Sharecare, Inc. (SHCR)·Q4 2023 Earnings Summary

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 .

Financial Results

Revenue, EPS, Adjusted EBITDA (chronological: Q2 → Q3 → Q4)

Guidance vs Actual (Q4 2023)

KPI – Liquidity

Notes:

• Q4 revenue included a $14.2M negative impact from eliminating disputed, nonperforming contracts; related non-cash impairment reduced Adjusted EBITDA by $6.2M .
• Company recast non-GAAP definitions (e.g., includes costs related to exited contract, abandoned leases, certain staff reorg) per clarified SEC guidance .

Segment breakdown

• The company did not disclose a numeric segment revenue breakdown in these releases. Q3 commentary noted “record revenue in Provider,” but no dollar disclosure .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Brent Layton (press release): “I am particularly encouraged by the momentum we are experiencing in Medicaid, Medicare, and the Exchange, value-based care, and reinsurance as our team actively expands our field of play...” .
• CFO/President Justin Ferrero: “We ended the year in a strong financial position with a solid balance sheet, over $182 million in available cash, and successful execution of our year-end goal of delivering positive cash flow during the fourth quarter.” .
• CFO on non-GAAP changes: Adjusted EBITDA now includes costs related to an exited contract, abandoned leases, and certain staff reorganization expenses per SEC clarified guidance (prior periods recast) .
• Earnings call tone: Layton underscored pipeline-building efforts and intent to provide “clear and predictable” guidance in the future; reiterated ongoing strategic review and Board process .

Q&A Highlights

• Cash flow sensitivity to disputed client: “There’ll be an impact. We need to resolve this in order to maintain cash flow breakeven.” (Ferrero) .
• Impairment mechanics: Company took the contract asset impairment fully in Q4; other contract items could affect EBITDA going forward (Ferrero) .
• Medicaid navigation commercialization: Analysts probed whether the state or MCO is the contracting customer for Medicaid navigation; management discussed go-to-market approach in this channel .
• Guidance & strategy: Management reiterated suspension of 2024 guidance due to strategic review and said they will communicate decisions at its conclusion .

Estimates Context

• S&P Global consensus: Not available via our SPGI mapping for SHCR at this time. We therefore cannot present S&P Global consensus in the tables (system mapping unavailable).
• Third-party public summaries indicate: Adjusted EPS of $(0.03) vs expectation of approximately $(0.02); revenue of $105.28M missed by about $9.72M (implying a higher consensus) .

Third-party “Street” snapshot

Note: We attempted to retrieve S&P Global consensus via GetEstimates but the SHCR mapping was unavailable in our system at the time of analysis.

Key Takeaways for Investors

• Q4 prints reflect a discrete revenue/EBITDA headwind from disputed contracts; resolving the related client issue is key to sustaining cash flow breakeven in 2024, per management’s call commentary .
• Guidance suspension and active strategic review create near-term uncertainty but also set up a potential catalyst path (transaction outcome, renewed guidance cadence) .
• Structural margin story remains intact: Adjusted EBITDA improved y/y despite revenue pressure, supported by ~$30M annualized cost savings and globalization; non-GAAP methodology aligned with SEC guidance and recast for comparability .
• Liquidity provides runway: management cited >$182M “available cash” and delivered positive Q4 cash flow; balance sheet cash and equivalents were $128.2M at year-end (note definitional differences) .
• Growth vectors: Management is leaning into government-funded programs (Medicaid/Medicare/Exchange), value-based care, and reinsurance—areas the new CEO knows well and sees momentum in .
• For the next print, watch for: any resolution or update on disputed contracts, re-initiation of guidance, concrete traction in government channels, and continued operating leverage from cost initiatives .
• Trading setup: Results were below prior company guidance and third-party “Street” expectations; shares may remain event-driven until the strategic review concludes or guidance returns .