Skylight Health Group Inc.

Revenue for Q2 2022 was just over $16 million, up from $7.7 million in Q1 2022. Fee-for-service and other revenue was $8.7 million, up 13% from $7.7 million, with 4% organic growth; capitated revenue was $7.4 million and came from the acquisition of Neighbor MD, reflecting two months of revenue. Cost of sales was $12.1 million and gross margin was 25%, versus $4.3 million and 44% in the prior quarter. Net loss from continuing operations was $5.2 million versus $8.3 million in Q1; adjusted EBITDA loss was $5.4 million versus $6.7 million, and management said the normalized adjusted EBITDA loss excluding Neighbor MD was $4.4 million. Cash at quarter-end was $2.3 million, compared with $11.7 million last year; $3.5 million of cash was used in operations in Q2, $9.9 million was used in investing activities mainly for Neighbor MD, and $11.6 million net was drawn from the FLC debt facility. Guidance/targets: management said it expects adjusted EBITDA breakeven by exit 2022, with further cost reductions expected to be fully realized by the end of Q3 and into early Q4. They also referenced a $70 million revenue run-rate target and said 2023 revenue growth is expected to benefit from Medicare Advantage, ACO Reach, and membership growth, including an expected 25% organic revenue growth in 2023 based on current traditional Medicare lives and a 10% EBITDA contribution from that base.

Pradyum Sekar framed the quarter as proof that the company can improve operations while expanding into value-based care. He stressed that the acquisition of Neighbor MD and the CHS partnership accelerate Skylight’s move into Medicare Advantage and ACO Reach, potentially by three years, and said the company is building around three internal KPIs: membership count, Medicare risk adjustment, and Medicare loss ratio. His tone was confident but measured, emphasizing a difficult market, meaningful cost cuts, and a longer-term shift from fee-for-service toward capitated economics.

Farooq Akhter focused on the quarter’s financial mix shift and the operating leverage still to come. He highlighted Q2 revenue of just over $16 million, gross margin of 25%, a $5.2 million net loss from continuing operations, and adjusted EBITDA loss of $5.4 million, while noting the normalized adjusted EBITDA loss excluding Neighbor MD was $4.4 million. On cash, he said the company ended with $2.3 million, used $3.5 million in operations in Q2, used $9.9 million in investing activities mainly for the acquisition, and drew $11.6 million net from the FLC debt facility; he also said the company is pursuing convertible debentures to improve short-term liquidity and that cash conversion is a top priority.

Analysts focused on the pace of incremental cost reductions, how the $70 million exit revenue run-rate could still support EBITDA positivity, and why fee-for-service revenue grew 4% sequentially. Management said most cost actions take 30 to 90 days to flow through and should be largely realized by late Q3 or early Q4, while revenue growth should also come from contact center improvements, marketing, and the full-quarter contribution from Neighbor MD. On fee-for-service, they cited normalized patient volumes after Q1 EHR disruption and lower COVID-related visits, plus better scheduling and higher acuity. Questions also centered on the CHS/Centene JV and AEP mechanics; management said CHS provides 25% downside coverage, adds care-management and membership-growth expertise, and will help with education, broker relationships, and enrollment support ahead of AEP.