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Schedule II: Condensed Combined Financial Information of Registrant
 12 Months Ended
Dec. 31, 2022
Condensed Financial Information Disclosure [Abstract]  
Schedule II: Condensed Combined Financial Information of Registrant
ROOT, INC. and CARET HOLDINGS, INC.
Schedule II: Condensed Combined Financial Information of Registrant
Balance Sheets (Parent Company)
(in millions, except par value)
As of December 31,
20222021
Assets
Other investments
$4.4 $4.7 
Cash and cash equivalents
551.8 432.3 
Restricted cash
1.0 1.0 
Investments in subsidiaries
97.6 — 
Other assets
46.8 49.3 
Intercompany receivable
22.1 261.8 
Total Assets
$723.7 $749.1 
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity
Liabilities:
Long-term debt and warrants
$295.4 $— 
Investments in subsidiaries— 58.5 
Accounts payable and accrued expenses
16.6 8.8 
Other liabilities
17.8 24.5 
Intercompany payable4.8 8.9 
Total liabilities
334.6 100.7 
Commitments and Contingencies
Redeemable convertible preferred stock, $0.0001 par value, 14.1 shares issued and outstanding at December 31, 2022 and December 31, 2021 (liquidation preference of $126.5)
112.0 112.0 
Stockholders’ equity:
Class A common stock, $0.0001 par value, 9.2 and 7.9 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively(1)
— — 
Class B common stock, $0.0001 par value, 5.0 and 6.1 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively(1)
— — 
Additional paid-in capital
1,850.7 1,806.1 
Accumulated other comprehensive income
(5.8)0.4 
Accumulated loss(1,567.8)(1,270.1)
Total stockholders’ equity
277.1 536.4 
Total liabilities, redeemable convertible preferred stock and stockholders’ equity
$723.7 $749.1 
______________
(1) Reflects the 1-for-18 reverse stock split that became effective August 12, 2022. Refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies.”
See Notes to Condensed Combined Financial Statements
ROOT, INC. and CARET HOLDINGS, INC.
Schedule II: Condensed Combined Financial Information of Registrant
Statements of Operations and Comprehensive Loss (Parent Company)
(in millions)
For the Years Ended December 31,
202220212020
Revenue:
Net investment income$4.5 $4.6 $0.9 
Net realized gains on investments1.2 — — 
Total revenue 5.7 4.6 0.9 
Operating expenses:
Sales and marketing11.9 10.0 — 
Other insurance expense6.6 2.9 — 
Technology and development33.4 42.5 19.5 
General and administrative18.3 5.3 37.8 
Total operating expenses 70.2 60.7 57.3 
Operating loss(64.5)(56.1)(56.4)
Interest expense(34.6)(20.0)(77.7)
Loss on early extinguishment of debt— (15.9)— 
Loss before income tax expense(99.1)(92.0)(134.1)
Income tax expense— — — 
Net loss before equity net loss of subsidiaries (99.1)(92.0)(134.1)
Net loss of subsidiaries(198.6)(429.1)(228.9)
Net loss (297.7)(521.1)(363.0)
Other comprehensive (loss) income:
Other comprehensive (loss) income of subsidiaries (6.2)(5.2)5.0 
Comprehensive loss$(303.9)$(526.3)$(358.0)

See Notes to Condensed Combined Financial Statements
ROOT, INC. and CARET HOLDINGS, INC.
Schedule II: Condensed Combined Financial Information of Registrant
Statements of Cash Flows (Parent Company)
(in millions)
For the Years Ended December 31,
202220212020
Cash flows from operating activities:
Net cash provided by (used in) operating activities
$205.9 $(257.1)$(62.9)
Cash flows from investing activities:
Purchases of investments— (0.4)(0.5)
Sales of investments
1.3 — — 
Purchases of indefinite-lived intangible assets and transaction costs(1.3)— — 
Capitalization of internally developed software(8.8)(6.6)(5.4)
Purchases of fixed assets— (4.6)(1.8)
Investment in subsidiaries(360.9)(261.8)(201.9)
Net cash used in investing activities(369.7)(273.4)(209.6)
Cash flows from financing activities:
Proceeds from issuance of common stock from IPO and concurrent private placements, net of issuance cost
— — 1,098.1 
Proceeds from exercise of stock options and restricted stock units, net of tax proceeds/(withholding)
0.3 3.2 2.1 
Proceeds from issuance of preferred stock and related warrants
— 126.5 — 
Payment of preferred stock and related warrants issuance costs
(3.0)(10.5)— 
Proceeds from debt and warrants issuance, net of issuance cost286.0 — 12.0 
Repayments of long-term debt— (199.5)(13.5)
Purchases of treasury stock— — (0.2)
Net cash provided by (used in) financing activities
283.3 (80.3)1,098.5 
Net increase (decrease) in cash and cash equivalents
119.5 (610.8)826.0 
Cash, cash equivalents and restricted cash at beginning of year433.3 1,044.1 218.1 
Cash, cash equivalents and restricted cash at end of year$552.8 $433.3 $1,044.1 

See Notes to Condensed Combined Financial Statements
ROOT, INC. and CARET HOLDINGS, INC.
Notes to Condensed Combined Financial Statements (Parent Company)
1. Business
Caret Holdings, Inc. is a holding company which was formed in 2015 to develop and launch a direct-to-consumer personal automobile insurance and mobile technology company. In August 2019 a new holding company, Root, Inc. was formed, which became the parent of Caret Holdings, Inc. and maintains 100% ownership of Caret Holdings, Inc.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Combination—The condensed combined financial statements include the accounts of Root, Inc. and its wholly owned subsidiary, Caret Holdings, Inc., and are prepared in accordance with accounting principles generally accepted in the United States. All intercompany accounts and transactions have been eliminated. These financial statements have been combined in order to present comparative parent company financial statements for 2022, 2021 and 2020 and should be read in conjunction with our consolidated financial statements.
Use of Estimates—The preparation of condensed combined financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reverse Stock Split— In August 2022, an authorized subcommittee of our board of directors approved a reverse stock split of our Class A and Class B common stock at a ratio of 1-for-18. On August 12, 2022, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to effect a 1-for-18 reverse stock split of our Class A and Class B common stock. As a result of the reverse stock split, every 18 shares of our issued or outstanding pre-reverse split common stock of each class were combined into one share of common stock of such class. No fractional shares were issued upon the reverse stock split. On August 15, 2022, our Class A common stock began trading on a split-adjusted basis on the Nasdaq Stock Market.
In connection with the reverse stock split, there was no change to the shares authorized or in the par value per share of $0.0001. In addition, there was no change to the number of shares issued or outstanding for our Series A Preferred Stock. The conversion price for our Series A Preferred Stock was adjusted to $162.00 and the exercise price and number of warrant shares for each of our outstanding warrants were also proportionately adjusted. Accordingly, all historical per share data, number of shares outstanding and other common stock equivalents for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split.
Statement of Cash Flows—The supplemental disclosures for cash and non-cash flows for the years ended December 31, 2022, 2021 and 2020 are as follows:
202220212020
(in millions)
Supplemental disclosures:
Interest paid$24.5 $23.9 $4.5 
Federal income taxes paid— — — 
Leasehold improvements - non-cash0.9 1.5 — 
Conversion of preferred stock to common stock - non-cash— — 560.4 
Conversion of warrants to common stock - non-cash— — 75.0 
Lease liabilities arising from obtaining right-of-use asset
— 9.9 — 
Carvana investment agreement issuance costs - non-cash— 9.1 — 
Purchases of treasury stock - non-cash— — 0.5 
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed combined balance sheets that sum to the total of the same such amount in the condensed combined statements of cash flows:
20222021
(in millions)
Cash and cash equivalents$551.8 $432.3 
Restricted cash1.0 1.0 
Total cash, cash equivalents and restricted cash shown in the condensed combined statements of cash flows
$552.8 $433.3 

Investments in Subsidiaries—As of December 31, 2021, Caret Holdings, Inc. had a negative investment in subsidiaries balance of $58.5 million primarily related to accumulated losses from subsidiaries. In accordance with applicable accounting guidance, we reclassified the negative investment in subsidiaries balance to the liabilities section of our combined balance sheet.
3. Guarantees
Root, Inc. entered into an agreement with the Superintendent of Insurance, State of Ohio, (the “Superintendent”) guaranteeing that Root Insurance Company will maintain certain capital and surplus requirements or risk-based capital levels, whichever is greater, and such additional surplus as the Superintendent requires. The guarantee remains in effect until such time as the Superintendent may release Root, Inc. in writing.