Sharecare - Q4 2023

Executive Summary

• Q4 2023 revenue was $105.3M, down 15% y/y, driven largely by eliminating disputed contracts with a client ($14.2M negative revenue impact; $6.2M non-cash contract asset impairment hit Adjusted EBITDA), and Adjusted EBITDA was $3.0M; GAAP loss per share was $(0.10), Adjusted loss per share was $(0.03).
• Company withdrew financial guidance for Q1 2024 and FY 2024 amid an ongoing strategic review; management promised to re-introduce guidance with a “clear and predictable path” when appropriate.
• Strategic review remained active with multiple proposals under evaluation; the Board appointed former Xerox executive Nicole Torraco to the Board and special committee overseeing the process.
• Management highlighted year-end positive cash flow and “over $182M in available cash,” while the balance sheet showed $128.2M cash and equivalents at 12/31/23; annualized cost savings target of ~$30M reaffirmed as an underpinning for improved bottom-line results.
• Potential catalysts: resolution of the disputed-client issue (noted as important to maintaining cash flow breakeven on the call), outcomes from the strategic review, and progress in government-funded programs (Medicaid, Medicare, Exchanges), value-based care, and reinsurance.

What Went Well and What Went Wrong

• What Went Well

  • Cost optimization/globalization supported margin resilience: Q4 Adjusted EBITDA rose to $3.0M vs $2.5M y/y despite revenue pressure, aided by structural cost initiatives recast under SEC non-GAAP guidance.
  • Year-end positive cash flow and robust liquidity (management cited over $182M “available cash” exiting 2023), positioning the company to invest in new product innovation and pursue profitable growth.
  • New CEO emphasized momentum in Medicaid, Medicare, Exchanges, value-based care, and reinsurance as an expanded “field of play,” with >75 stakeholder meetings in first 90 days supporting pipeline development.

• What Went Wrong

  • Revenue shortfall vs both y/y and prior guidance: Q4 revenue fell 15% y/y to $105.3M and came in below the Q3 guide of $111–$113M as disputed contracts reduced revenue by $14.2M; the related non-cash impairment cut Adjusted EBITDA by $6.2M.
  • Guidance suspended for 2024 amid strategic review, creating visibility overhang for investors near term.
  • On the call, management indicated maintaining cash flow breakeven depends on resolving the disputed-client issue, highlighting ongoing financial sensitivity to that outcome.

Transcript

Operator (participant)

Good day, everyone, and welcome to the Sharecare fourth quarter and full year 2023 earnings call and webcast. All participants are currently in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question at that time, please press star and then one using a touch-tone telephone. To withdraw from the queue, you may press star and two to remove yourself from the list. Today's call is being recorded and will be available on the company's website. On today's call, we have Mr. Brent Layton, Chief Executive Officer, Mr. Justin Ferrero, President and Chief Financial Officer, and Jeff Arnold, Executive Chairman, will join for the Q&A.

Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which includes statements regarding the strategic review, expected cost savings, new capabilities, pipelines, and future expectations. 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 statement to reflect changes that will occur after this 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 31st, 2023.

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 and the most comparable GAAP measures in reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website. I'd now like to turn the floor over to Mr. Brent Layton. Brent, please go ahead.

Brent Layton (CEO)

Thank you, Janie, and good afternoon. Thank you for joining us for my first earnings call as CEO of Sharecare. We appreciate you spending time with us today to learn more about Sharecare's fourth quarter and full year 2023 financial results, as well as the status of our strategic review and, most importantly, where this innovative company is headed. Since joining Sharecare's board of directors over a year ago, I've learned a great deal about our technology and the opportunities that lie ahead. My belief in this company has only grown since I became Sharecare's CEO on January 2nd. In many ways, that is fueled by more than 75 meetings I've had during the last three months with dozens of organizations, including our current clients and over 50 potential customers and partners.

I've seen firsthand their enthusiasm for the value we currently provide, as well as the considerable interest in the solutions we can bring to their businesses and the populations they serve. They're impressed by our innovation. They are inspired by our creativity, and they appreciate our collaborative approach to partnerships and our commitments to solution-based opportunities. The bottom line: our pipeline, our future is strong, healthy, and profitable. Before you hear from Justin, I think it's important to highlight a few things. First, Sharecare made good on its commitment to achieve cash flow break-even by the end of 2023. We have no debt, a strong balance sheet, and made the right investments, which positions us for strong growth. As I help scale this company, I will continue to prioritize one of Sharecare's guiding business principles: the importance of profitability.

To take that a step further, we have adopted new rules of engagement. We'll only work with committed partners and clients who are aligned with us in driving meaningful outcomes, leveraging our solutions so all parties succeed, especially the people in the communities we serve. That's why, in Q4, Sharecare eliminated non-performing disputed contracts with a client that has historically affected our forecasting. This impacted Q4 revenue by a reduction of approximately $14 million, which included a write-down of eliminated contracts reduced in Adjusted EBITDA by approximately $6 million. Eliminating these disputed contracts with this client enables us to focus our time and resources on productive collaborative relationships that recognize Sharecare's commitment to innovation, creativity, solution-based technology, and profitable growth, and it will provide our investors with more predictability and reliability in our financial forecasting and results going forward.

With that context, we reported revenues of $105 million for the quarter and $445 million for 2023, an Adjusted EBITDA of $3 million in the quarter and $16.5 million for the full year. Our enterprise channel performed in line for our expectations for Q4 and provider delivered an excellent quarter and had its strongest annual financial performance to date. Life Sciences' growth in Q4 compared to the year prior can be attributed to long-time customers increasing their spend with us, and we believe suggests a rebound from the softness in the digital advertising that the pharma industry has seen the last several quarters in 2023. I'm sure you have questions about our strategic review discussed in our press release two weeks ago.

Sharecare's special committee of independent members of the board of directors, supported by legal and financial advisors, are continuing to actively evaluate multiple proposals for a potential sales transaction, as well as developing alternative value creation opportunities. The special committee is dedicated to being methodical in their review with the goal of maximizing shareholder value, and we will communicate the board's decision at the conclusion of the review process. As a reminder, our next earnings is in May. Additionally, we are pleased to announce we have appointed a new member of our board of directors and the special committee, former Xerox executive Nicole Torraco, further strengthening our commitment to effective governance and strategic direction. Ms. Torraco has extensive public company experience holding key executive roles in finance, M&A, and investment management over the last 25 years.

With the strategic review process ongoing, among other factors, we will not be providing 2024 guidance today. When that's said, when we do provide guidance, we will articulate a clear and predictable path for long-term growth and profitability. In January at JPMorgan, I said I was focused on three key principles in my first 90 days: operational excellence, profitable growth, and building innovative next-generation products. Now, we took an important step in driving operational excellence when we brought in a new Chief Operating Officer, Shannon Bagley. She brings 25 years of experience spanning a range of functions from auditor to Chief Administrative Officer, as well as leading M&A integration efforts for multi-billion dollar acquisitions.

For over 20 years, Shannon and I worked together at Centene, and in her first few months at Sharecare, she and the team have quickly identified opportunities for operational improvements and financial savings to make our enterprise platform more agile, efficient, and effective. And most of all, her operational acumen enables me to focus on what I do best: scaling this great company, and we'll certainly continue to add top talent to the team. In terms of profitable growth, as I said earlier, we achieved a break-even by the end of 2023. We have no debt and a strong balance sheet. As for innovating next-generation products, I believe it's worth reminding that our founder and Executive Chairman, Jeff Arnold, pioneered digital health, and his DNA runs deep here at Sharecare. This company has always been on the cutting edge of innovation, and that will not stop while I am CEO.

You already know Sharecare for our deep customer relationships with large employers like Delta Air Lines, Kohler, Koch Industries, Lennar, and H&R Block, and health plans such as CareFirst. Our focus in those areas will only continue. But given that I spent 30 years in managed care, 23 the nation's largest Medicaid and exchange company, I immediately recognize the expansion opportunities, both short and long-term, for Sharecare's business. In addition to deepening our public-private partnership with government, we're also focused on MCOs that specialize in Medicaid, Medicare, and the exchange. And over the last several months, we've made significant progress and developed a new health navigation platform to meet the specific needs of government-sponsored healthcare that, quite frankly, we believe no one else is offering.

The initial iteration of our enterprise-grade navigation platform was purpose-built for Medicaid and is a consumer-centric digital front door where members can access their benefits, providers, governmental programs, and additional information and resources. Members can easily navigate and re-enroll for their benefits using chat functionality and receive personalized prompts to engage preventive actions and close gaps in care. Our Medicaid platform also includes a dynamic, searchable provider directory that uses geolocation technology to help members find their providers and point of interest near them, such as pharmacies or shelters. Members can refine their search to find out hours of operation, supporting languages, or whether they accept financial assistance programs like SNAP benefits. The platform also includes a digital wallet for secure access to their financial assistance and reward programs so they can easily check their account balances and transactions history.

I'm pleased to share that reception has been incredibly strong. In fact, we signed our first Medicaid contract of the year in advanced discussions with several other companies for this new platform. Over the last several months, we've made significant progress to support risk-bearing arrangements and other reinsurance and value-based care organizations. By aligning our data analytics capability with our digital therapeutics, clinical advocates, and network of professional in-home caregivers, we are addressing fragmentation of care and improving patient outcomes. This not only helps high-risk members have a better quality of life, but also helps our partners proactively bend the health cost curve and improve stars and quality outcomes. I am pleased that we're already in contract with some of the nation's largest, including one of the largest reinsurance partners for Sharecare to support members through our digital platform, high-risk maternity programs, and provide transitions of care services.

Additionally, we are contracting with a large value-based care specialty organization focused on oncology to help improve cost, quality metrics, and diagnostic accuracy. We're active contracting with three risk-bearing entities to use our respite care capabilities to support the application for the CMS GUIDE Model focused on dementia. These initial agreements demonstrate our commitment to optimizing our existing capabilities to generate revenue in new markets while sharing both the financial risk and rewards with our partners. I'd like to close out on our innovative discussion today with one of the industry's most followed topics, GLP-1s. By pairing these medications to our digital therapeutics, our coaches and clinical advocates, and our data analytics capabilities, we're able to affect lasting lifestyle behavioral change in a way that's more effective and affordable.

Last Friday, I participated in a meeting with one of our long-time customers to prepare for the launch of our new holistic GLP-1 weight loss solution to their associates. Each of these examples is evidence of our ability to innovate quickly and effectively and expand the field of play while bringing long-term growth and sustainability to Sharecare's business. It's important to me that you know and believe that I take organic growth seriously and that I thrive on both the challenge and success of executing upon it. With the breadth and depth of resources Sharecare has assembled over the years, we have everything we need to be successful. I also want you to know that I believe deeply in Sharecare, as well as our technology, our people, and where we're headed. I look forward to sharing more about our path ahead.

Thank you for your ongoing support and confidence in this company. I'll now hand the call over to Justin.Justin,

Justin Ferrero (President and CFO)

sir. Thank you, Brent. Thanks to everyone for joining this afternoon. I'll be taking you through the financial highlights for the fourth quarter and full year 2023. We reported fourth quarter revenue of $105.3 million and Adjusted EBITDA of $3 million. Due to the disputed contracts with the client discussed earlier, there was a $14.2 million negative impact to what we had expected for Q4 revenue. This includes an approximate $6 million non-cash impairment, which also negatively impacted Adjusted EBITDA. For the full year, our revenue grew to $445.3 million from $442.4 million a year ago, and Adjusted EBITDA grew to $16.5 million versus $5.8 million year-over-year.

Excluding the impact of the disputed contracts with the client, our full year revenue would have achieved the high end of our guidance and the middle of our Adjusted EBITDA guidance. We ended the year in a very strong financial position with $128.2 million in cash on our balance sheet and over $182 million in available cash. We also successfully executed on our goal of achieving cash flow break-even by the end of the year, delivering positive cash flow of $200,000 during Q4. Relative to our primary annual operating KPIs and the enterprise and provider channels, we achieved our target of 13 million lives, which includes 700,000 eligible lives associated with the disputed contracts with the client. We processed 6.9 million records, significantly outpacing our estimate of 6.5 million records for the year.

As discussed in the comments earlier, we are well on our way to diversifying with a reliable and profitable customer base. The future is bright for our enterprise channel, and Brent has already made a significant impact in his short tenure as CEO. To close out my comments, we are confident that our 2023 investments in new product innovation and our cost optimization and globalization efforts, enabling $30 million in annualized cost savings, positions us to deliver strong, long-term bottom-line results. I also think it's important to note that as the special committee continues to focus on maximizing shareholder value, and as we've indicated in the past, we continue to believe that each of our business channels are worth substantially more than our market capitalization today. In addition, the strength of our balance sheet and specifically our cash position are significant assets to our business.

As Brent said, we are grateful for your ongoing support and confidence in Sharecare. Thank you all for joining us today. We'll now open the call to your questions. Ladies and gentlemen, at this time, we'll begin that question and answer session. To join the question queue, you may press star and one. To withdraw yourself, you may press star and two. Our first question today comes from David Larsen from BTIG. Please go ahead with your question.

Can you please talk a little bit more about this contract dispute? Are you able to disclose the name of the client? How is your relationship with Elevance Health? And what is the nature of the dispute, please? Thank you.

Absolutely. Thank you, David, for the question. Jeff?

So this particular client, we have discussed in the past, and we've been advised not to get into contractual disputes, but it represents several hundred thousand of our lives under Sharecare Plus. And this particular contract from this client has given us challenges in the past in which some of the commitments weren't honored, which made it difficult for us to forecast. And working with Brent made the decision that certainty is important going forward and that we should focus on higher margin business. And so we're transitioning away from that contract.

David Larsen (Managing Director and Senior Equity Research Analyst)

Okay. Can you maybe talk a little bit more about sort of the evolution of the data management capabilities of Sharecare and your ability to bear risk?

And I guess what I'm getting at is, do you have a dashboard, an executive dashboard that you can share with your health plan customers saying, "Okay, these are the number of lives. These are the number of lives that have used the solution. These are the clinical interventions that have been made this quarter. This is your claims trend on a per-member, per-month basis. This is the improvement in trend based on those interventions." Can you talk about your ability to deliver that kind of data, which I think may have proactively prevented any kind of dispute that might have occurred with a health plan client? I imagine they want to sort of see the improved trend in value that's being delivered. Just any thoughts or color there would be very helpful, please. Thank you very much.

Justin Ferrero (President and CFO)

Well, yes, I would kind of answer that in two ways. One is we very much have advanced analytics and an interoperable platform, and we're able to deliver in real-time measurement of all our programs. This particular dispute has nothing to do with that, of our ability to deliver those capabilities. That's not what's under dispute.

David Larsen (Managing Director and Senior Equity Research Analyst)

Okay. So they were showing improved claims trend, good utilization, but there is a separate dispute that's occurring.

Justin Ferrero (President and CFO)

There's a contractual dispute that we believe needs to be resolved. Because of that, we're transitioning for now away from that relationship. But we're not disputing any of the things that you talked about.

David Larsen (Managing Director and Senior Equity Research Analyst)

Okay. And then just, I guess, Brent, just what are your thoughts on the business going forward? What sort of things would you like to see implemented? What are the greatest capabilities of Sharecare going forward that you want to bring to managed care plans?

Just thoughts on how to grow enterprise would be very helpful. Thank you.

Brent Layton (CEO)

Absolutely. Thank you for the question, David. First of all, my enthusiasm is sky-high for the company. I really have gone from coast to coast, meeting with potential customers and our current customers. In my old role at my other company, I used to have all types of companies come to me and say, "We have this solution or that solution." But nobody ever asked me what I needed and how to have such an impact. I have had the opportunity to do that now many times over. When I've had the opportunity to talk about our platform, our technology, our flexibility, our ability to scale, and most of all, our innovation, I am finding great receptivity. That is both from MCOs.

That is from entities that are leading the efforts of value-based care. That is actually from employers as well. So my enthusiasm has grown. When I had the opportunity to come as CEO last fall when the board came to me, I believed in our technology because I had the opportunity to be on the board for several months. But now, having 90 days to be able to visit with so many customers and to be able to sit down and talk to them about what we do, what we can do, and what they're looking for, I believe the future is very bright. I'm as excited as I can be. When I started with Centene many, many years ago, we did about $300 million in revenue. And when I walked out the door, we were doing more than $130 billion in revenue.

I was able to be very much a part of scaling that great company. I have every belief that I can scale this company because we actually have scalable, innovative, creative technology. We also have other assets. Our Life Sciences, I've got to admit, Life Sciences was something new for me when I came to Sharecare. I've had the opportunity to visit with our team and our staff in New York and had a lot of time to be able to learn about it. I'm amazed by the data they have and what they do on a daily basis. Being able to work with Tim Huestis and our team on provider and all the things that they were doing, both on release of information and then, of course, CareLinx, that literally allows me to have opportunity with so many unique value-based companies.

You're going to hear more and more about that. I gave you a little bit of flavor in my comments. But the future is very bright for Sharecare. The one thing I'm going to do is I make sure that we're going to have a diversity and a variety of clients. My old boss used to say that we are not going to basically look to one client to be it. We're not going to look to one state for that or one customer. We're going to go out from coast to coast and have multiple clients and have multiple impact. That's exactly where I'm going to take Sharecare.

David Larsen (Managing Director and Senior Equity Research Analyst)

Okay. Thanks a lot. I'll hop back on the queue.

Justin Ferrero (President and CFO)

Thank you.

Operator (participant)

Our next question comes from Richard Close from Canaccord Genuity. Please go ahead with your question.

Richard Close (Managing Director and Equity Research Analyst)

Yeah. Just to be clear on the non-performing contract, is that completely off the books at this point? There will be no additional noise going forward on that. And then are there any other contracts like this that could be an issue?

Justin Ferrero (President and CFO)

No. It's not where we expect, definitely for Q1, to have a similar impact. This is Justin. Richard, thank you for the question. So there is still noise. Obviously, we're working to resolve the dispute. But until that has been fully agreed upon, then we expect to continue to see an impact to the P&L. So yeah, you can expect that in Q1 as well.

Richard Close (Managing Director and Equity Research Analyst)

So this is similar magnitude?

Justin Ferrero (President and CFO)

Similar magnitude.

Richard Close (Managing Director and Equity Research Analyst)

Given guidance. Okay.

Justin Ferrero (President and CFO)

Yeah. Yeah. Similar magnitude, but we're obviously hopeful that we can resolve the contract dispute. And we're actively having conversations around that.

But it is of significant magnitude, and so we're working hard to resolve it. But I don't have that timetable set, as we sit here today. So it'll impact us in the first half of the year. But as Brent talked about earlier, he has a lot of opportunity that he has brought in a very short time. It is 90 days. And we're going to start seeing that come online starting in Q3. And so I just want to reiterate the impact that he's had in a short time and that the future is bright for enterprise.

Richard Close (Managing Director and Equity Research Analyst)

Okay. And then with respect to, I guess, the momentum in Medicaid, Medicare exchange business, and then you're talking about reliable, profitable customer base going forward, maybe talk a little bit more about the opportunities on Medicaid. I know you signed one contract.

If you can give any details on that, I guess it's going live in third quarter. But is there also going to be any de-emphasizing of the employer market? Are you pivoting towards these government markets? How do we think about that? I know there's a ton of questions in there.

Justin Ferrero (President and CFO)

That's okay, Richard. And I'm glad to answer all of them. First and foremost, there's no backing up for employer one bit. I've had the opportunity to be on a handful of best and finalist meetings with, hopefully, potential customers. And I have visited with current customers. So we're not backing up from employers at all. In fact, I'm going to try and bring more and more discipline. At Centene, I had the opportunity to be a part of 110 RFP wins, RFPs that sometimes were 10,000 pages and very complex.

I was in finalist meetings and did all types of business development and so forth, did that for 2 decades. I'm going to try to make sure that we have the very best RFP procurement business development approach there is. That's something you should hold me accountable for. We're going to focus that on employers. We're going to focus that on government. I absolutely believe in public-private partnerships. I believe our technology brings all types of solution to state governments throughout this country. In regards to Medicaid, look, at the end of the day, there is a lot of opportunity within Medicaid. Even though the redeterminations are out there, there's still roughly 80+ million people on Medicaid in this country.

We've been able to develop something very unique with our navigation tool, trying to make sure and I'll freestyle with you for a moment, Richard, so that that Medicaid recipient knows that the provider that's nearest to them that's in-network is 3 miles away, that they're open 4 days a week, that they close at 4 o'clock, that the providers actually speak Spanish, and that they will actually schedule an appointment for you immediately online, that the nearest grocery store is 4 miles away, and that ultimately, you know that grocery store will take your SNAP benefits. For all the governmental programs and all the nonprofit groups that exist out there, better known as Social Determinants of Health, that ultimately, you have a dynamic directory so people can see about them, interact with them, and contact with them. That's the creativity.

That's the innovation you should expect of Sharecare. I was sure looking for that back in my old job, and I'm honored to have it here today. In regards to the exchange, I think anybody who knows me by history, I'm a huge advocate of the exchange and a huge advocate of things that are going on with the exchange. I can remember three short years ago, the exchange overall was somewhere around 8-10 million. Today, there's 21.3 million people in the exchange and growing. Between the data that we have, the technology we have, and the innovation we have, you should expect us to see us involved in that. And you also should see us involved with ICHRA as that begins to take hold from small group to large group from that standpoint. And yes, we're talking to Medicare MCOs as well.

And I'm very proud that we are being creative in other lines of insurance, like reinsurance, as I imagine. And talking to my staff, we sat down and said, "Look, I'm trying to bring creative ideas. What other creative ideas do you have?" And they brought the ideas of reinsurance and then value-based. My old job, I did a tremendous amount of value-based contracting. And I can say that we have talked to some of, and we are going to work with some of the largest value-based risk assumption companies that are out there. In a lot of ways, if we didn't have CareLinx, we wouldn't be able to do it. But since we do have CareLinx, we can focus on post-acute. We can help people receive the right care they can in their home. We can stretch out that savings and, more importantly, have positive outcomes.

The assets that Jeff and team has put together from life sciences to provider to enterprise platform flows quite well together in the modern healthcare system. And that's why, at the end of the day, I'm glad I'm here. I've been here 90 days, and I look forward to watching this really company evolve and grow. Thank you.

Richard Close (Managing Director and Equity Research Analyst)

All right. Thank you.

Operator (participant)

And our next question comes from Craig Hettenbach from Morgan Stanley. Please go ahead with your question.

Craig Hettenbach (Managing Director and Equity Research Analyst)

Great. Thank you. Brent, maybe just building on some of the discussion just now in terms of just the customer meetings you've had and just anything tangible as to kind of what you've identified as where you need to execute or how you kind of put this into plan, if you will.

Brent Layton (CEO)

I'd say on the employer, clearly, as I mentioned, GLP-1s have been really a topic to discuss, top of mind. And before I took over CEO, Jeff and team were already on it. So to be able to move quickly and to be able to go live soon with a new existing customer and to have that conversation and be there for our current customers and new ones very much a part of that. But at the same time, it's making sure that our technology is meeting the needs of employers. And that's one thing that I've enjoyed meeting these meetings and sitting in these best and finals and make sure that we are meeting their needs and what they're looking for.

What I'm finding is that our approach to our digital front door, what I am finding is our approach and coaching as well as advocacy is meeting their needs. In a lot of ways, we just have to listen to our customer and make sure we are articulating correctly what we're doing because we do have a lot of ways to solution for that, but at the same time, it's getting to know partners or future partners and making sure we meet their needs from that standpoint. In regard to MCOs, look, the MCOs, at the end of the day, are incredible. I've been in the industry for 30 years, and I think a lot of people forget the great impact that they have. But there are certain places that companies like Sharecare can come in and bring assistance. Navigation is one.

Being able to help people access benefits and access services, to be able to have an impact on proper utilization and to be able to focus on care gaps, there's all types of areas of all types of MCOs I've had discussions with. But in talking to Medicaid MCOs, whether it's navigation, but more importantly, what they want to make sure is that members get all the care they should. And I believe that our technology and our ability to get people on our platform and to receive service and care, we can do just that. I look forward to how we're going to be judged by MCOs down the road because I'm confident they're going to want to work with us in regards to our navigation tool. But more importantly, they're going to make sure that we have outcomes.

And I look forward to, over the coming quarters, to report those outcomes to you to show you that we're having a positive impact on people's lives. And I know that I'm going to be held to a high bar by MCOs and by you and by others. And I look forward to that challenge.

Craig Hettenbach (Managing Director and Equity Research Analyst)

Got it. Thanks for that. As a follow-up on the employer market, I think before your arrival, there was a big investment in terms of Salesforce and just building out kind of that sales infrastructure to execute. Do you think you have the right go-to-market, or are there things you're also going to tweak there in terms of where you've invested to grow that business?

Brent Layton (CEO)

Absolutely, we have the right go-to-market. I think, in a lot of ways, it's just sales discipline at the end of the day and focus and how to scale.

And that's, in a lot of ways, it has to do about how are we responding at RFP? Are we listening and properly answering the question that our client wants? At the same time, are we finding the solutions to help them do better and the outcomes they wish for and to be able to go in there and properly be a partner? And a lot of that is just overall sales discipline. And to be able to really be in that role for well over two decades, I have a pretty good insight to that. And I'm really good at listening to customers and helping them get to where they're going. So absolutely, we have what we need here. It's a matter of listening to our customers and acting upon it. And I think that discipline and our skills, we're going to get sharper and sharper.

We're going to focus on it. One thing, at the end of the day, I like to win, and I like to have an impact. And that's where we're going to go in sales.

Craig Hettenbach (Managing Director and Equity Research Analyst)

Got it. And then this last question from me, understanding you're not providing guidance, but at a high level, any kind of headwinds or tailwinds you would call out kind of by business segment this year to keep in mind?

Brent Layton (CEO)

Justin, I'll let you go with that one, sir.

Justin Ferrero (President and CFO)

Yeah. Are you referring to 2024 or 2023?

Craig Hettenbach (Managing Director and Equity Research Analyst)

Yeah. And ex the customer dispute, just how you're thinking about the underlying trends by segments this year.

Justin Ferrero (President and CFO)

Yeah. Well, I think you can see in our Q4 that we had a record year at Provider. We expect that to continue. We performed very well at Life Sciences in a down market.

We've talked about that a few times, Craig. So we expect that to continue. So it's really the headwinds is around primarily this disputed contract. And I think that Brent's laid out a lot of opportunity in his first 90 days that we've started to execute against. So, ultimately, there'll be a little bit of lag in the front end, which is what I commented on as we work through the dispute. Hopefully, that can get done sooner than later. But I think we're going to be teed up very, very well. As the other two assets are performing great, as I noted in my comments, we would have had really an incredible quarter in Q4 if it wasn't for this disputed contract. We would have been at the high end of well over the high end of the guide.

We were at the high end of the guide for the year and right in the middle of the range for EBITDA. So it was all cylinder systems go, but we have this one issue, and we're working hard to resolve it. So once we get through that, the future is really bright.

Craig Hettenbach (Managing Director and Equity Research Analyst)

Got it. Thank you.

Justin Ferrero (President and CFO)

Thank you, Craig.

Operator (participant)

And our next question comes from Eric Percher from Nephron Research. Please go ahead with your question.

Eric Percher (Founding Partner and Senior Research Analyst)

Thank you. I think I just have two simple ones left. First, congrats on getting to cash flow break-even. I do want to ask, is there dependency in maintaining that on coming to agreement with this client? Is there any chance of backstepping from break-even?

Brent Layton (CEO)

Justin, I don't know that, sir.

Justin Ferrero (President and CFO)

Yeah. There'll be an impact. We need to resolve this in order to maintain cash flow break-even.

But there's things that we can do as a business to offset that, which we're looking at. But again, Eric, we've been focused on being cash flow positive, as we've talked about all year. It was a big push. We're all thrilled that we achieved it. The Q1, as you know, seasonally is a lower quarter for us. So we expect some burn in the first half of the year. But we think that it'll be very similar. We think that we can get back to cash flow break-even is the long-term answer. So we take it. It's a challenge for us, and we achieved it. And although there may be a short-term hit, we'll get back to it.

Eric Percher (Founding Partner and Senior Research Analyst)

That's appreciated. And we heard you loud and clear on the cash on the balance sheet.

Maybe slightly related, is it possible to size the annual impact of the disputed contract, not asking for 2025 but looking back over 2024 to give us some measure here?

Justin Ferrero (President and CFO)

Well, it could potentially be as large as rolling forward Q4 in that realm. It could potentially be there. Now, please know that we are again, this is part of why we haven't guided. We are working very diligently to resolve the dispute. And so we're hopeful that that won't be the case.

Eric Percher (Founding Partner and Senior Research Analyst)

Okay. And then the last one, I wanted to take the bait on the GLP-1 commentary. Well, I'll ask, what are you doing there? And I assume that this is relative to behavioral engagement and not in the realm of fulfillment. Do you partner for fulfillment? How are you working with payers in that space?

Brent Layton (CEO)

I'm going to let Jeff take the honor in that.

He has led the charge on that, and he's been talking ever since I got here on day one. So Jeff, I'm going to let you take that one, sir.

Jeff Arnold (Co-Founder and Executive Chairman)

Sure, Brent. Yeah. On the GLP-1 front, Eric, we've talked about it in the past. It's an exciting area. And similar to our business, we're taking a holistic approach and looking at how we can combine our unique assets to have a differentiated offering. And so we've been working with our medical team to really understand what's the right criteria based on our claims data and then using our analytics to be able to onboard those people based on eligibility.

And yes, we've been working on different ways to source the GLP-1s, whether it's from compound pharmacies or directly from manufacturers, and then how to leverage our behavior change program, our DPP-approved Eat Right Now, as well as our Unwinding Anxiety, and then lastly, how to use our Sharecare Rewards platform for adherence. And so we've kind of stitched all this together in a really elegant, interoperable way and are now in our go-to-market, talking to our clients and thinking through how to address affordability. And that's where some of the compound pharmacies have kind of come into play. But we've been doing that in partnership with the client.

Eric Percher (Founding Partner and Senior Research Analyst)

Interesting. Thank you.

Brent Layton (CEO)

Sure.

Jeff Arnold (Co-Founder and Executive Chairman)

Thank you, Eric.

Operator (participant)

And our next question is a follow-up from Richard Close from Canaccord Genuity. Please go ahead with your follow-up.

Richard Close (Managing Director and Equity Research Analyst)

Yeah. I just wanted to follow up on the disputed contract. Just on the EBITDA, you classify it as roughly a $6 million impairment. Is that just the fourth quarter, or is that a combination of maybe several quarters? I know in the answer to one of the recent questions, you said, "Look at the fourth quarter and roll that forward." But just clarity on the EBITDA would be helpful.

Justin Ferrero (President and CFO)

Yeah. There's contracts which we label. Specific to the impairment, we took the impairment all in the fourth quarter, which we were amortizing through contra-revenue over the term of the relationship. But we went ahead and took a worst-case scenario. But there could be other items of these contracts that impact EBITDA going forward, which is why I say rolling this forward is the right way to look at it. But specific to that impairment, we impaired that asset in full.

Richard Close (Managing Director and Equity Research Analyst)

Okay. And then, Brent, maybe on the Medicaid, the navigation platform for Medicaid. So just help me out here. Is the customer the state that you would be selling this to? So you sell it to the state, and they maybe require all the managed care organizations for managed Medicaid to provide this to the population, or is it you are essentially contracting with the managed Medicaid organization?

Brent Layton (CEO)

Thank you for the question. We definitely could interact with states. I mean, I did that for many, many years at Centene. But I will tell you that right now, I'm focused on working with MCOs. The MCOs want to make sure that their members actually get care and get the services, and they want to make sure that they understand their benefits. And I think we've developed a tool to do just that for them.

But I have been speaking to a great deal of states to better understand what they're looking for because I honestly believe that our technology lets us do so much more than Medicaid. There's things within justice and foster care. There's things in other social services. And like I even mentioned SNAP before, that I think we can have an impact. So coming out of working in public-private partnerships for two decades, that's something I'm going to spend a lot of time on and have a lot of conversations with states and make sure they understand the flexible and really our innovative technology. But no, right now, definitely focus on Medicaid MCOs.

Richard Close (Managing Director and Equity Research Analyst)

Okay. Thank you.

Operator (participant)

And with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Brent Layton for closing remarks.

Brent Layton (CEO)

Thank you, Jamie. And thank you for your questions today. I appreciate them. I appreciate everybody spending time with me today. As I mentioned, for two decades, while I was at Centene, I started with a company with about $300 million in revenue. Today, when I walked out that door in 2023, they were doing well over $130 billion. It was a hell of a ride, and I'm proud of my time at that great company. At Sharecare, though, I am confident we have a similar opportunity to scale this company like I did in my old job. What I've seen and what I've heard in the interactions I've had as a board member and now as CEO for the last 90 days, we do have happy clients.

We do have a dynamic, innovative technology platform that creates endless opportunities, whether with states, whether with MCOs, whether with value-based, whether with employers, to help us develop new customers and new innovations. In closing, I believe in this great company, and I'm confident we can scale and that I can scale this great company by driving strong, profitable growth. Thank you very much for your attention today. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation.

Operator (participant)

We thank you for joining. You may now disconnect your line.