Sharecare, Inc. (NASDAQ:SHCR) Q3 2023 Earnings Call Transcript

Sharecare, Inc. (NASDAQ:SHCR) Q3 2023 Earnings Call Transcript November 9, 2023

Sharecare, Inc. misses on earnings expectations. Reported EPS is $-0.07 EPS, expectations were $-0.01.

Operator: Good day and welcome to the Sharecare Third Quarter 2023 Earnings Conference Call and Webcast. All participants are in listen-only mode. And after today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Today’s call is being recorded and will be available on the company’s website. On today’s call we have Mr. Jeff Arnold, Chairman and CEO; and Mr. Justin Ferrero, President and Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which include statements regarding strategic initiatives, expected cost savings, new capabilities, pipelines and our guidance.

These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Although, we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that will occur after the call. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors section of our Form 10-K for the year ended December 31, 2022. In addition, please note that the company will be discussing certain non-GAAP financial measures that we believe are important in evaluating performance.

Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company’s website. I would now like to hand the conference call over to Mr. Jeff Arnold. Jeff, please go ahead.

Jeff Arnold : Thank you, and good morning everyone. We appreciate you joining us today, as we mark a significant and exciting moment for all of us at Sharecare. In addition to continuing to execute our near-term business objectives, as represented in our strong third quarter results, we are also positioning the business for operational excellence and sustained growth with the appointment of Centene Corporation’s former President and Chief Operating Officer, Brent Layton as the next CEO of Sharecare. This evolution is multiple years in the making, and I’m looking forward to working closely with him, as I remain engaged in our day-to-day business activities in my new role as Executive Chairman. Since inception, we have been building an end-to-end digital platform focused on improving health outcomes for people, no matter where they are in their personal well-being journeys.

As we sit here today, we have done just that. We have built a platform of choice for some of the country’s most notable employers and health plans. We also believe there are significant opportunities ahead, which is why now is the right time for me to focus my expertise on our strategic direction to create new solutions, leveraging our data, platform and technology, and have Brent step into the CEO role to accelerate growth and continue to ensure operational excellence. Before I discuss Brent’s appointment in detail, I’d like to start with an overview of our third quarter results. For the quarter, we reported revenues of $113.3 million and adjusted EBITDA of $9.6 million. Revenue exceeded our guidance forecast and adjusted EBITDA was at the high end of the guidance range.

This was driven by the strong execution of our teams, record revenues in our Provider segment and realizing the benefits of our expense reduction program. In fact, our adjusted EBITDA was an improvement of over $4 million versus the prior year quarter. And year-to-date it is triple what it was in the first three quarters of last year. I would like to affirm our full year guidance of revenues between $452.5 million and $460 million and adjusted EBITDA of $21 million to $26 million. Justin will discuss our latest guidance estimates in his update later on the call. Importantly, we remain on track to deliver our year-end commitments to be cash flow breakeven as well as service 12.9 million eligible lives through our high-tech, high-touch platform that delivers personalized and proven health and well-being solutions to our clients’, members populations including large employers, health systems, payers, TPAs and government customers and it was a strong quarter.

And we expect that momentum to carry forward. I also want to spend a moment highlighting what sets Sharecare apart within the Digital Health Space and why we are well positioned to benefit from the industry’s transition from fee-for-service to value-based care. Our platform has proven successful in engaging with our users whether people simply require routine preventative care or managing high risk and chronic conditions by delivering personalized recommendations and interventions, resulting in better health outcomes and lowering costs for both our members and our customers. Our continued investments in Generative AI Technology, leveraging our expansive and ever-growing data sets, continue to enhance efficiencies and improve our capabilities.

We are supplementing our high-touch clinical advocacy and coaching services with AI to improve the quality and efficiency of member interactions. Bolstered with AI, our digital resources, call center specialists and clinical resources can quickly pull relevant information from across dozens of plan types and files, seamlessly delivered to the user in multimodal optionality. Data is critical for value-based care to work and our AI capabilities ensure that we are unlocking the full power of that data, on behalf of both our customers and the people using our platform to navigate their benefits and manage their health. Our integrated and tech-enabled home care solution CareLinx, continues to be another key differentiator in our ability to improve outcomes and lower cost.

Our betting and training process is among the most rigorous in the industry and our Net Promoter Score of 90, underscores our commitment to ensure the highest level of quality professionalism and importantly, safety. Our health plan customers use our Home Care Solution, as a supplemental benefit, our employers as a benefit to help their employers’, better care for themselves and their loved ones when they’re not able to do so, and our provider clients as an extension of their care management teams. We have a growing pipeline for 2024 and beyond, and we not only assist with members’ unmet functional needs in the home which drives trust and engagement, but also identify clinical complexity and social risk factors that can help address through our Clinical Advocacy services or third-party referral programs.

As outlined above, we continue to deliver solutions that drive ROI for our customers across the health care ecosystem, leveraging our unique assets and data-centric approach. We’ve made significant progress in our globalization and cost improvement efforts as planned, without sacrificing customer service and with our margin improvements on track. Overall, we have the Proprietary Technology data and interoperable platform to deliver a seamless digital experience and be the partner of choice for our customers, regardless of the populations they serve. As we look ahead, and we continue our focus on unlocking shareholder value, I believe, there are two areas of significant opportunity. The first is in government-funded programs including Medicare, Medicaid and the health insurance marketplace.

We currently have a number of customers in this sector, including several state health benefit plans where we provide health and well-being resources to hundreds of thousands of state employees. In addition, we are contracted with multiple Medicare Advantage programs both using our technology platform to engage with their members as well as offering our home care service CareLinx, as a supplemental benefit for millions of their MA members. We are poised to go even deeper, with existing state and local government contracts. The second is in offering value-based contracts to share in both the risk and cost savings with our customers. With innovation in our DNA, we are leveraging our assets and capabilities to develop new solutions to address many of the challenges our customers are facing and as I mentioned earlier be their strategic partner of choice.

To that end, we are actively exploring value-based care models in addition to our new risk adjustment solution we announced in Q2 that we will roll out in 2024. As against this backdrop and from the strong foundation that I’m excited that Brent Layton has agreed to become our next CEO effective January 2, 2024. His appointment comes following a deliberate and well-planned transition done together with the Board focused on positioning Sharecare to capitalize on the opportunities ahead. I’m sure many of you are familiar with Brent, but those of you who are not he has been a member of the Sharecare Board of Directors since early 2023 and brings more than 30 years of health care and public policy experience and a variety of growth-oriented executive roles, including more than two decades at Centene Corporation.

Brent held many roles and capacities while at Centene including serving as Chief Business Development Officer during, which time the company scales from three health plans to 31 health plans, becoming the nation’s largest Medicaid managed care company. He oversaw many of the divisions and products in his time at Centene including provider contracting where he led the company into value-based care. As President and COO of Centene, he oversaw Ambetter, the nation’s largest health insurance exchange provider and WellCare, the nation’s sixth largest Medicare Advantage company. Brent announced his retirement from Centene in late 2022 and stayed with Centene as Senior Adviser to the CEO. Centene grew annual revenues from $300 million to $144 billion during Brent’s tenure.

I am confident that with the combination of Brent’s expertise in driving growth at scale with large value-based contracts and my extensive experience in digital health M&A and product innovation, we are well-positioned to continue to execute our strategy for growth and profitability and deliver enhanced value for our users, customers and shareholders. We look forward to sharing more detail in 2024 once Brent officially assumes the role. Before I hand the call over to Justin who will provide additional financial details, I want to comment on the previously disclosed unsolicited preliminary nonbinding proposal that we received from Claritas Capital. Claritas, which is a large shareholder of the company is led by John Chadwick who also serves on Sharecare’s Board with me and Brent.

Consistent with its fiduciary duties, our Board of Directors is carefully reviewing the proposal and we will pursue the course of action it determines to be in the best interest of the company and all of its shareholders. We have a strong path ahead and our distinct advantages set us apart from the rest of the industry. And with Brent on the team, we are accelerating our evolution as a go-to digital health partner. And with that I’ll turn it over to Justin.

Justin Ferrero: As Jeff noted we reported positive third quarter results with revenue of $113.3 million, exceeding guidance and adjusted EBITDA of $9.6 million, which is at the high end of our guide. Since going public our Q3 adjusted EBITDA margin of 8.4% represents the highest single quarter adjusted EBITDA margin for Sharecare and is a very significant increase over our Q2 adjusted EBITDA margin of approximately 3%. Additionally, we are on track to meet our primary annual operating KPIs in both enterprise and provider channels, which are 12.9 million eligible lives and 6.5 million records processed for the year. The enterprise channel performed in line with our expectations with our advocacy solutions driving outstanding results in both care gap closures as well as avoidable readmission rates yielding millions of dollars in potential savings and leading to member satisfaction of over 90% and client satisfaction rates of over 99%.

And our clinical advocacy Net Promoter Score is at nearly 100. I am pleased to report that the Provider channel once again set a quarterly revenue record in Q3, driven by increases in Medicare Advantage risk adjustment related chart volumes. The channel is also realizing meaningful reductions in expenses resulting from the ongoing globalization and cost mitigation efforts. Life Sciences’ Q3 revenue was in line with expectations and with the prior year period, despite softness in macro pharma spend across the industry as we anticipated and have seen throughout the year. We are pleased with the resilience of this channel and are benefiting from the value of our high-quality targeting with our proprietary zero party database of over 100 million people.

Our financial health remains strong. We ended the third quarter with a cash balance of $128 million and approximately $182 million in available liquidity. As we continue to advance toward our target of achieving cash flow breakeven, we reduced cash burn in Q3 to approximately $6.9 million, excluding the impact of stock buybacks and other one-time non-operating payments in the quarter, which compares to $8 million burn in Q2, which had one fewer payroll period. We are continuing to execute against our globalization, automation and other business optimization initiatives to be cash flow breakeven. As an update on our previously announced stock repurchase program, we have bought back 9.2 million worth of shares to-date, leaving 40.8 million remaining under the current authorization through next May.

As noted previously, we continue to evaluate our capital allocation strategy and strongly believe our current stock price does not represent the full underlying value of our business. Looking forward to Q4, we are guiding to revenue within the range of $111 million to $113 million and adjusted EBITDA between $9.5 million and $11.5 million. This represents another expected lift in adjusted EBITDA margin driven by the myriad of operational improvement initiatives underway across the business, amounting to $30 million in annualized expense reduction as discussed on earnings calls earlier in the year. It is important to note that we have taken a conservative approach to our revenue guide in Q4 due to the aforementioned softness in pharma marketing spend.

Revenue guidance for fiscal year 2023 is reiterated at $452.5 million to $460 million. But I’d like to add one note on our adjusted EBITDA reporting. In conformance with the SEC’s clarified guidance around and recent focus on non-GAAP financial measures, our adjusted EBITDA now includes costs related to an exited contract, abandoned leases and certain staff realization expenses, all of which were previously disclosed but excluded from our historical adjusted EBITDA calculations and guidance. The earnings release contains a reconciliation of adjusted EBITDA to GAAP net income inclusive of these changes and all current and historical financials presented reflect this update to our non-GAAP measures. In Q3 2023 and Q3 year-to-date 2023, these costs totaled $1.1 million and $3.1 million respectively.

To put that into context adjusted EBITDA margins delivered in Q3 would have been even higher than the record margins reported. Additionally, we have updated our adjusted EBITDA guidance to $21 million to $26 million for fiscal year 2023 to reflect this change. It is important to highlight, there are no new expenses and no impact on the balance sheet or cash flow. This is simply moving previously discussed below-the-line expenses, back into our adjusted EBITDA guidance. I will also note that, these expenses are not expected to recur in 2024. In closing, we are pleased to report the positive third quarter performance included record adjusted EBITDA margins, execution against our core KPIs successful implementation of our comprehensive cost savings program and continued advancements towards cash flow breakeven.

Thank you for your continued support and commitment to the Sharecare vision. We’re now ready to take your questions.

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Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] At this time, we will take our first question which will come from David Larsen with BTIG. Please go ahead.

David Larsen: Hi. Congratulations on the excellent EBITDA growth. Can you talk a little bit about the progress you’re making in the Enterprise division, RFP activity the sales pipeline? And then what was the revenue for Enterprise in the quarter? And then any color or thoughts on Carillon without getting too specific obviously. Thank you.

Justin Ferrero: Thanks, Dave. There’s a lot of ton packed on that one. Which one do you want me to focus on first? I’ll start with the quarter. We had a — I think we set out for significant EBITDA growth. We came in at a record since our IPO 8.4%. As you know, that’s almost 3x our percentage EBITDA that we did in Q2. So sequentially just a significant lift there. And so we’re really pleased with the quarter. Relative to the pipeline it continues to grow. It’s a very strong pipeline. We had a number of — we can’t talk to them yet but we had double-digit wins in new customers in Q3. Those will come out later and are real excited about how that sets us up for 2024.

Jeff Arnold: Yes. And I would just add to that David, it’s Jeff, not only great quarter strong pipeline but we’re starting to get in a lot of results from our Sharecare+ deployments some in conjunction with Carillon and the results have been really great like satisfaction really high, outcomes coming in better than expected and so we’re super encouraged by that.

David Larsen: Okay. And it sounded to me like you have incremental opportunities within some existing large Enterprise customers. And it also sounds like you’re sort of moving forward with your value-based care and risk-sharing efforts. Can you provide any color on that? Like, would you be accepting like a PMPM rate? Would there be like a value-based care sort of arrangement like we see with like a Privia or an Evolent for example? Just any thoughts there would be helpful.

Jeff Arnold: Yes. So, the plan remains the same. We have a big installed base. And so the opportunity is to expand within those clients, and have some good success stories of clients who bought the digital front door to start and then added digital therapeutics and then added advocacy and now have even added CareLinx. And obviously, in those examples the PMPM continues to increase. And then — in addition to that, we remain focused on obviously, adding new logos. And so we’re happy with our pull-through in the pipeline. We had a huge day, yesterday, as an example across all three of our big — our business segments, new wins. And then we think our platform is really well positioned for value-based care. And the way that we participate today outside of our PMPM, is that we do a lot of performance guarantees, which is kind of a form of shared risk and are making a lot of investments in our technologies and people Brent in particular to aggressively move into value-based care, where we’ll move beyond just performance guarantees and PGs into more risk sharing arrangements.

David Larsen: Okay. And then one more for me, before I hop back in the queue. Is this EBITDA margin sustainable into next year? Or should we expect like a step-up in cost for incremental investments in new onboarding? Just at a high level, just some color around the sustainability of higher margin.

Justin Ferrero: Well, maybe I’ll — well first of all, I think it’s important to note that this EBITDA margin would have even been higher, that you heard in my — it was a record percentage for us, but would have been even higher due to some of the shifts in the clarified discussions that we had around our non-GAAP measures. Those are going to go away. Those will not recur next year. So there will already be a tailwind there. I think you should also get comfort in that our EBITDA margins are sustainable, as you look at our Q4 guide. And so we’re guiding to another step-up in EBITDA margin at $9.5 million to $11.5 million. So we — without getting too much into 2024, we want to spend time with Brent, as we come up with the 2024 guide.

But we are set up very well. All the effort that we put in this year, which is significant to take out an annualized $30 million of expense across the organization, we have executed against that. And you’re seeing it in the results, and that just is going to give us a nice tailwind as we go into next year.

David Larsen: Okay. I’ll hop back in the queue. Congrats on the good EBITDA.

Justin Ferrero: Thank you.

Operator: And our next question will come from Craig Hettenbach with Morgan Stanley. Please go ahead.

Q – Unidentified Analyst : Hi, guys. This is McCoy [ph]. Thanks for taking the question. And good luck — or good luck Jeff on kind of the next steps and congrats to Brent, on the new role. Just wanted to talk about Carillon. I know you kind of saw some pressure with PMPMs, earlier in the year. I just want to talk about how that relationship is going? And if you’ve kind of seen those PMPM stabilize? And then also just kind of as open enrollment started up again, I just wanted to see how Sharecare Plus engagement is going and if that’s kind of tracking in line with expectations. Thanks.

Jeff Arnold: Yes. I think its stay the course. Everything is kind of tracking on expectations. It’s kind of the same story as the last question, I answered is that, we’ve got current clients with Carillon that we’re executing against, which we believe become great reference sites for us and the results have been really good. And we have lots of opportunities within Carelon that we’re pursuing across both our Enterprise segment and our Provider segment. And things are staying the course. The platform is becoming more mature as time goes on. Awareness is growing with the brokers, which there’s been a big emphasis on this year of driving awareness at Sharecare Plus offers advocacy. And so we’re seeing an increase in the number of RFPs that are coming in the door.

The dialogue that we’re having with the brokers is kind of way up. We’ve seen some delays in decision-making but ultimately seeing the pull-through at the end of the day like we had one this week that we were a finalist. We did our finalist presentation six months ago and found out yesterday that we won that contract. But yes, I would say it’s business as usual.

Unidentified Analyst: Great. Appreciate that. And then just one more on kind of what Brent and this new CEO role means for the company. Just curious you talked about just the government programs that you guys are looking to grow into. Can you talk about the experience that Brent has at Centene and kind of how that relationship might help going forward?

Jeff Arnold: Yes. So I would say this has been a long time in the works for me personally is I feel like I’ve been recruiting Brent for five years initially to come on to the Board. And he had a kind of an unbelievable run at Centene was a part of that team, a big contributor as it grew from $300 million to $144 billion. And when I look at Sharecare we have a lot of success stories today in government-funded programs. The State of Georgia probably being the best example. But we’ll kick off next year another huge state account. We made a finalist meeting for a state just yesterday. And when I think about our community well-being index and I think about our kind of whole person strategy and I think of clients like Georgia that who’s been with us for 10 years, it’s just a massive growth opportunity for us not just within state health benefit plans but also within Medicaid, which obviously, I would argue that Brent might be the – maybe the best expert in the country on Medicaid, as well as Medicare Advantage.

So we have state health plans. We do business in Medicaid today. We have a couple of million lives already in Medicare Advantage. And Brent is coming with an informed view. He’s been on the Board for the last year. I think we share a passion and a vision of how do we use enabling technologies to improve well-being not only for individuals but for communities. And he’s bringing an amazing Rolodex to the team. And I’ve witnessed that personally just working with him as a Board member of doors that he’s opened with us. And I think, I speak for all of us we’re super excited about getting on the field with him in 2024 and growing especially within these government-funded programs.

Unidentified Analyst: Great. Well I look forward to it. And congrats again on the quarter. I’ll hop back in the queue.

Jeff Arnold: Great. Thank you.

Operator: And our next question will come from Eric Percher with Nephron Research. Please go ahead.

Eric Percher: Thank you. Jeff, I know there’s limitations on what you can say on bids be they solicited or unsolicited. One question that maybe you could answer for us is, when we look back to last year in the strategic review, was that truly limited to provider and consumer? Or were considerations for the full company made at that time?

Jeff Arnold: The primary focus of the strategic review was the sum of the parts. And so we had conversations along the way of is it — people might have interest in the entire business, but our focus was on the sum of the parts during the strategic review.

Eric Percher: Okay. And then just stopping for a moment on the SEC change. Justin, can — I want to make sure we’re crystal clear on what line items may have been impacted as we look back over the first nine months and then the guidance to come. Can you just walk through that?

Justin Ferrero: Yes. It’s really two line items and we certainly can help you with the models going forward. But there were two areas. It was the exited contract in PCMH that we’ve moved back up and then it was termed leases. And both of those — the exited contract will be throughout the year. The term lease ended in Q1. And again, as you know, these were highly talked about especially the exited contract and all fully disclosed. So this is no new expense. It’s just being moved from below the line back into our non-GAAP reporting. And the good news is that we’ve been able to reimagine that contract and are in later-stage conversation with better pricing. And none of these expenses are going to recur for us in 2024.

Eric Percher: Okay. Well, I think clear on that. And then just turning to the segmentation. You talked about Life Sciences and the macro pressure. Has that business returned to sequential growth? Or can you give us a little bit on what the current state of affairs there is?

Justin Ferrero: It has. We grew nicely from Q2 to Q3. And first of all, that division has been incredibly resilient this year in a tough market. So maybe I start there. They’ve done very well. We are down year-over-year slightly, whereas the market is all down double digits. We grew about 15% sequentially. And we expect a 20%-plus growth again sequentially from Q3 to Q4. But as you know that number is like — is often even higher. And we just wanted — it’s still a tough market out there. So, we will definitely have growth in Q4. We just want to be somewhat conservative because it is a tough market still.

Eric Percher: Do you believe you’re gaining share in that marketplace?

Justin Ferrero: We do. We think that our assets and our programs performed very well which is the reason why we get buy-ups in the back half of the year. It’s the reason why our Q4 and Q3 grow over Q1 and Q2 is because, we perform better and then we get more share.

Eric Percher: Thank you. And then maybe a last one is just the segment growth levels for the other segments. Can you give us the detail there?

Justin Ferrero: Yes. The — so it will be — so Enterprise will be slightly down single-digits then our Provider business will be up about 10% sequentially.

Eric Percher: When you say well — are you talking about the quarter we just saw?

Justin Ferrero: Yes, just the quarter — when the Q comes out, you’ll see it all. Yes.

Eric Percher: Right. That’s sort of roughly where we were for the quarter we just saw. And I assume no specific commentary on Q4?

Justin Ferrero: No, no specific comment. Other than the guide that we presented. And I just want to reiterate that in our EBITDA guide even with the call it a headwind of adding additional expense to our non-GAAP measures, we’re going to have another record EBITDA margin in Q4.

Eric Percher: Right. Okay. Thank you very much.

Justin Ferrero: Thank you.

Operator: And our next question will come from Richard Close with Canaccord Genuity. Please go ahead.

Richard Close: Yes. Thanks for the questions. Just with respect to the SEC non-GAAP change are the historical numbers restated? Just want to be clear there.

Justin Ferrero: There — it’s not a restatement. It is updating the tables year-over-year. And so the answer is yes. And if you look into the footnotes we lay it all out not only for the first half of this year, but we do the same for 2022 as well.

Richard Close: Okay. And then with respect to you talked about some significant or I guess double-digit wins earlier in response to David’s question double-digit wins in the third quarter. How should we think about the launch of those wins? Is that like January, so we’ll see the lives come in in January? And is it number of lives you’re thinking greater than the number of lives you saw this year year-over-year?

Jeff Arnold: Yes. I think — hi, Richard this is Jeff. We’ll have the majority in the first half of the year like we always do. But like for example the account we won yesterday is a 5/1 start. And we have 7/1 starts as well. And I would imagine there’ll be some 10/1 starts as we close out the year. And so yes, we feel like we’re in line with our growth in covered lives from 2023 into 2024. And then you’ll see starts throughout the year but a lot of it front half loaded.

Richard Close: And just to be clear are those Sharecare+ or Sharecare the basic platform?

Jeff Arnold: It’s a mix. It’s a mix. So, we’re still — we’re selling new Sharecare+ accounts and we’re continuing to win the wellness accounts. We had one of our competitors in the space merge with a TPA. So, that’s given us some good tailwinds that — so — of being a standalone provider being part of a TPA has given us some good momentum on the wellness side, which we love that business because it gives us the land-and-expand opportunity.

Richard Close: Okay. With respect to the management transition, do you see any — expect any deemphasizing the employer market at all and more focusing on the managed care market? Or any thoughts there would be helpful.

Jeff Arnold: No. I think there is — like this is a pure offense move. And as I said Brent have formed Board member joining the team and obviously has incredible strengths in the MCL market and on the payer. The exchange side I think is going to be — bring us a lot of upside opportunity but definitely sees the benefit in the employer side as well. And so — yes. So no. We’re not deemphasizing anything. I think it’s going to allow us to just to be more aggressive on the payer side, but we’ll continue to work really hard to win employer business.

Richard Close: With respect to the discussion on the value-based care looking more at that, can you go into a little bit more detail exactly what you would be doing on that front? That would be helpful.

Jeff Arnold: Yeah. So basically, if you think about what Sharecare is overall is our technology is a risk management platform. And so we’re using the technology working with clients to figure out how they can better manage risk and how we can get financial alignment with them. And one of the benefits of Sharecare is that we have a lot of data from our clients and just tons of data, self-reported data, and device data, and claims data and SDOH data and some examples medical record data. And whether it’s a GLP-1s or it’s in-home programs, we’re sitting with those clients and we’re looking at ways that we could go at risk with them and manage certain percentages of their populations where we think our services could have impact.

And so you’ll see certain carve-outs coming from some of our clients in 2024 where we’re going to go on the risk meaning that we’re not going to charge the traditional PMPMs for some of these populations but have opportunities to get more of the upside based on our savings. And we’re going to do that in a very measured approach. And so one is like we’ve always wanted to get to this point, but we needed to have confidence in the data which we think we now have some really good trend lines. And then going forward, we want to be able to participate in bigger dollars and we want to get better strategic and financial alignment with our clients. And you’re going to see that in 2024 on a limited basis where certain carve-outs of certain populations where we think Sharecare can have the greatest impact.

Richard Close: Okay. Final question. On the proposal by Claritas and the Board review, is there any time line that you can provide us in terms of when you expect that to be complete?

Jeff Arnold : Yes. I don’t have a firm time line. But what I can tell you is that we’re committed to a — working through this as quickly as possible. As you know, we had a fairly lengthy strategic review and in this example in particular Claritas is extremely informed. And so we’re working through this quickly. We wanted to get through the quarter, we wanted to get Brent onboarded as the new CEO, and we’re turning our attention fully to this.

Richard Close : All right. And are you precluded from executing on the share repurchase and as that review proposal reviews going on?

Jeff Arnold : We have windows of opportunity where we could repurchase shares that we’re evaluating.

Richard Close : Okay. Thank you.

Jeff Arnold : Thanks.

Operator: And next up is a follow-up question from David Larsen with BTIG. Please go ahead.

David Larsen : Hey, Jeff, I just wanted to make sure that I heard you correctly. I think you’re still going to be involved in the day-to-day activities of the business. You’re going to work through this transition with the new CEO and guide him. So you’re not going anywhere, right?

Jeff Arnold : No. I’m going to focus on where I think I can help the company the most and that’s in product development and strategy and clients and evangelizing all the great things that I know Brent’s going to bring to the business. But I plan on as being very active.

David Larsen : Okay. Great. Thanks.

Jeff Arnold : Yes.

Operator: And this concludes our question-and-answer session. I’d like to turn the conference back over to Jeff Arnold for any closing remarks.

Jeff Arnold : Well, thank you. In closing, I want to reiterate that we are very pleased with the financial performance this quarter. And we’re confident in Sharecare today and into the future. And the Board and I are delighted that Brent has agreed to become our next CEO. In my role as Executive Chairman, I’m looking forward to working with him and combining our respective areas of expertise to continue to deliver enhanced value for Sharecare’s users, customers and shareholders. And we appreciate your time and interest this morning. Thank you. Hope everybody has a great day. Take care.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.