Convey Health Solutions Announces Financial Results for Second Quarter 2021

FORT LAUDERDALE, Fla., Aug. 12, 2021 /PRNewswire/ -- Convey Holding Parent, Inc. (NYSE: CNVY) (the "Company", "Convey Health Solutions" or "Convey"), a leading healthcare technology and services company in the U.S., announced today financial results for the second quarter ended June 30, 2021.

"We achieved excellent second quarter 2021 operating and financial results as customer demand remains strong. We continue to demonstrate our ability to utilize purpose-built, proprietary technology and processes to increase revenue and reduce costs for Medicare Advantage plans," said Stephen Farrell, CEO of Convey Health Solutions. "We are committed to improving health plan operations through our technology that both streamlines complex processes and improves member engagement."

Mr. Farrell continued, "We expect strong market growth over the next 4 to 5 years in Medicare Advantage as the trend towards value-based care continues. As a result of these strong market tailwinds combined with our purpose-built technology, we performed well during the first half of 2021 and we believe our future growth prospects are excellent."

Tim Fairbanks, Convey's CFO, said "We successfully completed our IPO on June 18, 2021, raising net proceeds of $146.1 million which were primarily used to reduce our total debt outstanding. We generated strong second quarter 2021 financial results, our first as a public company, highlighted by 22% net revenue growth as compared to Q2 2020, and a 63% year over year increase in Adjusted EBITDA. We remain confident in our underlying business and are now introducing full year 2021 net revenues and Adjusted EBITDA guidance ranges which represent 18% and 30% year over year growth, respectively, at the midpoints as compared to 2020. I want to thank our entire organization for their hard work and dedication as our future looks bright and our growth prospects remain strong."

Second Quarter 2021 Financial Results

• Net revenues of $75.2 million, up 22.2% compared to $61.6 million in the second quarter of 2020. Second quarter revenue growth was driven by Technology Enabled Solutions (TES) segment revenue of $61.4 million, up 17.8% year over year from $52.1 million in second quarter 2020, and $13.9 million of revenue in our Advisory Services segment, which was up 46.8% year over year from $9.5 million in second quarter 2020.
• Net loss was $13.1 million compared to a net loss of $6.0 million for the second quarter of 2020. Net loss in 2021 included $7.9 million for a 3-year insurance premium coverage for prior acts directors & officers policy, $5.0 million of expense related to the June 2021 extinguishment of debt, and $2.3 million related to the one-time termination of a management service agreement with TPG, all of which were in connection with our IPO.
• Adjusted EBITDA of $15.2 million increased 62.9% year over year from $9.3 million in the second quarter of 2020.
• As of June 30, 2021, Convey had cash and cash equivalents of $21.4 million and $39.5 million available on the company's revolver. Total debt, excluding unamortized cost of $3.3 million, was $192.6 million.

 First Half 2021 Financial Results

• For the six months ended June 30, 2021, net revenue of $157.9 million was up 25% compared to the first six months of 2020.
• Net loss was $14.1 million compared to a net loss of $12.9 million for the six months ended June 30, 2020. Net loss in 2021 included $7.9 million for a 3-year insurance premium coverage for prior acts directors & officers policy, $5.0 million of expense related to the June 2021 extinguishment of debt, and $2.3 million related to the one-time termination of a management service agreement with TPG, all of which were in connection with our IPO.
• Adjusted EBITDA for the first six months of 2021 was $31.1 million, up 81.4% year over year from $17.1 million for the first six months of 2020.

2021 Financial Guidance

For the full year 2021, Convey is providing the following financial guidance ranges.

• Net revenues of $330 million to $340 million
• Adjusted EBITDA ⁽²⁾ of $66 million to $68 million

The midpoints of these guidance ranges represent an 18% year over year increase in net revenues and a 30% year over year increase in Adjusted EBITDA.

¹ Convey is not providing forward-looking guidance for U.S. GAAP reported financial measures (other than net revenues) or a quantitative reconciliation of forward-looking non-GAAP financial measures. Please see "Use of Non-GAAP Financial Measures" for additional information.

² Convey is not providing forward-looking guidance for U.S. GAAP reported financial measures (other than net revenues) or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net (loss) income and adjustments that could be made for COVID-19 related costs, income tax expense/benefits, contract termination costs, and extinguishment of debt in its reconciliation of historic numbers. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period.

Second Quarter 2021 Conference Call

Convey will host a conference call to discuss second quarter 2021 results on August 12, 2021 at 5:00 p.m. Eastern Time. The conference call can be accessed by dialing (844) 200-6205 for U.S. participants or +44 208-0682-558 for international participants, and referencing conference ID 496860; or via a live audio webcast that will be available online at https://ir.conveyhealthsolutions.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Convey Health Solutions

Convey Health Solutions is a specialized healthcare technology and services company that is committed to providing clients with healthcare-specific, compliant member support solutions utilizing technology, engagement, and analytics. Convey's administrative solutions for government-sponsored health plans help to optimize member interactions, ensure compliance, and support end-to-end Medicare processes. By combining its purpose-built technology platforms with dedicated and flexible business process solutions, Convey creates better business results and better healthcare consumer experiences on behalf of business customers and partners. Convey's clients include some of the nation's leading health insurance plans and pharmacy benefit management firms. Convey's healthcare-focused teams help millions of Americans navigate the complex Medicare Advantage and Part D landscape.

Forward-Looking Statements

This press release contains "forward-looking statements." These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies and other future conditions. Such forward-looking statements may include, without limitation,  statements about future opportunities for us and our products and services, our future operations, financial or operating results, including our 2021 financial guidance, anticipated business levels, our ability to create value for our clients and serve their business objectives, future earnings, planned activities, anticipated growth, market opportunities and our expectations with respect to the growth of the markets in which we compete, including the Medicare Advantage market, trends in the markets in which we compete, strategies, competitions and other expectations and targets for future periods. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "predict," "project," "target," "potential," "seek," "will," "would," "could," "should," continue," contemplate," "plan" and other words and terms of similar meaning. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and cash flows, and the development of the markets in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, among others, the following: our ability to retain our existing clients or attract new clients; our dependence on a small number of clients for a substantial portion of our total revenue; limitations of our clients' growth prospects, and the failure of the size of the total addressable markets in which we compete or expect that we may compete in the future to grow at rates currently expected; an economic downturn or volatility, including as a result of the ongoing COVID-19 pandemic; developments in the Medicare Advantage market or the healthcare industry generally, including with respect to changing laws and regulations; security breaches, failures or other disruptions of the information technology systems used in our business operations or by our vendors; our ability to obtain, maintain, protect and enforce our intellectual property and proprietary rights; our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties; our substantial indebtedness, and the restrictions imposed by our indebtedness on our subsidiaries; a material weakness in our internal control over financial reporting and a failure to remediate a material weakness, and the effectiveness of our internal controls over financial reporting; and the significant influence our principal stockholder, TPG, has over us. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section "Risk Factors" included in the final prospectus for the Company's IPO dated June 15, 2021 and filed with the SEC on June 17, 2021 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended and our other filings with the SEC. Given these uncertainties, you should not place undue reliance on these forward-looking statements. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We qualify all of the forward-looking statements in this press release by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("GAAP"). EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures and are presented in order to supplement investors' and other readers' understanding and assessment of the financial performance of the Company. We use EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess our financial performance and also for internal planning and forecasting purposes. We believe EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin provide investors with useful information because such metrics offer a consistent and comparable overview of our operations across historical financial periods. In evaluating EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, you should be aware that in the future we may incur expenses similar to those eliminated in the presentation.

Non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

The non-GAAP financial measures we present are not meant to be considered as indicators of performance in isolation from or as a substitute for measures prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of these non-GAAP measures to the most directly comparable GAAP financial measure are presented below. We encourage you to review our financial information in its entirety, not to rely on any single financial measure and to view the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude such items, may incur income and expenses similar to these excluded items, and include other expenses, costs, and non-recurring items.

The following table presents a reconciliation of Segment Adjusted EBITDA to the U.S. GAAP loss from continuing operations

Non-GAAP Reconciliations

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

We define EBITDA as net loss from continuing operations adjusted for interest expense, income tax benefit, and depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted for certain items of a significant or unusual nature, including but not limited to, change in fair value of contingent consideration, COVID-19 cost impacts, non-cash stock compensation expense, transaction related costs, acquisition bonus expense, loss on extinguishment of debt, director and officer prior act liability insurance policy and other costs. Other includes costs such as contract termination fees, management, and board of director fees, and costs associated with obtaining the incremental term loans.

Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net revenues.

The following table reconciles EBITDA and Adjusted EBITDA for the three and six months ending June 30, 2021 and 2020 to net (loss) income, the most directly comparable GAAP measure:

Investor Contacts

Bob East, Kevin Ellich 
Westwicke 
ConveyHealthIR@westwicke.com

Media Contact

Tom Pelegrin 
Senior Vice President & Chief Revenue Officer 
mediarelations@conveyhs.com

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SOURCE Convey Health Solutions