On August 10, 2021 Signify Health, Inc. (NYSE: SGFY), a leading healthcare platform that leverages advanced analytics, technology and nationwide healthcare networks to create and power value-based payment programs, reported the Company’s financial results for the second quarter and six months ended June 30, 2021 (Press release, Signify Health, AUG 10, 2021, View Source [SID1234590241]).

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"I am proud to say that we are touching the lives of more people in their homes than ever before and helping to make recovery in the home a realization for a growing number of individuals across the country. As a result, we achieved strong financial results in the second quarter and for the six months ended June 30, 2021," said Kyle Armbrester, Chief Executive Officer of Signify Health. "Accelerated customer demand for our comprehensive member in-home evaluations supplemented by diagnostic and preventative testing services drove strong Home & Community Services results. Additionally, we continue to gain traction in our Transition to Home solution, further demonstrating the synergies between Episodes of Care and Home & Community Services."

Mr. Armbrester continued, "In our Episodes of Care Services segment, we have delivered strong savings to our customers and ensured superior care to individuals during their episodes despite COVID-19 headwinds. We remain on track to deliver a 2021 program size exit run rate of approximately $6 billion in our episodes business and we believe as the COVID-19 impact becomes less prevalent, savings rates will resume their previous growth trajectory."

Second Quarter 2021 Financial Results
Total revenue for the second quarter increased 63% to $212.8 million, up from $130.7 million in the same period a year ago. Overall growth in the second quarter of 2021 was driven by strength in Home & Community Services (HCS).
The strong HCS revenue of $175.4 million in the second quarter, an increase of 109% over the same period a year ago, was due to record in-home evaluation (IHE) volume in the quarter of approximately 497,000 compared to approximately 298,000 in the second quarter of 2020.
Second quarter revenue was $37.4 million for the Episodes of Care Services (ECS) segment, a 20% decrease from $46.7 million in the same period a year ago. The decline was primarily due to a decrease in program size reflecting the COVID-19 reduction in elective procedures. Based on the BPCI-A reconciliation received in the second quarter, there was a reduction in the savings rate primarily related to the impact of COVID-19 in two specific areas. The first area related to missing comorbidity diagnosis codes that did not properly reflect patient acuity, thereby impacting patient case mix adjustments and reducing episode pricing. The second area relates to patients being discharged during the pandemic from an acute care facility to inpatient rehabilitation facilities and other high-cost next sites of care when lower-cost skilled nursing facilities were facing COVID-19 outbreaks and staffing shortages.
Second quarter total net loss was $0.1 million compared to net income of $7.0 million for the same period a year ago as an improvement in operating income was offset by the quarterly revaluation of customer Equity Appreciation Rights (EAR) of $14.5 million and a $5.0 million loss on the extinguishment of debt related to the June 2021 debt refinancing.
Non-GAAP Adjusted EBITDA1 for the second quarter increased 55% to $54.6 million, compared to $35.4 million for the second quarter of 2020, driven primarily by HCS revenue growth. Non-GAAP Adjusted EBITDA margin1 for the second quarter was 25.6%.
Six Months Ended June 30, 2021 Financial Results

Total revenue for the six months ended June 30, 2021 increased 50% to $392.8 million, up from $262.4 million in the same period a year ago. Overall growth for the six-month period ended June 30, 2021 was driven by momentum in HCS.
HCS revenue for the six months ended June 30, 2021 was $327.8 million, a 75% increase from the six-months ended 2020, due to an increase in IHE volume to approximately 959,000 compared to approximately 601,000 in the same period of 2020.
ECS revenue for the six months ended June 30, 2021 decreased 14% to $65.0 million due primarily to the aforementioned decrease in the BPCI-A program size.
Total net loss for the six months ended June 30, 2021 was $51.8 million compared to a net loss of $1.9 million in the comparable period a year ago. An improvement in operating income for the period was offset by $71.3 million of other expense related to the remeasurement of the fair value of our customer EAR reflecting the Company’s post IPO valuation.
Non-GAAP Adjusted EBITDA1 for the six months ended June 30, 2021 increased 56% to $89.0 million, compared to $57.3 million for the same period in 2020, driven primarily by HCS revenue growth. Non-GAAP Adjusted EBITDA margin1 for the six months ended June 30, 2021 was 22.7%.
2021 Outlook
Signify Health is raising its total revenue and adjusted EBITDA guidance ranges for 2021 as follows:

Total GAAP revenue in the range of $745 million to $765 million; and
Total adjusted EBITDA1 in the range of $155 million to $165 million.
The revised financial guidance assumes that the COVID-19 situation will not worsen and negatively impact IHE volume and BPCI-A weighted average savings rate or program size for the balance of 2021.

Signify Health is also updating estimates for the following key performance indicators for the full year 2021 reflecting continued strength in HCS and the impact of COVID-19 on ECS:

HCS segment IHEs of approximately 1.785 to 1.815 million;
ECS segment weighted average program size of approximately $4.9 to $5.1 billion; and
ECS segment weighted average savings rate of approximately 6.1% to 6.4%
1Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Refer to the reconciliation in "Non-GAAP Financial Measures." We have not reconciled 2021 guidance for adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, and have not provided forward-looking guidance for net income (loss) because of the uncertainty around certain items that may impact net income (loss), including, among others, stock-based compensation and the fair valuation of the EARs, that are not within our control or cannot be reasonably predicted.

Conference Call Information
Signify Health will host a conference call to discuss the Company’s second quarter 2021 results on August 11, 2021 at 8:30am ET. A live audio webcast of the conference call may be accessed through the investor relations section of Signify Health’s website at investors.signifyhealth.com/events/default.aspx and will be available for replay through October 11, 2021.