Q4 2023 Sharecare Inc Earnings Call

Participants

Brent Layton; Chief Executive Officer, Director; Sharecare Inc

Justin Ferrero; President, Chief Financial Officer; Sharecare Inc

Jeff Arnold; Co-Founder & Executive Chairman; Sharecare Inc

David Larsen; Analyst; BTIG, LLC

Richard Close; Analyst; Canaccord Genuity

Craig Hettenbach; Analyst; Morgan Stanley

Eric Percher; Analyst; Nephron Research

Presentation

Operator

Yes, good day, everyone, and welcome to the Sharecare Fourth Quarter and Full Year 2023 earnings call and webcast. And all participants are currently in a listen only mode. After today's presentation, there will be an opportunity to ask questions to ask a question. At that time, please press star and then one in your touch-tone telephone. To withdraw from the queue, you may press star and two to remove yourself from Mylan. Today's call is being recorded and will be available on the company's website.
On today's call, we have Mr. Brent Layton, Chief Executive Officer, Mr. Justin Ferrero, President and Chief Financial Officer, and Jeff Arnold, Executive Chairman, will join for the Q&A.
Before we begin, I would like to remind you that certain statements made during this call will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which include statements regarding the strategic review, expected cost savings, new capabilities, pipelines, and future expectations.
These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that will occur after this call.
Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors section of our Form 10 K for the year ended December 31st, 2023. In addition, please note that the Company will be discussing certain non-GAAP financial measures that we believe are important in evaluating performance details on the relationship between these non-GAAP measures and the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website.
I'd now like to turn the floor over to Mr. Brent Layton. Brent, please go ahead.

Brent Layton

Thank you Jamie, and good afternoon, and thank you for joining us from our first earnings call as CEO of Sharecare. We appreciate you spending time with us today to learn more about share Care's Fourth Quarter and Full Year 2023 financial results as well as the status of our strategic review and most importantly, where those innovative companies headed.
Since joining SeraCare's Board of Directors over a year ago. I've learned a great deal about our technology and the opportunities that lie ahead. My belief in this company has only grown since it became Sharecare CEO. in January second, in many ways, that is fueled by fueled by more than 75 meetings I've had during the last three months with dozens of organizations, including our current clients and over 50 potential customers and partners have seen first hand their enthusiasm for the value we currently provide, as well as the considerable interest in the solutions we can bring to their businesses and the populations they serve. They are impressed by our innovation. They are inspired by our creativity and they appreciate our collaborative approach to partnerships and our commitments to solution based opportunities. The bottom line, our pipeline, our future is strong, healthy and profitable.
Before you hear from Justin, I think it's important to highlight a few things. First, Sharecare made good on its commitment to achieve cash flow breakeven by the end of 2023. We have no debt, a strong balance sheet and made the right investments, which positions us for strong growth as I help scale this company. Our continued prioritize one of Serco's guiding business principles, the importance of profitability to take that a step further, we have adopted. New rules of engagement will only work with committed partners and clients who are aligned with us and driving meaningful outcomes, leveraging our solutions.
So all parties succeed, especially the people and the communities we serve. That's why in Q4, Sharecare eliminated nonperforming disputed contracts with a client that has historically affected our forecasting. This impacted Q4 revenue by a reduction of approximately $14 million, which included a write down of eliminated contracts, reducing adjusted EBITDA by approximately $6 million. Eliminating these disputed contract for this client enables us to focus our time and resources on productive collaborative relationships that recognize Sharecare's commitment to innovation, creativity, solution-based technology and profitable growth. And it will provide our investors with more predictability and reliability in our financial forecasting and results going forward.
For that context, we reported revenues of $105 million for the quarter and $445 million for 2023 and adjusted EBITDA of $3 million in the quarter and $16.5 million for the full year. Our enterprise channel performed in line for our expectations for Q4 and provided delivered an excellent quarter and had its strongest annual financial performance to date.
Life Sciences growth in Q4 compared to the year prior could be attributed to long-time customers increasing their spend with us and we believe, suggest a rebound from the softness in the digital advertising. That pharma is that the pharma industry has seen the last several quarters in 2023.
I'm sure you have questions about our strategic review discussed in our press release two weeks ago, Sharecare special committee of independent members of the Board of Directors supported by legal and financial advisers are continuing to actively evaluate multiple proposals for a potential sales transaction as well as developing alternative value creation opportunities. The special committee is dedicated to being methodical in their review with the goal of maximizing shareholder value, and we will communicate the Board's decision at the conclusion of the review process. As a reminder, our next earnings is in May.
Additionally, we are pleased to announce we have appointed a new member of our Board of Directors and the special committee, former Xerox executive, the culture. Rocco further strengthen our commitment to effective governance and strategic direction. Mr. Rocco has extensive public company experience holding key executive roles in finance, M&A and investment management over the last 25 years with the strategic review process ongoing among other factors, we will not be providing 2024 guidance today.
When that said, when we do provide guidance, we will articulate a clear and predictable path for long-term growth and profitability in January at JPMorgan. I said I was focused on three key principles. My first 90 days, operational excellence, profitable growth and building innovative next-generation products. Now we took an important step in driving operational excellence when we brought in a new Chief Operating Officer, Shannon Bagley. She brings 25 years of experience spanning a range of functions from auditor to Chief Administrative Officer, as well as leading M&A integration efforts for multi-billion dollar acquisitions for over 20 years.
And I worked together at Centene and her first few months of Sharecare SE and the team have quickly identified opportunities for operational improvements and financial savings to make our enterprise platform more agile, efficient and effective. And most of all for operational acumen and now enables me to focus on what I do best skill in this great company, and we'll certainly continue to add top talent to the team in terms of profitable growth, as I said, earlier, we achieved breakeven by the end of 2023. We have no debt and a strong balance sheet as for innovative next generation products.
I believe it is worth reminding that our Founder and Executive Chairman, Jeff Arnold, pioneered digital health and his DNA runs deep here at Sharecare. This company has always been on the cutting edge of innovation and that will not stop LIMCO. You already know Sharecare for a deep customer relationships with large employers like Delta Airlines, coal or coke industries, L&R and H&R Block and health plans such as CareFirst.
Our focus in those areas will only continue given that I spent 30 years in managed care 23, the nation's largest Medicaid and exchange company and nearly recognize the expansion opportunities, both short and long term for SeraCare's business. In addition into deepening our public-private partnership with government, we're also focused on MCOs, have specialized Medicaid, Medicare and the exchange. And over the last several months, we've made significant progress and developed a new health navigation platform to meet the specific needs of government-sponsored health care that quite frankly, we believe no one else is offering.
The initial iteration of our enterprise-grade navigation platform was purpose-built for Medicaid and as a consumer centric digital front door where members can access their benefits providers, government programs and additional information and resources members can easily navigate and re-enroll for their benefits using chat functionality and receive personalized prompts to engage preventive actions and close gaps in care.
Our Medicaid platform also includes a dynamic searchable provider directory. It uses geo location technology to help members Sponda providers and point of interest near them such as pharmacies or shelters members can refine their search to find out hours of operation supporting languages or whether they accept financial assistance programs like SNAP benefits platform also includes a digital wallet for secure access to their financial assistance and reward programs so they can easily check their account balances and transactions history. And I'm pleased to share that reception has been incredibly strong. In fact, we signed our first Medicaid contract of the year and in advanced discussion with several other companies for this new platform.
Over the last several months, we've made significant progress to support risk-bearing arrangements and other reinsurance and value-based care organizations. By aligning our data analytics capability with our digital therapeutics, clinical advocates and network of professional in-home caregivers, we are addressing fragmentation of care and improving patient outcomes. This not only helps high-risk members have a better quality of life, but also helps our partners proactively been the health cost curve, improved stars and quality outcomes I am pleased that we're already in contract with some of the nation's largest, including one of the largest reinsurance partners for Sharecare to support members through our digital platform, high-risk maternity programs and provide transitions of care services.
Additionally, we are contracting with a large value-based care specialty organization focused on oncology to help improve costs, quality metrics and diagnostic accuracy and were active conduct in our contracting with three risk-bearing entities to use our respite care capabilities to support the application for the CMS guide program focused on dementia. These initial agreements demonstrate our commitment to optimizing our existing capabilities to generate revenue and new markets or sharing both the financial risk and rewards for the partners.
I'd like to close out on an innovative discussion today with one of the industry's most powerful topics, GLP ones preparing these medications sorry, digital therapeutics, our coaches and clinical efforts and our data analytics capabilities, we're able to effect lasting lifestyle behavioral change in a way that's more effective and affordable. And last Friday, I participated in a meeting with one of our long-time customer to prepare for the launch of our new holistic GLP one weight loss solution to their associates.
Each of these examples as evidence of our ability to innovate quickly and effectively and expand the field of play for bringing long-term growth and sustainability to Sharecare is this is important to me that you know, and believe that our take organic growth seriously and that our thrive on both the challenges assess and execute an opponent. And with the breadth and depth of resources SeraCare's assembled over the years, we have everything we need to be successful.
I also want you to know that I believe, deeply in Sharecare as well as our technology, our people and where we're headed and look forward to sharing more about our path ahead. Thank you for your ongoing support and confidence in this company.
I'll now hand the call over to Justin. Justin.

Justin Ferrero

Thank you, Brent, and thanks to everyone for joining this afternoon. So I will take you through the financial highlights for the fourth quarter and full year 2023. We reported fourth quarter revenue of $105.3 million and adjusted EBITDA of $3 million due to the disputed contracts with the clients discussed earlier, there was a $14.2 million negative impact to what we had expected for Q4 revenue. This includes an approximate $6 million noncash impairment, which also negatively impacted adjusted EBITDA. For the full year, our revenue grew to $445.3 million from $442.4 million a year ago, and adjusted EBITDA grew to $16.5 million versus $5.8 million year over year.
Excluding the impact of the disputed contracts with the client, our full year revenue would have achieved the high end of our guidance in the middle of our adjusted EBITDA guidance. We ended the year in a very strong financial position with $128.2 million in cash on our balance sheet and over $182 million in available cash. We also successfully executed on our goal of achieving cash flow breakeven by the end of the year, delivering positive cash flow of a couple of hundred thousand during Q4 relative to our primary annual operating KPIs in the enterprise and provider channels.
We achieved our target of 13 million lives, which includes 700,000 eligible lives associated with the disputed contract with the client. And we processed [$6.9 million] records, significantly outpacing our estimate of [$6.5 million] records for the year. As discussed in our comments earlier, we are well on our way to diversifying with a reliable and profitable customer base. The future is bright for our enterprise channel and brand has already made a significant impact in his short tenure as CFO. To close out my comments, we are confident that our 2023 investments in new product innovation and our cost optimization and globalization efforts, enabling $30 million in annualized cost savings positions us to deliver strong long-term bottom line results.
I also think it's important to note that as the special committee continues to focus on maximizing shareholder value and as we've been indicated in the past, we continue to believe that each of our business channels are worth substantially more than our market capitalization today. In addition to strength of our balance sheet and specifically our cash position, our significant assets to our business. As Brent said, we are grateful for your ongoing support and confidence in Sharecare. Thank you all for joining us today.
And we'll now open the call to your questions.

Question and Answer Session

Operator

David Larsen, BTIG.

David Larsen

How can you please talk a little bit more about this this contract dispute. Are you able to disclose the name of the client? How is your relationship with elevates health? And what is the nature of the dispute please? Thank you.

Brent Layton

Absolutely. Thank you, David, for the question, Jeff?

Jeff Arnold

Hi, David. So this particular client we have discussed in the past and we've been advised not to get into contractual disputes, but it represents several hundred thousand of our lives under Sharecare plus. And this particular contract from this client has given us challenges in the past and with some of the commitments. Some weren't honored there, which made it difficult for us to forecast and working with Brent made the decision that uncertainty is important going forward and that and that we should focus on higher margin business. And so we're transitioning away from that contract.

David Larsen

Okay.
Can you maybe talk a little bit more about sort of the evolution of the data management capabilities of Sharecare and your ability to bear risk. And I guess what I'm getting at is do you have like a dashboard and executive dashboard that you can share with your health plan customers saying, okay, these either not the number of lives. This is the number of lives that have used the solution. This is these are the clinical interventions that have been made this quarter. Is your claims trend on a per member per month basis? Is the improvement in trend based on those interventions? Can you talk about your ability to deliver that kind of data, which I think may have proactively prevented any kind of dispute that that might have occurred with a health plan client. I imagine they want to sort of see the improved trend and value that's being delivered. Just any thoughts or color there would be very helpful, please. Thank you very much.

Jeff Arnold

Well, I guess I would kind of answer that in two ways is one is we very much have advanced analytics and an interoperable platform and Bill and we're able to deliver and real-time measurement of all our programs. And this particular dispute has nothing to do with that of our ability to deliver those capabilities. That's not what's under dispute.

David Larsen

Okay. So they were showing improved claims trend, good utilization. But there is a separate dispute that's occurring on that.

Jeff Arnold

There's a contractual dispute that that now we we now believe some out time needs to be resolved. And and because of that, we're transitioning for now away from that relationship. But we're not disputing any of the things that you talked about.

David Larsen

Okay. And then just I guess, Brent, just what are your thoughts on the business going forward, like what sort of on things would you like to see implemented? What are the greatest capabilities of Sharecare going forward that you want to bring T to managed care plans and just thoughts on how to grow enterprise be very helpful. Thank you.

Brent Layton

Absolutely. Thank you for the question, David. First of all, I'm enthusiastic and this guy had for the Company. And I really have going from coast to coast meeting with potential customers and our current customers. And in my old role at my other company, I used to have all types of companies come to me and say we have this solution or that solution. And nobody ever asked me what I needed and how to have such an impact I have had the opportunity to do that now many times over and when I've had the opportunity to talk about our platform, our technology, our flexibility, our ability to scale and most of all our innovation, I am finding great receptivity, and that is both from MCOs that is from entities that are leading the efforts of value-based care that is actually from employers as well.
So my enthusiasm has grown, but when I had the opportunity to come as CEO last fall, when the Board came to me and I believed in our technology because I had the opportunity to be on the Board for several months, but now having 90 days to be able to visit with so many customers and to be able to sit down and talk to them about what we do, what we can do and what they're looking for. I believe the future is very bright. I'm as excited as I can be when I started with 17 many, many years ago, we did about $300 million in revenue. And when I walked out the door, we were doing more than $130 billion of revenue. And I was able to be very much a part of scaling that great company.
And I have every belief that I can scale this company because we actually have scalable, innovative creative technology, and we also have other assets, our Life Sciences. I got to admit life science was something new for me when I came to Sharecare and I've had the opportunity to visit with our team and our staff in New York and had a lot of time to be able to learn about it. And I'm amazed by the data they have and what they do on a daily basis.
And we're going to work with Tim who said and our team on provider and all the things that they are doing both on release of information and then, of course, care links that literally allows me to have opportunity with so many unique value-based companies, and you're going to hear more and more about that. And I gave you a little bit of flavor my comments, but future's very bright for Sharecare. And the one thing I'm going to do is make sure that we're going to have a diversity and a variety of clients. My old boss used to say that we are not going to basically look to one client to be it. We're not going to look to one state for that one customer. We're going to go out from coast to coast and have multiple clients that have multiple impact. And that's exactly where I'm and take Sharecare potential.

David Larsen

I'll hop back in the queue.

Brent Layton

Thank you.

Operator

Richard Close, Canaccord Genuity.

Richard Close

Yes, just to be to be clear on the nonperforming contract, some is that completely off the books at this point? There will be no additional noise going forward on that. And then are there any other contracts like this that could be an issue now?

Justin Ferrero

It's not what we expect dumb definitely for Q. one to have a similar impact. This is just in Richard, thank you for the question. And so there is there is still noise. Obviously, we're working to resolve the dispute. But until that has been and fully agreed upon, then we expect to continue to see an impact to the P&L so that, yes, you can expect that in Q1 as well.

Richard Close

So there's a similar magnitude?

Justin Ferrero

Similar magnitude.

Richard Close

Of not giving guidance. Okay.

Justin Ferrero

Yes, not given yet similar similar magnitude, but we're obviously hopeful that we can resolve the contract dispute and we're actively having conversations around that. But it is a significant magnitude and so we're working hard to resolve it, but I don't have that timetable set as we sit here today. So it'll be it will impact us in the first half of the year. But as Brent talked about earlier, he has a lot of opportunity that he has brought in a very short time as 90 days, and we're going to start seeing that come online starting in Q3. And so you know, I just want to reiterate the impact that he's had in a short time and that the future is bright for enterprise.

Richard Close

Okay. And then with respect to, I guess, the momentum in Medicaid Medicare exchange business, and then you're talking about reliable, profitable customer base going forward. Can you maybe talk a little bit more about the opportunities on Medicaid. I know you signed one contract. If you can give any details on that. I guess it's going live and third quarter, but is there also going to be any deemphasizing of the employer market? Are you like pivoting towards these government markets or how do we think about that?

Brent Layton

I know there's a ton of questions that's Okay, Richard, and I'm glad to answer all of them. First and foremost, there's no backing up for employer one bid. I've had the opportunity to be on a handful of best in finalist meetings with hopefully potential customers. And I have visited with current customers. So we're not backing up from employers at all. In fact, I'm going to bring more and more disciplined at 17, I had the opportunity to be a part of 110 RFP wins, RFPs that sometimes were 10,000 pages and very complex house and finalist meetings and all types of business development and so forth, the debt for two decades.
And I'm going to trying to make sure that we have the very best RFP procurement business development approach there is and that's something you should hold me accountable for. And we're going to focus that on employers were going to focus that on government. And I absolutely believe in public-private partnerships. And I believe our technology brings all types of solution to state governments throughout this country and in regards to Medicaid.
But at the end of the day, there is a lot of opportunity within Medicaid, even though the redeterminations are out there, there's still roughly 80 plus million people on Medicaid in this country, and we've been able to develop something very unique with our navigation tool, trying to make sure now Freestyle with you for a moment, Richard, so that that Medicaid recipient knows that the provider that's nearest to them, that's your network is three miles away, but they're open four days a week that they close at four o'clock that the providers actually speak Spanish and that they will actually schedule an appointment for you immediately online, but the nearest grocery stores, four miles away.
And that ultimately, you know that grocery store will take your SNAP benefits for all the governmental programs and all the nonprofit groups that exist out there, better known as social determinants of health that ultimately you have a dynamic directory. So people can see about them interactive and contacted them that's the creativity, the innovation you should expect of Sharecare. I was you're looking for that back in my old job, and I'm honored to have it here today.
In regards to the exchange. I think anybody who knows me by history, I'm a huge advocate exchange and a huge advocate of things that are going on with the exchange. I could remember three short years ago, this change overall was somewhere around $8 million to $10 million. Today, there's$ 21.3 million people in the exchange and growing between the data that we have the technology we have and the innovation we have, you should expect us to see us involved in that. And you also should see us involved with Ingram as that begins to take hold from small group large group from that standpoint.
And yes, we're talking to Medicare MCOs as well. And I'm very proud that we are being creative in other lines of insurance like reinsurance, as I mentioned in talking to my staff, we set down a silicon trying to bring creative ideas, what other creative ideas do you have and they brought the ideas of reinsurance and then value-based my old job. I did a tremendous amount of value-based contracting. And I can say that we have talked to some of and we are going to work with some of the largest value-based risk assumption companies that are out there.
And a lot of ways we did healthcare links, we wouldn't be able to do it, but since we do healthcare links, we can focus on post-acute. We can help people receive the right care they can in their home. We can stretch out that savings. And more importantly, have positive outcomes. The assets, the Jeff and team has put together from life sciences to provider to enterprise platform flows quite well together and the modern healthcare system. And that's why the end of the day. I'm glad here. I've been here 90 days, and I look forward to watching this really company evolve and grow. Thank you.

Richard Close

All right. Thank you.

Operator

Craig Hettenbach, Morgan Stanley.

Craig Hettenbach

Great.

Operator

Thank you, Brent. Maybe just building on some of that discussion just now in terms of just the customer meetings you've had.

Brent Layton

And just anything tangible as to kind of what you've identified is where you need to execute or how you kind of put this in the plan, if you will, I'd say on the employer we have clearly, as I mentioned, GLP ones have been a 1 billion topic to discuss top of mind. And before I took over as CEO, Jeff and team were already on it. So to be able to move quickly and to be able to go live soon with a new existing customer and to have that conversation and be there for our current customers and new ones, very much a part of that. But at the same time is making sure that our technology is meeting the needs of employers.
And that's one thing that I've enjoyed meeting these meetings and sitting in these best in bottles and make sure that we are meeting their needs and what they're looking for. And what I'm finding is that our approach to our digital front door, what I'm finding is our approach and coaching as well as advocate advocacy is meeting their needs and a lot of ways we just have to listen to our customer and make sure we are articulating correctly what we're doing because we do have a lot of ways a solution for that, but at the same time is getting to know partners or future partners and making sure we meet their needs from that standpoint.
In regards to MCOs, like the MCOs have at the end of the day, our incredible buzz in the industry for 30 years. And I think a lot of people forget the great impact that they have. But there are certain places that companies like Sharecare can come in and bring assistance. Navigation is one being able to help people access benefits and access services to be able to have an impact on proper utilization and to be able to focus on care gaps.
There's all types of areas of all types have been CEOs. I've had discussions with, but in talking to Medicaid MCOs, whether it's navigation, but more importantly, what they want to make sure is that members get all the care they should. And I believe that our technology and our ability to get people on our platform and receive service and care, we can do just that.
I'll look forward to how we're going to be judged by MCO.'s down the road because I'm confident they're going to want to work with us in regards to our navigation tool. But more importantly, I want to make sure that we have outcomes. I look forward to over the coming quarters to report those outcomes due to show you that we're having a positive impact on people's lives. And I know that I'm going to be held to a high bar by MCOs and by you and by others. Now, look, what are the challenges?

Craig Hettenbach

Got it. Thanks. And I think for that as a follow-up on the employer market. I think before your arrival there was a big investment in terms of sales force and just building out kind of that sales infrastructure to execute. Do you think you have the right go market or are there things you're also going to tweak there in terms of where you've invested to grow that business?

Brent Layton

Absolutely. We have the right go to market I think a lot of ways this is sales discipline at the end of the day and focus and how to scale. And that's a lot of ways it has to do about how we've responded at RPO, are we listening and properly answering the question that our client wants at the same time, are we finding the solutions to help them do better and the outcomes they wish for and to be able to go in there and probably be a partner. And a lot of that is just overall sales discipline and to be able to really be in that role for well over two decades, have a pretty good insight to that. And I'm really good at listening to customers and helping them get to where they're going. So absolutely. We have what we need here. It's a matter of listener customers and acting upon it. And I think that discipline in our skills, we're going to get sharper and sharper, we're going to focus on it. One thing is in the day I like to win, and I like to have an impact, and that's where we're going to go in sales.

Craig Hettenbach

And then just last question from me. Understanding you're not providing guidance, but at a high level, any kind of headwinds or tailwinds you'd call out kind of by business segment this year to keep them?

Brent Layton

Justin, I'll let you go with that answer.

Justin Ferrero

Yeah, are you referring to that 2024 or 23?

Craig Hettenbach

Extra customer X the customer dispute, just how you're thinking about the underlying trends but by segment year-on-year.

Justin Ferrero

Well, we're where we were from a bridge, you can see in our Q for that, we had a record year at provider. We expect that to continue. We performed very well at Life Sciences and a down market. We've talked about that a few times, Craig, and so we expect that to continue. So it's really the headwinds is around primarily this disputed contract and some you know, I think that Brent's laid out a lot of opportunity in his first, 90 days that we've started to execute against.
And so ultimately, there'll be a little bit of lag in the front end, which is what I commented on as we work through the dispute. And hopefully that can get done sooner than later and now, but I think we're going to be teed up very, very well as the other two assets are performing great. We would as I noted in my comments, we would have had a really incredible quarter in Q4.
If it wasn't for this disputed contract, we would have been at the high end at well over the high end of the guide, we were at the high end of the guide for the year and right in the middle of the range for EBITDA. So it's it's some it was all cylinder as systems go, but we have this this one issue and we're working hard to resolve it. So we once we get through that, the future is really bright.

Craig Hettenbach

Thank you.

Brent Layton

Thank you, Craig.

Operator

Eric Percher, Nephron Research.

Eric Percher

Thank you. I think I just have two simple ones left first, and congrats on getting to cash flow breakeven. I do want to ask it, is there dependency and maintaining that on coming to agreement with this client? Is there any chance of backstopping from breakeven?

Brent Layton

Justin, do you want to answer?

Justin Ferrero

Yes, there will be an impact on. We need to resolve this in order to maintain cash flow breakeven, but there's things that we can do as a business to offset that, which were which we're looking at. But them again, Eric, we've been focused on being cash flow positive. As we've talked about all year, it was a big push for all thrilled that we achieved it on the IQQ. one, as you know is, you know, seasonally is a lower quarter for us. So we expect some burn in the first half of the year. But yes, we think that will it will be a very similar. We think that we can get back to cash flow breakeven is the long-term answer. So we take it. It's a challenge for us and we achieved it. And although there may be a short term hit, we'll get back to it.

Eric Percher

That's appreciated. And we heard you loud and clear on the cash on the balance sheet and maybe slightly related. Is it possible to size, the annual impact of the disputed contract and not asking for 25, but looking back over 2014, give us some measure

Justin Ferrero

Well, it could potentially be, you know, as large as rolling forward Q4 and that in that in that round, it could potentially be there. Now please know that we are again, this is part of why we haven't guided we are working very diligently to resolve the dispute and um and so we're hopeful that that won't be the case.

Eric Percher

Okay. And then the last one, I want to take the bait on the GLP-1 commentary, are you still ask what are you doing there? And I assume that this is relative to on behavioral engagement and not buy in the realm of fulfillment do partner for fulfillment? How are you working with payers in that?

Brent Layton

I'm going to let Jeff take the order and that he has led the charge on that. And he's been talking ever since. I got here on day one. So Jeff, I'll let you take them sort of answered that.

Jeff Arnold

Yes, on the GLP-1 front, Eric, is we've talked about in the past. It's an exciting area and similar to our business, we're taking a holistic approach and looking at how we can combine our unique assets to have a differentiated offering and so we've been working with our medical team to really understand what's the right criteria and based on our claims data and then using our analytics to be able to onboard those people based on eligibility. And yes, we've been working on different ways to source the GLP ones, whether it's from compound pharmacies or directly from manufacturers and then how to leverage our behavior. Our behavior change program, our DPP. approved eat right now as well as our unwinding anxiety.
And then lastly, how to use our We care rewards platform for adherence and so we've kind of stitched all this together in a really elegant, interoperable way and have now are now in our go to market like talking to our clients and thinking through how to address affordability. And that's where some of the compounding pharmacy pharmacies have kind of come into play. But we've been doing that in partnership with the client.

Eric Percher

Interesting. Thank you.

Brent Layton

Sure, thank you.

Operator

Richard Close, Canaccord Genuity.

Richard Close

Yes, I just wanted to follow up on the contract disputed contract. Just on the EBITDA, I mean, you classify it as you know, roughly a $6 million impairment. Is that just the fourth quarter or is that a combination of maybe several quarters. I know in the answer to the one of the recent questions you said look at the fourth quarter and roll that forward, but just clarity on the EBITDA would be helpful.

Justin Ferrero

Yes, there there's a there's contracts which we label specific to the impairment. We have we took the impairment all in the fourth quarter, which we were amortizing through contra revenue over the term of the relationship, but we went ahead and took a worst case scenario, but there could be other other items of these contracts that impact EBITDA going forward.

Richard Close

Okay.

Justin Ferrero

So that's why I say, you know, rolling rolling this forward is the right way to look at it. But specific to that impairment, we impaired that asset Inphone.

Richard Close

Okay. And then Brent, maybe on the Medicaid side and the navigation platform for Medicaid. So just help me out here is the customer, the state and that you would be selling this to so you sell it to the state and they maybe require all the managed care organizations for managed Medicaid to provide this to their thumb to the population or is it you are essentially contracting with the managed Medicaid organization?

Brent Layton

Thank you for the question. We definitely could interact with states. I mean, I did that for many, many years at Centene, but I would tell you right now, I'm focused on working with MCOs. The MCOs want to make sure that their members actually get care and get the services and they want to make sure that they understand the benefits. And I think we've developed a tool to do that, just that for them.
But I have been speaking to a great deal of states to better understand what they are looking for because I honestly believe that our technology lets us do so much more than Medicaid. There's things within justice and foster care. There's things and other social services. And like I mentioned, Snap before that I think we can have an impact. So coming out of working in public-private partnerships for two decades, that's something I'm going to spend a lot of time on and have a lot of conversations with states and make sure they understand the flexible and really are innovative technology. But no right now definitely focused Medicaid MCOs.

Richard Close

Okay. Thank you.

Operator

And with that, we'll be concluding today's question and answer session I'd like to turn the floor back over to Brent Layton for closing remarks.

Brent Layton

Thank you, Jamie, and thank you for your questions today. I appreciate them and appreciate everybody spending time with me today, I mentioned for two decades. Wireless at Centene has started with the company with about $300 million in revenue. And today, when I walked out the door in 2023, they were doing well over $130 billion it was a hell of a ride, and I'm proud of my time at that great company at Sharecare, though, I am confident we have a similar opportunity to scale this company like I did in my job and what I've seen and what I've heard in the interactions I've had as a Board member and now as CE. over the last 90 days. We do have happy clients. We do have a dynamic, innovative technology platform that creates endless opportunities, whether which states, whether with MCOs, whether with value-based, whether employers to help us develop new customers and new innovations in closing, I believe in this great company, and I'm confident we can scale and that I can scale this great company by driving strong profitable growth. Thank you very much for your attention today.

Operator

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.