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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to    .
Commission File Number: 001-40028
Signify Health, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
85-3481223
(I.R.S. Employer
Identification Number)
800 Connecticut Avenue, Norwalk, CT 06854
(Address of principal executive offices)
(203) 541-4600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Class A common stock, par value $0.01 per ShareSGFYNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes ☐ No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No ☒
As of April 30, 2022, there were 176,317,381 outstanding shares of Class A common stock, $0.01 par value, and 57,372,117 outstanding shares of Class B common stock, $0.01 par value.






Signify Health, Inc.

Table of Contents
Page
Condensed Consolidated Statements of Operations
PART II. OTHER INFORMATION

2

PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets (unaudited, in millions, except shares)

March 31,December 31,
20222021
ASSETS
Current assets
Cash and cash equivalents$451.3 $678.5 
Accounts receivable, net220.7 217.2 
Contract assets132.5 84.3 
Restricted cash2.3 5.7 
Prepaid expenses and other current assets19.1 14.9 
Total current assets825.91000.6
Property and equipment, net23.423.7 
Goodwill796.4597.1 
Intangible assets, net540.2455.3 
Operating lease right-of-use assets21.3— 
Deferred tax assets53.538.8 
Other assets10.711.7 
Total assets$2,271.4 $2,127.2 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses$105.5 $136.7 
Contract liabilities44.0 32.9 
Current maturities of long-term debt3.5 3.5 
Other current liabilities18.3 10.0 
Total current liabilities171.3183.1
Long-term debt334.5 334.9 
Contingent consideration30.6  
Customer EAR liability84.0 48.6 
Tax receivable agreement liability56.3 56.3 
Deferred tax liabilities22.4 
Noncurrent operating lease liabilities25.2— 
Other noncurrent liabilities1.2 11.4 
Total liabilities725.5634.3
Commitments and Contingencies (Note 19)
Class A common stock, par value $0.01 (176,232,513 and 170,987,365 issued and outstanding at March 31, 2022 and December 31, 2021, respectively)
1.8 1.7 
Class B common stock, par value $0.01 (57,313,051 and 56,838,744 issued and outstanding at March 31, 2022 and December 31, 2021, respectively)
0.6 0.6 
Additional paid-in capital1,160.0 1,101.3 
Retained earnings8.4 19.7
Contingently redeemable noncontrolling interest375.1 369.6 
Total stockholders' equity1,545.9 1492.9
Total liabilities and stockholders' equity$2,271.4 $2,127.2 


See accompanying notes to the condensed consolidated financial statements.

3


Condensed Consolidated Statements of Operations
(unaudited, in millions, except shares and per share amounts)


Three months ended March 31,
 20222021
Revenue$216.5 $180.0 
Operating expenses
Service expense (exclusive of depreciation and amortization shown below)114.5 98.5 
Selling, general and administrative expense (exclusive of depreciation and amortization, shown below)70.3 57.3 
Transaction-related expenses3.2 5.6 
Depreciation and amortization18.0 16.7 
Total operating expenses206.0 178.1 
Income from operations10.5 1.9 
Interest expense4.0 6.8 
Other (income) expense28.8 56.7 
Other (income) expense, net32.8 63.5 
Loss before income taxes(22.3)(61.6)
Income tax benefit(6.0)(9.9)
Net loss$(16.3)$(51.7)
Net loss attributable to pre-Reorganization period— (17.2)
Net loss attributable to noncontrolling interest(5.4)(11.3)
Net loss attributable to Signify Health, Inc.$(10.9)$(23.2)
Loss per share of Class A common stock
Basic$(0.06)$(0.14)
Diluted$(0.06)$(0.14)
Weighted average shares of Class A common stock outstanding
Basic172,761,665 165,486,015 
Diluted172,761,665 165,486,015 
See accompanying notes to the condensed consolidated financial statements.

4


Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited, in millions, except shares)



Class A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at January 1, 2022170,987,365 $1.7 56,838,744 $0.6 $1,101.3 $369.6 $19.7 $1,492.9 
Adoption of new accounting standard— — — — — — (0.4)(0.4)
Equity-based compensation— — 492,383 — 2.9 3.7 — 6.6 
Vesting of restricted stock units57,651 — — — — — — — 
Proceeds from exercises of stock options407,287 — — — 1.2 0.4 — 1.6 
Tax payments on behalf of non-controlling interest— — — — — (0.3)— (0.3)
Exchange of LLC units18,076 — (18,076)— 0.1 (0.1)—  
Issuance of Class A common stock in connection with Caravan Health acquisition4,762,134 0.1 — — 54.5 7.2 — 61.8 
Net loss— — — — — (5.4)(10.9)(16.3)
Balance at March 31, 2022176,232,513 $1.8 57,313,051 $0.6 $1,160.0 $375.1 $8.4 $1,545.9 





See accompanying notes to the condensed consolidated financial statements.
5


Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited, in millions, except shares)


Cure TopCo, LLC (Prior to Reorganization Transactions)Signify Health, Inc. Stockholders' Equity
Members' EquityClass A common - SharesClass A common stockClass B common - SharesClass B common stockAdditional paid-in capitalNon-controlling interestRetained earnings (Accumulated deficit)Total stockholders' equity
Balance at January 1, 2021$894.0  $  $ $ $ $ $894.0 
Net loss prior to Reorganization Transactions(17.2)— — — — — — — (17.2)
Equity-based compensation prior to Reorganization Transactions0.9 — — — — — — — 0.9 
Impact of Reorganization Transactions and IPO
Initial effect of the Reorganization Transactions and IPO on noncontrolling interests(877.7)140,758,464 1.4 57,613,676 0.6 620.8 254.9 —  
Contribution of New Remedy Corp to Signify Health Inc.— — — — — (26.0)— — (26.0)
Issuance of Class A common stock in IPO, net of issuance costs— 27,025,000 0.3 — — 479.3 125.3 — 604.9 
Deferred tax adjustment related to Reorganization and tax receivable agreement— — — — — 6.3 — — 6.3 
Class B subscription fee receivable — — — — — 0.6 — — 0.6 
Post- IPO activity
Equity-based compensation subsequent to Reorganization Transactions— — — 8,626 — 0.9 0.7 — 1.6 
Proceeds from exercises of stock options— 184,392 — — — 0.4 — — 0.4 
Net income subsequent to Reorganization Transactions— — — — — — (11.3)(23.2)(34.5)
Balance at March 31, 2021$ 167,967,856 $1.7 57,622,302 $0.6 $1,082.3 $369.6 $(23.2)$1,431.0 








See accompanying notes to the condensed consolidated financial statements.
6


Condensed Consolidated Statements of Cash Flows (unaudited, in millions)

Three months ended March 31,
20222021
Operating activities
Net loss$(16.3)$(51.7)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 18.0 16.7 
Equity-based compensation 6.6 2.5 
Customer equity appreciation rights6.5 4.9 
Remeasurement of customer equity appreciation rights28.9 56.8 
Amortization of deferred financing fees0.6 0.7 
Amortization of right-of-use assets1.7 — 
Remeasurement of contingent consideration0.1 0.2 
Deferred income taxes(12.9)(14.0)
Changes in operating assets and liabilities:
Accounts receivable(1.9)101.2 
Prepaid expenses and other current assets(2.3)2.4 
Contract assets(39.1)(33.5)
Other assets1.3 (1.0)
Accounts payable and accrued expenses (32.1)(13.8)
Contract liabilities11.1 14.6 
Other current liabilities(0.7)1.9 
Noncurrent lease liabilities(1.9)— 
Other noncurrent liabilities 0.1 (1.2)
Net cash (used in) provided by operating activities(32.3)86.7 
Investing activities
Capital expenditures - property and equipment(1.7)(0.7)
Capital expenditures - internal-use software development(6.8)(5.7)
Purchase of long-term investment(0.3) 
Business combinations, net of cash acquired(189.6) 
Net cash used in investing activities(198.4)(6.4)
Financing activities
Repayment of long-term debt(0.9)(1.0)
Repayments of borrowings under financing agreement(0.3)(0.3)
Distributions to/on behalf of non-controlling interest members(0.3) 
Proceeds from IPO, net 604.8 
Proceeds related to the issuance of common stock under stock plans1.6 0.1 
Net cash provided by financing activities0.1 603.6 
(Decrease) increase in cash, cash equivalents and restricted cash(230.6)683.9 
Cash, cash equivalents and restricted cash - beginning of period684.2 77.0 
Cash, cash equivalents and restricted cash - end of period$453.6 $760.9 
Supplemental disclosures of cash flow information
Cash paid for interest$3.3 $4.8 
Cash payments, net of refunds, for taxes (0.1)
Noncash transactions
Capital expenditures not yet paid0.9 0.6 
Assumption of liabilities from New Remedy Corp 26.0 
Issuance of common stock related to acquisition60.0  
Items arising from LLC interest ownership exchanges:
   Establishment of liabilities under tax receivable agreement(0.1) 
See accompanying notes to the condensed consolidated financial statements.
7



Notes to the Condensed Consolidated Financial Statements (unaudited)


1.Nature of Operations

Signify Health, Inc. (referred to herein as “we”, “our”, “us”, “Signify Health” or the “Company”) was incorporated in the state of Delaware on October 1, 2020 and was formed for the purpose of completing an initial public offering (“IPO”) of its common stock and related reorganization transactions as described below. As a result of the reorganization transactions in February 2021, we control, and therefore consolidate the operations of Cure TopCo, LLC (“Cure TopCo”) and its direct and indirect subsidiaries.

Cure TopCo is a Delaware limited liability company formed on November 3, 2017. Cure TopCo has adopted a holding company structure and is the indirect parent company of Signify Health, LLC (“Signify”), a Delaware limited liability company. Signify was formed on November 3, 2017. Operations are performed through our wholly-owned subsidiaries.

We are a healthcare platform that leverages advanced analytics, technology and nationwide healthcare provider networks to create and power value-based payment programs. Our customers include health plans, governments, employers, health systems and physician groups. We operate in two segments of the value-based healthcare payment industry: payment models based on individual episodes of care, or the Episodes of Care Services segment, and in-home health evaluations (“IHE”), or the Home & Community Services segment. Payment models based on individual episodes of care organize or bundle payments for all, or a substantial portion of, services received by a patient in connection with an episode of care, such as a surgical procedure, particular condition or other reason for a hospital stay. IHEs are health evaluations performed by a clinician in the home to support payors’ participation in Medicare Advantage and other government-run managed care plans. Our solutions support value-based payment programs by aligning financial incentives around outcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, care coordination and cost-savings. Through our platform, we coordinate what we believe is a holistic suite of clinical, social, and behavioral services to address an individual’s healthcare needs and prevent adverse events that drive excess cost, all while shifting services towards the home.

On March 1, 2022, we acquired Caravan Health, Inc. (“Caravan Health”), see Note 4. Business Combinations. With this combination, we will now be able to provide a broader range of value-based and shared savings models from advanced primary care to specialty care bundles to total cost of care programs.
Initial Public Offering
On February 16, 2021, we closed an initial public offering (“IPO”) of 27,025,000 shares of our Class A common stock at a public offering price of $24 per share, which included 3,525,000 shares issued pursuant to the full exercise of the underwriters’ over-allotment option. We received gross proceeds of $648.6 million, which resulted in net cash proceeds of $609.7 million after deducting underwriting discounts and commissions of $38.9 million and before fees and expenses incurred in connection with the IPO and paid for by Cure TopCo. We used the proceeds to purchase newly-issued membership interests from Cure TopCo at a price per interest equal to the IPO price of our Class A common stock, net of the underwriting discount and commissions.

Reorganization Transactions
In connection with the IPO, Signify Health and Cure TopCo completed a series of transactions (“Reorganization Transactions”), the effects of which included, among other things, Signify Health becoming the controlling shareholder of Cure TopCo.

As of March 31, 2022, we owned approximately 75.5% of the economic interest in Cure TopCo. The non-controlling interest, consisting of certain pre-IPO members who retained their equity ownership in Cure TopCo subsequent to the Reorganization Transactions owned the remaining 24.5% economic interest in Cure TopCo.
8



Notes to the Condensed Consolidated Financial Statements (unaudited)

2.Significant Accounting Policies
Basis of Presentation
These Condensed Consolidated Financial Statements are unaudited and have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and following the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements included in this report should be read in conjunction with the Company’s audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. In our opinion, they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for future interim periods or the entire fiscal year. Our quarterly results of operations, including our revenue, income from operations, net loss and cash flows, have varied and may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, our interim results should not be relied upon as an indication of future performance.

For the periods subsequent to the Reorganization Transactions effective February 12, 2021, the Condensed Consolidated Financial Statements represent Signify Health and our consolidated subsidiaries, including Cure TopCo. For the periods prior to the Reorganization Transactions, the condensed consolidated financial statements represent Cure TopCo and its consolidated subsidiaries, see Note 1 Nature of Operations. Signify Health was formed for the purpose of the IPO, which was effective in February 2021 and had no activities of its own prior to such date. We are a holding company and our sole material asset is a controlling ownership interest in Cure TopCo.

The Condensed Consolidated Financial Statements include the accounts and financial statements of our wholly-owned subsidiaries and variable interest entities (“VIE”s) where we are the primary beneficiary. See Note 5 Variable Interest Entities. Results of operations of VIEs are included from the dates we became the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.

We have two operating segments, Home & Community Services and Episodes of Care Services as described in Note 1 Nature of Operations.

Use of Estimates
The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions affecting the reported amounts in our Condensed Consolidated Financial Statements and accompanying notes. These estimates are based on information available as of the date of the Condensed Consolidated Financial Statements; therefore, actual results could differ from those estimates. The significant estimates underlying our Condensed Consolidated Financial Statements include revenue recognition; allowance for doubtful accounts; recoverability of long-lived assets, intangible assets and goodwill; loss contingencies; accounting for business combinations, including amounts assigned to definite and indefinite lived intangible assets and contingent consideration; customer equity appreciation rights; and equity-based compensation.

As of March 31, 2022, the COVID-19 pandemic continues to evolve and impact our Episodes of Care Services segment due to the passage of time between episode initiation and the performance and subsequent recognition of revenue for our services; See Note 3 The COVID-19 Pandemic. As a result, many of our estimates and assumptions have required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in the future.

Comprehensive Income (Loss)
We have not identified any incremental items that would be considered a component of comprehensive income (loss) and accordingly a statement of comprehensive income (loss) is not reflected in the Condensed Consolidated Financial Statements because net loss and comprehensive loss are the same.

Restricted Cash
Under our Master Agreement with the Centers for Medicare and Medicaid Services (“CMS”), we were required to place certain funds in escrow for the benefit of CMS. These amounts, known as a Secondary Repayment Source
9



Notes to the Condensed Consolidated Financial Statements (unaudited)

(“SRS”), were primarily based on the size of our participation in the legacy CMS Bundled Payments for Care Improvement (“BPCI”) program, the predecessor program of the Bundled Payments for Care Improvement - Advanced initiative (“BPCI-A”). These funds were available to CMS as a supplemental payment source if we failed to pay amounts owed to CMS. Under the agreement, the funds are returned to us 18 months after the conclusion of the effective period of the CMS Master Agreement, or when all financial obligations to CMS are fulfilled. As of December 31, 2021, there was $0.5 million in the SRS account included in restricted cash on the Condensed Consolidated Balance Sheets related to BPCI-A, all of which was released in the first quarter 2022.

We also withhold a portion of shared savings to customers in a “holding pool” to cover any potential subsequent negative adjustments through CMS’s subsequent reconciliation true-up process. These funds are distributed to customers following the final true-up if there is no negative adjustment. These amounts represent consideration payable to the customer and therefore have reduced revenue in the period earned. The funds have been received by us from CMS and are held in a separate cash account, included as restricted cash on the Condensed Consolidated Balance Sheets. Since the funds are payable to the customer at the point the final CMS true-up is made or a negative adjustment is due to us, the amounts are also included in accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, there was $1.8 million and $5.2 million of restricted cash in the holding pool, respectively.

In addition, as of March 31, 2022 we hold $0.5 million in a separate cash account, included as restricted cash on the Condensed Consolidated Balance Sheets, in relation to an accountable care organization (“ACO”) owned by Caravan Health. This ACO is part of a risk model under the CMS Medicare Shared Savings Program (“MSSP”) program where it shares in both the savings and losses. The ACO has a master letter of credit with CMS as the recipient where the letter of credit is used as protection against unpaid losses, should the ACO fail to remit payment in the event that losses occur. The letter of credit is collateralized by the ACO members, by either cash remitted or subordinated letters of credit. This restricted cash will only be used if an ACO member fails to remit payment in connection with a subordinated letter of credit.

The following table reconciles cash, cash equivalents, and restricted cash per the Condensed Consolidated Statements of Cash Flows to the Condensed Consolidated Balance Sheets:
March 31, 2022December 31, 2021
(in millions)
Cash and cash equivalents$451.3 $678.5 
Restricted cash2.3 5.7 
Total cash, cash equivalents, and restricted cash $453.6 $684.2 

Accounts Receivable
Accounts receivable primarily consist of amounts due from customers and CMS and are stated at their net realizable value. Management evaluates all accounts periodically and an allowance is established based on the latest information available to management. Management considers historical realization data, accounts receivable aging trends and other operational trends to estimate the collectability of receivables. After all reasonable attempts to collect a receivable have been exhausted, the receivable is written off against the allowance for doubtful accounts. As of March 31, 2022 and December 31, 2021, we had an allowance for doubtful accounts of $9.7 million and $7.9 million, respectively.

Advertising and Marketing Costs
Advertising and marketing costs are included in selling, general and administrative expenses (“SG&A”) and are expensed as incurred. Advertising and marketing costs totaled $0.2 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively.

Accounting for Leases
We lease various property and equipment, with the majority of our leases consisting of real estate leases. Effective January 1, 2022, we adopted ASC Topic 842 Leases (“ASC 842”). Under ASC 842, a lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Our contracts determined to be or contain a lease include explicitly or implicitly identified assets where we have the right to substantially all of the economic benefits of the assets and we have the
10



Notes to the Condensed Consolidated Financial Statements (unaudited)

ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or financing. All of our leases meet the criteria to be classified as operating leases. For operating leases, we recognize a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as prepaid rents, initial direct costs and lease incentives received from the lessor. We use the incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.

Certain of our leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses and certain non-lease components that transfer a distinct service to us, such as common area maintenance services. We have elected not to separate the accounting for lease components and non-lease components for all leased assets.

We sublease portions of our office space where we do not use the entire space for our operations. Sublease income is recorded as a reduction of lease expense.

Recent Accounting Pronouncements

Recently Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) which requires lessees to recognize leases on the balance sheet by recording a right-of-use asset and lease liability. This guidance is effective for non-public entities for annual reporting periods beginning after December 15, 2021. We adopted this new guidance as of January 1, 2022 and applied the transition option, whereby prior comparative periods will not be retrospectively presented in the consolidated financial statements. We elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for all asset classes. We made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. See Note 8 Leases.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. We elected to early adopt this new guidance for interim periods in 2022 beginning with the Caravan Health acquisition on March 1, 2022. We measured the acquired contract assets and liabilities in accordance with Topic 606. See Note 4 Business Combinations.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance (“ASU 2021-10”) which requires annual disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. ASU 2021-10 is effective for all entities for fiscal years beginning after December 31, 2021. We adopted this new guidance as of January 1, 2022. There was no material impact on our condensed consolidated financial statements upon adoption.

Pending Adoption

We are an “emerging growth company” under the Jumpstart Our Business Startups Act (“JOBS Act”). Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We intend to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. The effective dates below are the effective dates we expect to adopt the new accounting pronouncements, which are those permitted for a company that is not an issuer.
11



Notes to the Condensed Consolidated Financial Statements (unaudited)


In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) which introduced the current expected credit losses methodology for estimating allowances for credit losses. ASU 2016-13 applies to all financial instruments carried at amortized cost and off-balance-sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credit, and financial guarantees. The new accounting standard does not apply to trading assets, loans held for sale, financial assets for which the fair value option has been elected, or loans and receivables between entities under common control. ASU 2016-13 is effective for non-public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of this new guidance on our condensed consolidated financial statements.
3.The COVID-19 Pandemic

Our operations in our Home & Community Services segment were significantly affected by the COVID-19 pandemic early in 2020. However, as the COVID-19 pandemic has evolved, we have been able to pivot and flex the volume of virtual IHEs (“vIHEs”) if needed and as a result we have not experienced a material impact to our results of operation in our Home & Community Services segment as a result of the ongoing pandemic since the second quarter of 2020.

Our Episodes of Care Services segment has experienced a prolonged negative impact related to the pandemic. At certain times during the pandemic, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, including certain acute and post-acute care services, be suspended or canceled to avoid non-essential patient exposure to medical environments and potential infection with the COVID-19 virus. In addition, the temporary suspension or cancellation of services was put in place to focus limited resources and personnel capacity toward the prevention of, and care for patients with, COVID-19. This resulted in fewer elective procedures and a general reduction in individuals seeking medical care starting at the end of the first quarter of 2020, which contributed to a substantially lower number of episodes being managed in 2020 and 2021. Due to the nature of the BPCI-A program, however, there is a significant lag between when the episodes are initiated and when CMS reconciles those services and we recognize revenue over a 13 month period encompassing both of those points in time. As such, there was no immediate impact to our revenues in early 2020 when the pandemic began. However, the specific impact of the lower volumes on our program size and revenues has resulted in a decline in weighted average program size and savings rates. In addition, in the third quarter of 2020 and in response to the COVID-19 pandemic, CMS announced that all episodes with a COVID-19 diagnosis irrespective of the impact on the outcome of the episode, would be excluded from reconciliation, and this exclusion has extended into 2022, resulting in a negative impact to our program size. We expect this impact on the program size to decrease once the COVID-19 pandemic subsides or CMS removes this rule.

Initially, the reduction in the number of episodes managed was offset by a higher savings rate achieved due to a combination of improved performance by some of our partners as well as certain partners that were underperforming choosing to exclude some or all of their episodes from reconciliation in 2020. However, beginning with the reconciliation results received from CMS during the second quarter of 2021, we saw a negative impact on our savings rate as a result of the COVID-19 pandemic, primarily related to the under-diagnosis of co-morbidities and the use of higher cost next site of care facilities, both of which drove costs higher and in turn, lowered our savings rates.

Due to the passage of time between when we perform our services and the confirmation of results and subsequent cash settlement by CMS, COVID-19 and the aforementioned negative impacts have also negatively impacted our semi-annual cash flows related to the BPCI-A program.

We continue to monitor trends related to COVID-19, including the recent surge in variants, changes in CDC recommendations and their impact on results of operations and financial condition on both of our operating segments.
12



Notes to the Condensed Consolidated Financial Statements (unaudited)

4.Business Combinations

Caravan Health Acquisition

On February 9, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Caravan Health, Inc., pursuant to which we acquired Caravan Health on March 1, 2022. Caravan Health is a leader in assisting ACOs to excel in population health management and value-based payment programs. The initial purchase price was approximately $250.0 million, subject to certain customary adjustments, and included approximately $190.0 million in cash and approximately $60.0 million in our Class A common stock, comprised of 4,726,134 shares at $12.5993 per share, which represents the volume-weighted average price per share of our common stock for the five trading days ending three business days prior to March 1, 2022. In connection and concurrently with entry into the Merger Agreement, we entered into support agreements with certain shareholders of Caravan Health, pursuant to which such shareholders agreed that, other than according to the terms of its respective support agreement, it will not, subject to certain limited exceptions, transfer, sell or otherwise dispose of any of the Signify shares acquired for a period of up to five years following closing of the merger.

In addition to the initial purchase price, the transaction included contingent additional payments of up to $50.0 million based on certain future performance criteria of Caravan Health, which if conditions are met, may be paid in the second half of 2023. The preliminary fair value of the contingent consideration as of the acquisition date was estimated to be approximately $30.5 million, which was estimated using a Black-Scholes option pricing model. See Note 13 Fair Value Measurements. Therefore, the total purchase consideration of the transaction was determined to be $287.4 million, which consisted of cash consideration, stock consideration, and potential contingent consideration.

We allocated the purchase price to the identifiable net assets acquired, based on the estimated fair values at the date of acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities was recorded as goodwill. Goodwill represents the value of the acquired assembled workforce and specialized processes and procedures and operating synergies, none of which qualified as separate intangible assets. All of the goodwill was assigned to our Episodes of Care Services segment. None of the goodwill is expected to be deductible for tax purposes.

We estimated the fair value of intangible assets acquired using estimates of future discounted cash flows to be generated by the business over the expected duration of those cash flows. We based the estimated cash flows on projections of future revenue, operating expenses, capital expenditures, working capital needs and tax rates. We estimated the duration of the cash flows based on the projected useful lives of the assets acquired. The discount rate was determined based on specific business risk, cost of capital and other factors.
13



Notes to the Condensed Consolidated Financial Statements (unaudited)


The purchase price allocation is preliminary and subject to change up to one year after the date of acquisition and could result in changes to the amounts recorded below. The preliminary allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of the acquisition was as follows:

Cash$6.8 
Restricted cash0.5 
Accounts receivable1.6 
Contract assets9.1 
Prepaid expenses and other current assets1.7 
Property and equipment0.3 
Intangible assets93.9 
Other assets0.1 
Total identifiable assets acquired114.0 
Accounts payable and accrued liabilities2.9 
Other current liabilities0.6 
Deferred tax liabilities22.4 
Total liabilities assumed25.9 
Net identifiable assets acquired88.1 
Goodwill199.3 
Total of assets acquired and liabilities assumed$287.4 

The $93.9 million of acquired intangible assets consists of customer relationships of $69.8 million (10-year useful life), acquired technology of $23.4 million (5-year useful life) and a tradename of $0.7 million (3-year useful life).

The acquisition was not material to our Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. The financial results of Caravan Health have been included in our Condensed Consolidated Financial Statements since the date of the acquisition.
5.Variable Interest Entities

We consolidate our affiliates when we are the primary beneficiary. The primary beneficiary of a VIE is the party that has both the decision-making authority to direct the activities that most significantly impact the VIE’s economic performance and the right to absorb losses or receive benefits that could potentially be significant to the VIE.

Consolidated VIEs at March 31, 2022 and December 31, 2021 include seven physician practices that require an individual physician to legally own the equity interests as certain state laws and regulations prohibit non-physician owned business entities from practicing medicine or employing licensed healthcare providers. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the losses from and direct activities of these operations. As a result, these VIEs are consolidated and any non-controlling interest is not presented. Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which totaled $31.3 million and $25.2 million at March 31, 2022 and December 31, 2021, respectively.

14



Notes to the Condensed Consolidated Financial Statements (unaudited)

The carrying amount and classification of the VIEs’ assets and liabilities included in the Condensed Consolidated Balance Sheets, net of intercompany amounts, are as follows:

March 31, 2022December 31, 2021
(in millions)
ASSETS
Current assets
Cash and cash equivalents$12.0 $10.6 
Accounts receivable, net 19.3 14.6 
Total current assets31.3 25.2 
Total assets$31.3 $25.2 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses$ $3.4 
Contract liabilities0.5  
Other current liabilities1.1  
Total current liabilities1.6 3.4 
Total liabilities1.6 3.4 
Company capital37.9 29.3 
Accumulated deficit(8.2)(7.5)
Total equity29.7 21.8 
Total liabilities and equity$31.3 $25.2 

As of March 31, 2022, Caravan Health is the sole member of four ACOs, which we have determined are VIEs. CMS offers an MSSP to ACOs, where the goal of the program is to reward the ACO participants when specific quality metrics are met and expenditures are lowered. The MSSPs have different risk models where the ACOs can either share in both savings and losses or share in only the savings. The governance structure of the VIEs does not provide Caravan Health with the ultimate decision-making authority to direct the activities that most significantly impact the VIEs’ economic performance. Based on these ACOs’ operating agreements, the power to direct the VIEs’ operations is shared among the entities that make up the ACO Board of Directors, which is required to consist of at least 75% ACO participants (hospitals, clinics, etc.). As such, we have determined we are not the primary beneficiary of these VIEs, and therefore we do not consolidate the results of these entities.

Caravan Health is ultimately liable for losses incurred by one out of the four ACOs owned by them. As of March 31, 2022 there was $0.5 million included in restricted cash on our Condensed Consolidated Balance Sheets which relates to this VIE. The ACO has a master letter of credit with CMS as the recipient where the letter of credit is used as protection against unpaid losses, should the ACO fail to remit payment in the event that losses occur. The letter of credit is collateralized by the ACO members, by either cash remitted or subordinated letters of credit. This restricted cash will only be used if an ACO member fails to remit payment in connection with a subordinated letter of credit.

Two of the four VIEs are ACOs that are not part of an MSSP risk model where the losses are shared and the remaining VIE has a guarantor that has taken full responsibility of indebtedness of the ACO, and therefore, Caravan Health is not liable for its losses.

15



Notes to the Condensed Consolidated Financial Statements (unaudited)

During the three months ended March 31, 2022, we did not make any contributions to the unconsolidated VIEs for losses incurred. Our maximum exposure to loss as a result of our involvement in these unconsolidated VIEs cannot be reasonably estimated as of March 31, 2022, as the shared losses are dependent on a number of variable factors, including estimates of patient attribution, expenditure data, benchmark data, inflation factors and CMS quality reporting. Losses incurred, if any, are determined once updated CMS reporting is provided, which is expected to be available in the third quarter of 2022. Under the provisions of the MSSP program, once a minimum shared loss rate of 2% is exceeded, losses are calculated at a rate of 1 minus the final sharing rate, with a minimum shared loss rate of 40% and a maximum shared loss rate of 75%, not to exceed 15% of the updated benchmark. Our current ACO contracts indicate that we will bear the risk beyond the first 1% of potential losses not to exceed the MSSP maximum of 15%.
6.Revenue Recognition

Disaggregation of Revenue
We earn revenue from our two operating segments, Home & Community Services and Episodes of Care Services, under contracts that contain various fee structures. Through our Home & Community Services segment, we offer health evaluations performed either within the patient’s home, virtually or at a healthcare provider facility, primarily to Medicare Advantage health plans (and to some extent, Medicaid). Additionally, we offer certain diagnostic screening and other ancillary services, and through our Signify Community solution, we offer access to services to address healthcare concerns related to social determinants of health. Through our Episodes of Care Services segment, we primarily provide services designed to improve the quality and efficiency of healthcare delivery by developing and managing episodic payment programs in partnership with healthcare providers, primarily under the BPCI-A program with CMS. We also provide ACO services through our Caravan Health subsidiary, acquired in March 2022. Additionally, we provide certain complex care management services. All of our revenue is generated in the United States.

We are dependent on a concentrated number of payors and provider partners with whom we contract to provide our services, See Note 22 Concentrations.

The following table summarizes disaggregated revenue from contracts with customers by source of revenue, which we believe best presents the nature, amount and timing of revenue.
Three months ended March 31,
20222021
(in millions)
Evaluations$186.2 $150.3 
Other0.7 2.1 
Home & Community Services Total Revenue186.9 152.4 
Episodes24.1 25.4 
Other5.5 2.2 
Episodes of Care Services Total Revenue29.6 27.6 
Consolidated Revenue Total$216.5 $180.0 

16



Notes to the Condensed Consolidated Financial Statements (unaudited)

Performance Obligations

Episodes of Care Services

There have been no material changes to our revenue recognition and estimates, other than as described below related to the acquisition of Caravan Health. Caravan Health enters into contracts with customers to provide multiple services around the management of the ACO model. These include, but are not limited to, population health software, analytics, practice improvement, compliance, marketing, governance, surveys and licensing. The overall objective of the services provided is to help the customer receive shared savings from CMS. Caravan Health enters into arrangements with customers wherein we receive a contracted percentage of each customer’s portion of shared savings if earned. We recognize shared savings revenue as performance obligations are satisfied over time, commensurate with the recurring ACO services provided to the customer over a 12-month calendar year period. The shared savings transaction price is variable, and therefore, we estimate an amount we expect to receive for each 12-month calendar year performance obligation period.

In order to estimate this variable consideration, management initially uses estimates of historical performance of the ACOs. We consider inputs such as attributed patients, expenditures, benchmarks and inflation factors. We adjust our estimates at the end of each reporting period to the extent new information indicates a change is needed. We apply a constraint to the variable consideration estimate in circumstances where we believe the data received is incomplete or inconsistent, so as not to have the estimates result in a significant revenue reversal in future periods. Although our estimates are based on the information available to us at each reporting date, new and material information may cause actual revenue earned to differ from the estimates recorded each period. These include, among others, Hierarchical Conditional Category (“HCC”) coding information, quarterly reports from CMS, unexpected changes in attributed patients and other limitations of the program beyond our control. We receive final reconciliations from CMS and collect the cash related to shared savings earned annually in the third or fourth quarter of each year for the preceding calendar year.

The remaining sources of Caravan Health revenue in our Episodes of Care Services segment are recognized over time when, or as, the performance obligations are satisfied and are primarily based on a fixed fee or per member per month fee. Therefore, they do not require significant estimates and assumptions by management.

Related Balance Sheet Accounts
The following table provides information about accounts included on the Condensed Consolidated Balance Sheets.

March 31, 2022December 31, 2021
Episodes of Care ServicesHome & Community ServicesTotalEpisodes of Care ServicesHome & Community ServicesTotal
(in millions)
Assets
Accounts receivable, net (1)$39.8 $180.9 $220.7 $100.1 $117.1 $217.2 
Contract assets (2)$128.1 $4.4 $132.5 $82.8 $1.5 $84.3 
Liabilities
Shared savings payable (3)$37.4 $ $37.4 $63.4 $ $63.4 
Contract liabilities (4)$39.2 $4.8 $44.0 $27.8 $5.1 $32.9 
Deferred revenue (5)$1.0 $1.6 $2.6 $0.1 $3.5 $3.6 

(1)Accounts receivable, net for Episodes of Care Services included $1.6 million due from CMS as of March 31, 2022 primarily related to amounts not yet collected for the fifth reconciliation period of the BPCI-A program. As of December 31, 2021, accounts receivable, net for Episodes of Care Services included $56.2 million due from CMS primarily related to the fifth reconciliation period of the BPCI-A program. Accounts receivable, net for Home & Community Services included $51.1 million and $3.7 million in amounts not yet billed to customers, as of March 31, 2022 and December 31, 2021, respectively. The remaining amount
17



Notes to the Condensed Consolidated Financial Statements (unaudited)

of accounts receivable for both Episodes of Care Services and Home & Community Services represent amounts to be received from customers. Home & Community Services accounts receivable as of March 31, 2022 reflected strong IHE volume in the first quarter and a higher mix of in-person IHEs compared to vIHEs.
(2)Contract assets primarily represent management’s estimate of amounts we expect to receive under the BPCI-A program related to the next two reconciliation periods. As of March 31, 2022, contract assets covered episodes of care commencing in the period from April 2021 through March 2022. Estimates for program size and savings rate are based on information available as of the date of the financial statements. We record an estimate of revenue related to these performance obligations over the 13-month period starting in the period the related episodes of care commence and through the estimated receipt of the semi-annual CMS reconciliation file. Any changes to these estimates based on new information will be recorded in the period such information is received. Total savings generated and revenue earned for the episodes of care in which a component of the contract asset recorded as of March 31, 2022 relates to, will be included in the semi-annual reconciliation expected from CMS during the second quarter of 2022. Contract assets for Episodes of Care Services segment also included $10.5 million related to estimated shared savings under the Caravan Health ACO services programs. Contract assets in the Home & Community Services segment of $4.4 million as of March 31, 2022 represent management’s estimate of amounts to be received from clients as a result of certain service levels being achieved during the contractual period.
(3)Total shared savings payable is included in accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets. Shared savings payable for Episodes of Care Services included $23.9 million due to CMS as of December 31, 2021, all of which was settled with CMS in the first quarter of 2022. Shared savings payable included $35.6 million as of March 31, 2022 primarily related to the fifth reconciliation received in December 2021, which is expected to be paid to customers related to their portion of savings earned under the BPCI-A program. Additionally, there is $1.8 million included in shared savings payable at March 31, 2022, which represents amounts withheld from customers under the BPCI-A program based on contractual withholding percentages. This amount has been received by us from CMS and is held as restricted cash. We expect to remit these amounts to customers at the conclusion of the program, at which time both restricted cash and the liability will be reduced.
(4)Contract liabilities in our Episodes of Care Services segment represent management’s estimate of savings amounts we expect to share with our customers based on contractual shared savings percentages related to the amounts we expect to be entitled to receive under the BPCI-A program for the next two reconciliation periods. As of March 31, 2022, contract liabilities of $39.2 million cover episodes of care commencing in the period from April 2021 through March 2022. These amounts offset the gross amount we expect to receive for the same period included in contract assets as of March 31, 2022. Contract liabilities in the Home & Community Services segment of $4.8 million as of March 31, 2022 represent management’s estimate of potential refund liabilities due to certain clients as a result of certain service levels not being achieved during the contractual periods primarily due to COVID-19.
(5)Deferred revenue is included in other current liabilities on the Condensed Consolidated Balance Sheets and primarily relates to advance payments received from certain customers.

The table below summarizes the activity recorded in the contract asset and liability accounts for the periods presented.

Three months ended March 31,
Contract Assets20222021
(in millions)
Balance at beginning of period$84.3 $27.8 
Acquired in Caravan Health Acquisition9.1  
Estimated revenue recognized related to performance obligations satisfied at a point-in-time2.9  
Estimated revenue recognized related to performance obligations satisfied over time36.2 33.5 
Balance at end of period$132.5 $61.3 

18



Notes to the Condensed Consolidated Financial Statements (unaudited)

Three months ended March 31,
Contract Liabilities20222021
(in millions)
Balance at beginning of period$32.9 $6.2 
Payments made to customer (0.6)
Estimated amounts due to customer related to performance obligations satisfied at a point-in-time(0.3)1.1 
Estimated amounts due to customer related to performance obligations satisfied over time11.4 14.1 
Balance at end of period$44.0 $20.8 

Three months ended March 31,
Deferred Revenue20222021
(in millions)
Balance at beginning of period$3.6 $3.8 
Acquired in Caravan Health Acquisition0.5  
Payments received from customers0.6 7.5 
Revenue recognized upon completion of performance obligation(2.1)(4.3)
Balance at end of period$2.6 $7.0 

Three months ended March 31,
Shared Savings Payable20222021
(in millions)
Balance at beginning of period$63.4 $80.8 
Amounts paid to customer and/or CMS(67.8)(22.0)
Amounts due to customer upon completion of performance obligation41.8 15.6 
Balance at end of period$37.4 $74.4 
7.Property and Equipment

Property and equipment, net were as follows as of each of the dates presented:
March 31, 2022December 31, 2021
(in millions)
Computer equipment$23.7 $22.0 
Leasehold improvements18.6 18.5 
Furniture and fixtures6.7 6.5 
Software2.4 2.5 
Projects in progress0.5 0.7 
Property and equipment, gross51.9 50.2 
Less: Accumulated depreciation and amortization(28.5)(26.5)
Property and equipment, net$23.4 $23.7 


Depreciation and amortization expense for property and equipment, inclusive of amounts subsequently written off or disposed from accumulated depreciation, was $2.2 million and $2.0 million for the three months ended March 31, 2022 and 2021, respectively. There was no impairment of property and equipment during the three months ended March 31, 2022 or 2021.
19



Notes to the Condensed Consolidated Financial Statements (unaudited)

8.Leases

New Lease Guidance Adoption and Practical Expedients

We adopted ASC 842 as of January 1, 2022 using the optional transition method. Therefore, we did not restate comparative periods. Under this transition provision, we applied the legacy leases guidance, including its disclosure requirements, for the comparative periods presented.

ASC 842 includes practical expedient and policy election choices. We have elected the practical expedient transition package available in ASC Topic 842 and, as a result, did not reassess the lease classification of existing contracts or leases or the initial direct costs associated with existing leases. We made an accounting policy election not to recognize right of use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease expense on a straight-line basis over the lease term. We did not elect the hindsight practical expedient, and therefore we did not reassess our historical conclusions with regards to whether renewal option periods should be included in the terms of our leases.

Upon adoption on January 1, 2022, we recognized right-of-use assets and lease liabilities for operating leases of $23.0 million and $35.6 million, respectively. The difference between the right-of-use asset and lease liability primarily represents the net book value of deferred rent and tenant improvement allowances recognized as of December 31, 2021, which was adjusted against the right-of-use asset upon adoption.

In addition, there was $0.4 million recorded as a reduction of retained earnings upon adoption. This primarily related to an asset that we ceased using prior to the adoption of ASC 842 and do not have the intent and ability to sublease since the remaining lease term is less than one year. We recognized a lease liability equal to the present value of the remaining lease payments under the contract; however, we did not recognize a corresponding right-of-use asset. The previously recognized cease-use liability as of December 31, 2021 was recognized as a reduction to the carrying amount of the right-of-use asset. As the cease-use liability balance was less than the carrying amount of the right-of-use asset, the remaining portion of the right-of-use asset not offset by the cease-use liability was written off as an adjustment to retained earnings since the cease-use date of the asset occurred prior to adoption.

The following is a summary of the impact of ASC 842 adoption on our Condensed Consolidated Balance Sheet:
December 31, 2021ASC 842 AdjustmentsJanuary 1, 2022
(in millions)
Assets
Operating lease right-of-use assets$ $23.0 $23.0 
Liabilities
Current portion of operating lease liabilities 8.5 8.5 
Operating lease liability, net of current portion 27.1 27.1 
Deferred rent and tenant improvement allowances12.2 (12.2) 
Retained Earnings19.7 (0.4)19.3 


20



Notes to the Condensed Consolidated Financial Statements (unaudited)

Right-of-use Assets and Lease Liabilities

The following table presents our operating lease right-of-use assets and lease liabilities as of March 31, 2022. Current lease liabilities are included in other current liabilities on the Condensed Consolidated Balance Sheets.

March 31, 2022
(in millions)
Operating lease right-of-use assets$21.3 
Current portion of operating lease liabilities8.1 
Non-current operating lease liabilities25.2 
Total Lease Liabilities$33.3 

For the three months ended March 31, 2022, cash paid for amounts included in the measurement of operating lease liabilities was $2.7 million.

Our operating lease expense is recorded as a component of SG&A in our Condensed Consolidated Statements of Operations. The components of lease expense for the three months ended March 31, 2022 were as follows:

Three months ended
March 31, 2022
(in millions)
Operating lease cost$2.1 
Variable lease cost0.7 
Sublease income(0.7)
Total Lease Cost(1)
$2.1 
(1) Excludes short-term lease expense, which is not material

The following table presents the weighted average remaining lease term and discount rate of our operating leases as of March 31, 2022:

Weighted Average Lease Term (Years)5.8
Weighted Average Discount Rate4.6 %

We enter into contracts to lease office space and equipment with terms that expire at various dates through 2030. The lease term at the lease commencement date is determined based on the non-cancellable period for which we have the right to use the underlying asset, together with any periods covered by an option to extend the lease if we are reasonably certain to exercise that option, periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. We considered a number of factors when evaluating whether the options in our lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties.

21



Notes to the Condensed Consolidated Financial Statements (unaudited)

As of March 31, 2022, maturities of our operating lease liabilities are as follows:

Remainder of 2022$7.2 
20238.3
20244.8
20254.1
20263.4
Thereafter10.6
Total lease payments38.4
Less: imputed interest(5.1)
Present value of operating lease liabilities$33.3 

Effective October 1, 2021, we entered into a lease agreement for a facility in Oklahoma City, OK. The lease term is 7.25 years, with two 5-year options to renew, and total lease payments are expected to be approximately $4.2 million. The lessor and its agents are currently building this retail space and the lease is expected to commence once the construction of the asset has been completed. We expect commencement in the second quarter of 2022. As the lease has not yet commenced, it is not included in the right-of-use asset or lease liabilities recorded as of March 31, 2022. In addition, we entered into a lease agreement for a facility in New York, NY which is expected to commence February 1, 2024, once our current lease for this facility expires on January 31, 2024. The lease term is 5.75 years, with one 5-year option to renew, and total lease payments are expected to be approximately $22.7 million.

Disclosures Related to Periods Prior to Adoption of ASC 842

As of December 31, 2021, future minimum lease payments under non-cancellable operating leases were as follows:

2022$10.2 
20238.7 
20246.1 
2025