Sharecare, Inc. (NASDAQ:SHCR) Q3 2023 Earnings Call Transcript

Unidentified Analyst: Great. Well I look forward to it. And congrats again on the quarter. I’ll hop back in the queue.

Jeff Arnold: Great. Thank you.

Operator: And our next question will come from Eric Percher with Nephron Research. Please go ahead.

Eric Percher: Thank you. Jeff, I know there’s limitations on what you can say on bids be they solicited or unsolicited. One question that maybe you could answer for us is, when we look back to last year in the strategic review, was that truly limited to provider and consumer? Or were considerations for the full company made at that time?

Jeff Arnold: The primary focus of the strategic review was the sum of the parts. And so we had conversations along the way of is it — people might have interest in the entire business, but our focus was on the sum of the parts during the strategic review.

Eric Percher: Okay. And then just stopping for a moment on the SEC change. Justin, can — I want to make sure we’re crystal clear on what line items may have been impacted as we look back over the first nine months and then the guidance to come. Can you just walk through that?

Justin Ferrero: Yes. It’s really two line items and we certainly can help you with the models going forward. But there were two areas. It was the exited contract in PCMH that we’ve moved back up and then it was termed leases. And both of those — the exited contract will be throughout the year. The term lease ended in Q1. And again, as you know, these were highly talked about especially the exited contract and all fully disclosed. So this is no new expense. It’s just being moved from below the line back into our non-GAAP reporting. And the good news is that we’ve been able to reimagine that contract and are in later-stage conversation with better pricing. And none of these expenses are going to recur for us in 2024.

Eric Percher: Okay. Well, I think clear on that. And then just turning to the segmentation. You talked about Life Sciences and the macro pressure. Has that business returned to sequential growth? Or can you give us a little bit on what the current state of affairs there is?

Justin Ferrero: It has. We grew nicely from Q2 to Q3. And first of all, that division has been incredibly resilient this year in a tough market. So maybe I start there. They’ve done very well. We are down year-over-year slightly, whereas the market is all down double digits. We grew about 15% sequentially. And we expect a 20%-plus growth again sequentially from Q3 to Q4. But as you know that number is like — is often even higher. And we just wanted — it’s still a tough market out there. So, we will definitely have growth in Q4. We just want to be somewhat conservative because it is a tough market still.

Eric Percher: Do you believe you’re gaining share in that marketplace?

Justin Ferrero: We do. We think that our assets and our programs performed very well which is the reason why we get buy-ups in the back half of the year. It’s the reason why our Q4 and Q3 grow over Q1 and Q2 is because, we perform better and then we get more share.

Eric Percher: Thank you. And then maybe a last one is just the segment growth levels for the other segments. Can you give us the detail there?

Justin Ferrero: Yes. The — so it will be — so Enterprise will be slightly down single-digits then our Provider business will be up about 10% sequentially.

Eric Percher: When you say well — are you talking about the quarter we just saw?

Justin Ferrero: Yes, just the quarter — when the Q comes out, you’ll see it all. Yes.

Eric Percher: Right. That’s sort of roughly where we were for the quarter we just saw. And I assume no specific commentary on Q4?

Justin Ferrero: No, no specific comment. Other than the guide that we presented. And I just want to reiterate that in our EBITDA guide even with the call it a headwind of adding additional expense to our non-GAAP measures, we’re going to have another record EBITDA margin in Q4.

Eric Percher: Right. Okay. Thank you very much.

Justin Ferrero: Thank you.

Operator: And our next question will come from Richard Close with Canaccord Genuity. Please go ahead.