabilities, current portion | $ 5,605 | 0 | |
Finance lease liabilities | 501 | 498 | |
Non-current liabilities | |||
Operating lease liabilities, net of current portion | 18,623 | 0 | |
Finance leases obligations, net of current portion | 440 | $ 528 | |
Total lease liabilities | $ 25,169 |
LEASES - Additional Lease Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Cash paid for amounts related to lease liabilities: | ||
Operating cash flows from finance leases (interest) | $ 6 | |
Operating cash flows from operating leases | 1,541 | |
Financing cash flows from finance leases (principal payments) | $ 86 | $ 31 |
Weighted Average Remaining Lease Term (in years): | ||
Operating leases | 4 years 8 months 12 days | |
Finance leases | 2 years 3 months 18 days | |
Weighted Average Discount Rate: | ||
Operating leases | 4.10% | |
Finance leases | 3.90% |
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