FOXO TECHNOLOGIES INC
For the period ended Sep 30, 2024. Filed Nov 19, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 19, 2024
FOXO$0.13+19.2%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-19.
0001493152-24-032961
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001493152-24-046738
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 125 current paragraphs.
56 unchanged; 46 reworded; 22 added; 14 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 19 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Myrtle has been granted two licenses from the Tennessee Department of Mental Health and Substance Abuse Services, effective August 1, 2024, for 12 months. The first license authorizes the provision of services for alcohol and drug residential detoxification treatment, as well as alcohol and drug residential rehabilitation treatment. The second license authorizes the provision of services for non-residential office-based opiate treatment. Myrtle has also entered into in-network contracts with a number of commercial payers in the second and third quarters 2024.
Current report
Acquisition of RCHI and Its Subsidiary SCCH Under the Second Stock Exchange Agreement with RHI, as Amended and Restated
Current report
On June 10, 2024, the Company entered into the Second Stock Exchange Agreement (the “RCHI SEA”) with RCHI and RHI. On September 10, 2024, the Company entered into the Amended and Restated Stock Exchange Agreement with RCHI and RHI (the “RCHI SEA Amendment”) pursuant to which the RCHI SEA was amended to change the consideration to be received by RHI in exchange for all of the equity interests of RCHI from 20,000 shares of Series A Preferred Stock of the Company to a senior note in the principal amount of $22,000 (subject to adjustments) (the “September 10, 2024 Note”).
Current report
RCHI’s wholly-owed subsidiary, SCCH, is doing business as BSF. BSF is a critical access care hospital located in Oneida, Tennessee consisting of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. BSF has 25 inpatient beds, and 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. The hospital became operational on August 8, 2017 and it became designated as a Critical Access Hospital (rural) hospital in December 2021, retroactive to June 30, 2021.
Current report
NM = Not meaningful
Current report
***Management Contingent Share Plan.***Forfeitures under the Management Contingent Share Plan resulted in a net reduction of expense of $116 for the three months September 30, 2024 compared to a net reduction of expense of $1,553 for the three months ended September 30, 2023. The change is driven by more forfeitures of these awards in the 2023 period as a result of more employee layoffs and departures in 2023.
Current report
Non-operating Expense. Non-operating expense was $948 for the three months ended September 30, 2024, compared to $153 for the three months ended September 30, 2023. The increase is primarily related to a $809 increase of interest expense.
Current report
NM = Not Meaningful
Current report
***Segment Loss.***Segment loss was $47 for the three months ended September 30, 2024 and represents the $309 of income from RCHI, which was acquired on September 10, 2024, partially offset by the $356 loss from Myrtle, which was acquired on June 14, 2024.
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
NM = Not meaningful
Current report
***Management Contingent Share Plan.***Forfeitures under the Management Contingent Share Plan resulted in a net reduction of expense of $75 for the nine months ended September 30, 2024 compared to a net reduction of expense of $141 for the three months ended September 30, 2023. The change is driven by more forfeitures of these awards in the 2023 period as a result of more employee layoffs and departures in 2023.
Current report
NM = Not Meaningful
Current report
***Segment Loss.***Segment loss was $114 for the nine months ended September 30, 2024 and represents the income of $309 from RCHI, which was acquired on September 10, 2024, partially offset by the $423 loss from Myrtle, which was acquired on June 14, 2024.
Current report
Other Operating Data (Adjusted EBITDA):
Current report
We reconcile our non-GAAP financial measure to our net loss, which is its most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business mode. Adjusted EBITDA is not presented in accordance with U.S. GAAP.
Current report
February 1, 2024 Second Strata Purchase Agreement
Current report
On February 1, 2024, we entered into the Second Strata Purchase Agreement with ClearThink. No shares of the Company’s common stock were issued under the Second Strata Purchase Agreement and on August 8, 2024, the Company and ClearThink entered into a termination agreement and all outstanding obligations were terminated.
Current report
On July 22, 2024, we issued a promissory note to 1800 Diagonal Lending LLC in the principal amount of $169 and we received cash of $125.
Current report
On September 10, 2024, we issued a note payable due on September 10, 2026 to RHI in the principal amount of $22,000 for the purchase of RCHI. In addition, we have outstanding the Western Note Payable in the amount of $624, which was owed by RCHI at the time of the acquisition of RCHI.
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
Net cash of $977 was provided by financing activities in the nine months ended September 30, 2024 from the issuances of promissory notes of $1,981, partially offset by a payment of the note payable to RHI of $904 and payments under accounts receivable sales agreements of $100. Cash of $692 was provided by financing activities in the nine months ended September 30, 2023, including $744 from private placements, $247 from the issuance of a related party promissory note, partially offset by $299 of deferred offering costs.
Removed paragraphs (14)
Previous report
In the second agreement, the RCHI Agreement, we agreed to issue the Preferred Stock to RHI in exchange for all of the outstanding shares of RCHI. RCHI owns all of the outstanding shares of Scott County Community Hospital, Inc. (operating as Big South Fork Medical Center), RHI’s critical access care hospital in Oneida, Tennessee. Each share of our Preferred Stock will have a stated value of $1,000. The number of shares of our Preferred Stock issuable to RHI upon the closing of the RCHI Agreement is subject to adjustment as provided in the RCHI Agreement.
Previous report
The closing of the RCHI Agreement is subject to a number of conditions, including the approval of the shareholders of each of us and RHI.
Previous report
***Management Contingent Share Plan.***Management Contingent Share Plan expenses were $8 for the three months ended June 30, 2024 compared to expense of $648 for the three months ended June 30, 2023. The decrease was due to more shares vesting under the plan during the 2023 period.
Previous report
***Segment Losses.***Segment losses were $67 for the three months ended June 2024 and represent the losses of Myrtle, which was acquired on June 14, 2024.
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
***Management Contingent Share Plan.***Management Contingent Share Plan expenses were $41 for the six months ended June 30, 2024 compared to expense of $1,412 for the six months ended June 30, 2023. The decrease was due to more shares vesting under the plan during the 2023 period.
Previous report
Non-operating Expense. Non-operating expense was $900 for the six months ended June 30, 2024, compared to $3,935 for the six months ended June 30, 2023. The decrease is primarily related to the loss from PIK Note Amendment and 2022 Debenture Release $3,521 during the six months ended June 30, 2023.
Previous report
***Segment Losses.***Segment losses were $67 for the six months ended June 30, 2024 and represent the losses of Myrtle, which was acquired on June 14, 2024.
Previous report
Other Operating Data:
Previous report
We have financed our business through a combination of equity and debt. During the third quarter of 2022, we entered into separate securities purchase agreements pursuant to which we issued our Senior PIK Notes in the aggregate principal of $3,458. We received net proceeds of $2,918, after deducting fees and expenses of $540.
Previous report
During the first quarter of 2024, we entered into a Second Strata Purchase Agreement with ClearThink wherein, and subject to certain limitations, including the effectiveness of a registration statement as defined in the agreement, ClearThink has agreed to purchase from us, from time to time an aggregate of $5,000 shares of our Class A Common Stock.
Previous report
On June 14, 2024, we issued the Senior Note Payable in the principal amount of $840 to the Purchaser and we received cash of $750. On July 17, 2024, we issued to the Purchaser 1,108,755 shares of our common stock per the terms of the agreement.
Previous report
Sox Months Ended June 30, 2024 and 2023
Previous report
Net cash of $1,825 was provided by financing activities in the six months ended June 30, 2024 from the issuances of promissory notes, including a $265 promissory note issued to RHI for the purchase of Myrtle. No cash was used or provided by financing activities in the six months ended June 30, 2023.
Reworded paragraphs (46)
Previous wording
FOXO is focused on commercializing scientific discoveries in health and longevity. A pivotal moment in the field of longevity science came with the discovery that epigenetics could be used to develop measures of health, including biological aging, according to an article published in the scientific journal,Nature, in 2014. In recent years, we and other scientists have extended these findings to assess tobacco, alcohol, blood cell composition, and other health measures based on discovered epigenetic biomarkers. To that end, FOXO is dedicated to research and development in order to provide data-driven insights based on the numerous health measures that can be determined through this unique dimension of biology and used to foster optimal health and longevity for both individuals and organizations. We believe there is value in what these biomarkers will be able to provide to the world. Current testing options can be inaccurate, piecemeal, and often require obtaining a blood sample. Epigenetic biomarkers may pave the path for a fully comprehensive, at-home, low-cost test that could, with other existing testing, offer a much easier, more detailed sense of one’s health.
Current wording
FOXO is focused on commercializing scientific discoveries in health and longevity. A pivotal moment in the field of longevity science came with the discovery that epigenetics could be used to develop measures of health, including biological aging, according to an article published in the scientific journal,Nature, in 2014. In recent years, we and other scientists have extended these findings to assess tobacco, alcohol, blood cell composition, and other health measures based on discovered epigenetic biomarkers. To that end, FOXO is dedicated to research and development in order to provide data-driven insights based on the numerous health measures that can be determined through this unique dimension of biology and used to foster optimal health and longevity for both individuals and organizations. We believe there is value in what these biomarkers will be able to provide to the world. Current testing options can be inaccurate, and piecemeal, and often require obtaining a blood sample. Epigenetic biomarkers may pave the path for a fully comprehensive, at-home, low-cost test that could, with other existing testing, offer a much easier, more detailed sense of one’s health.
Previous wording
The first agreement, as supplemented, (the “Myrtle Agreement”), provided for RHI to exchange all of its equity interest in Myrtle for $500, payable in a combination of shares of our Class A Common Stock and a note payable. The closing occurred on June 14, 2024. The purchase price payable for the equity interest in Myrtle will be subject to certain post-closing adjustments, as provided in the Myrtle Agreement.
Current wording
The first agreement, as supplemented, (the “Myrtle Agreement”), provided for RHI to exchange all of its equity interest in Myrtle for $500, payable in a combination of shares of our Class A Common Stock and a note payable. The closing occurred on June 14, 2024.
Previous wording
On August 10, 2023, Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida, Tennessee. The facility, which is located at RHI’s Big South Fork Medical Center campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. On November 1, 2023, Myrtle began accepting patients at its Nonresidential Office-Based Opiate Treatment Facility (“OBOT”). The OBOT is located adjacent to Myrtle’s alcohol and drug treatment facility in Oneida, Tennessee and supplements the existing residential rehabilitation and detoxification services offered at Myrtle.
Current wording
On August 10, 2023, Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida, Tennessee. The facility, which is located at BSF’s campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 inpatients. On November 1, 2023, Myrtle began accepting patients at its Nonresidential Office-Based Opiate Treatment Facility (“OBOT”). The OBOT is located adjacent to Myrtle’s alcohol and drug treatment facility in Oneida, Tennessee and complements the existing residential rehabilitation and detoxification services offered at Myrtle.
Previous wording
The Company acquired Myrtle as a synergistic opportunity to expand its operations into the healthcare sector and as a compliment to its epigenetic biomarkers of human health, wellness and aging.
Current wording
FOXO acquired Myrtle and RCHI as synergistic opportunities to expand its operations into the healthcare sector and as a complement to its epigenetic biomarkers of human health, wellness and aging.
Previous wording
We manage and classify our business into two reportable business segments: (i) Healthcare; and (ii) Labs and Life. Previously, Labs and Life were treated as separate segments, however, with the acquisition of Myrtle, our operational focus shifted such that it was appropriate to combine our Labs and Life segments and to operate Myrtle under our newly formed Healthcare segment.
Current wording
We manage and classify our business into two reportable business segments: (i) Healthcare; and (ii) Labs and Life. Previously, Labs and Life were treated as separate segments, however, with the acquisition of Myrtle, our operational focus shifted such that it was appropriate to combine our Labs and Life segments and to operate Myrtle and RCHI under our newly formed Healthcare segment.
Previous wording
Labs currently recognizes revenue from providing epigenetic testing services and collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array. Labs conducts research and development, and such costs are recorded within research and development expenses on the unaudited condensed consolidated statements of operations. Labs had operated its Bioinformatics Services as an ancillary offering, with revenue recognized as epigenetic biomarker services in our historical financial statements, but now looks to it as a primary offering. Bioinformatics Services provide a data processing, quality checking, and data analysis service using FOXO’s cloud-based bioinformatics pipeline, referred to as our epigenetics, longevity, or methylation pipeline in our historical financial statements. Labs accepts raw data from third party labs and converts that data into usable values for customers. Life primarily had residual commission revenues from its legacy insurance agency business. Life also began receiving insurance commissions from the distribution and sale of life insurance policies based on the size and type of policies sold to customers. Life costs are recorded within selling, general and administrative expenses on the consolidated statements of operations.
Current wording
Labs conducts research and development, and such costs are recorded within research and development expenses on the unaudited condensed consolidated statements of operations. Labs had operated its Bioinformatics Services as an ancillary offering, with revenue recognized as epigenetic biomarker services in our historical financial statements, but now looks to it as a primary offering. Bioinformatics Services provide a data processing, quality checking, and data analysis service using FOXO’s cloud-based bioinformatics pipeline, referred to as our epigenetics, longevity, or methylation pipeline in our historical financial statements. Labs accepts raw data from third party labs and converts that data into usable values for customers
Previous wording
Due to market conditions, our capitalization following the Business Combination did not materialize in the way the Company anticipated, and we did not possess the funding that we believed would be required to satisfy state regulations and regulatory bodies to issue new life insurance policies through FOXO Life Insurance Company. As such, we decided to not move forward with the launch of FOXO Life Insurance Company.
Current wording
Due to market conditions, our capitalization following the Business Combination did not materialize in the way the Company anticipated, and we did not possess the funding that we believed would be required to satisfy state regulations and regulatory bodies to issue new life insurance policies through FOXO Life Insurance Company. As such, we decided to not move forward with the launch of FOXO Life Insurance Company. Accordingly, on February 3, 2023, we consummated the sale of FOXO Life Insurance Company to Security National pursuant to the Security National Merger Agreement. As a result of the merger, we were no longer required to hold cash and cash equivalents required to be held as statutory capital and surplus, as required under the Arkansas Insurance Code (the “Arkansas Code”).
Previous wording
***Net Revenues.***Total revenues were $28 for the three months ended June 30, 2024, compared to $12 for the three months ended June 30, 2023. Myrtle, acquired on June 14, 2024, contributed $20 of the increase, partially offset by the decreases in FOXO Labs and FOXO Life revenues of $4.
Current wording
***Net Revenues.***Total revenues were $1,196 for the three months ended September 30, 2024, compared to $10 for the three months ended September 30, 2023, an increase of $1,186. Myrtle, acquired on June 14, 2024, and RCHI, acquired on September 10, 2024, contributed $1,188 of the increase, partially offset by the decrease in Labs and Life revenues of $2.
Previous wording
***Direct Costs of Revenues.***Direct costs of revenues were $31 for the three months ended June 30, 2024, compared to no direct costs of revenues for the three months ended June 30, 2023. The increase resulted from the acquisition of Myrtle on June 14, 2024.
Current wording
***Direct Costs of Revenues.***Direct costs of revenues were $541 for the three months ended September 30, 2024, compared to $70 of direct costs of revenues for the three months ended September 30, 2023. The increase resulted from the direct costs of Myrtle and RCHI, which were acquired on June 14, 2024 and September 10, 2024, respectively.
Previous wording
***Research and Development.***Research and development expenses were $104 for the three months ended June 30, 2024, compared to $333 for the three months ended June 30, 2023. The decrease was driven by lower employee-related expenses and professional services as well as research and development projects that are no longer ongoing, which also contributed to the period over period decrease in research and development expenses.
Current wording
***Research and Development.***Research and development expenses were $43 for the three months ended September 30, 2024, compared to $283 for the three months ended September 30, 2023. The decrease was driven by lower employee-related expenses and professional services as well as research and development projects that are no longer ongoing, which also contributed to the period over period decrease in research and development expenses.
Previous wording
***Selling, General and Administrative.***Selling, general and administrative expenses were $2,462 for the six months ended June 30, 2024 compared to $10,335 for the six months ended June 30, 2023. The decrease of $7,873, or 76%, was driven by the completion of a consulting agreement as we recognized $2,575 less compensation costs associated with the amortization of consulting agreements in the current period compared to the prior period. Also contributing to the decrease were lower: employee related expenses due to headcount reductions, legal fees, amortization of intangible assets and professional fees, among other items. Partially offsetting the decrease in selling, general and administrative expenses were expenses of $37 associated with Myrtle, which was acquired on June 14, 2024.
Current wording
***Selling, General and Administrative.***Selling, general and administrative expenses were $1,733 for the three months ended September 30, 2024 compared to $4,717 for the three months ended September 30, 2023. We attribute the decrease of $2,984, or 63%, to lower: employee related expenses due to headcount reductions, legal fees and insurance expense, among other items. Partially offsetting the decrease in selling, general and administrative expenses were expenses of $326 associated with Myrtle, which was acquired on June 14, 2024 and $303 associated with RCHI, which was acquired on September 10, 2024.
Previous wording
***Net Loss.***Net loss was $2,164 for the three months ended June 30, 2024, an improvement of $9,129 or 81% compared to net loss of $11,293 for the three months ended June 30, 2023. The decrease in net loss was primarily related to the decrease in the loss from operations of $6,016, and the decrease in other non-operating expenses of $3,113. Additionally, a deemed dividend of $310 related to the trigger of the down round provisions of the Smithline Assumed Warrants was recognized in the three months ended June 30, 2024 compared to a deemed dividend of $2,466 related to the Exchange Offer during the three months ended June 30, 2023. The deemed dividends resulted in net loss to common stockholders of $2,473 and $13,759 for the three months ended June 30, 2024 and 2023, respectively.
Current wording
***Net Loss Attributable to FOXO.***Net loss attributable to FOXO was $1,946 for the three months ended September 30, 2024, an improvement of $1,714 or 47% compared to net loss of $3,660 for the three months ended September 30, 2023. The decrease in net loss was primarily related to the decrease in the loss from operations of $2,502, partially offset by an increase in other non-operating expenses of $795. Additionally, deemed dividends of $88 and $912 related to the trigger of the down round provisions of the Smithline Assumed Warrants was recognized in the three months ended September 30, 2024 and 2023, respectively. The deemed dividends resulted in a net loss to common stockholders of $2,034 and $4,572 for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
The following is an analysis of our results by reportable segment for the three months ended June 30, 2024 compared to the three months ended June 30, 2024. The primary earnings/loss measure used for assessing reportable segment performance is earnings/loss before interest, income taxes, depreciation, amortization, and stock-based compensation. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
Current wording
The following is an analysis of our results by reportable segment for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The primary earnings/loss measure used for assessing reportable segment performance is segment loss defined as earnings/loss before interest, income taxes and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
Previous wording
***Net revenues.***Net revenues were $20 or the six months ended June 30, 2024 and represent the net revenue of Myrtle, which was acquired on June 14, 2024. Our healthcare segment began with the acquisition of Myrtle.
Current wording
***Net revenues.***Net revenues were $1,188 for the three months ended September 30, 2024 and represent the net revenues of Myrtle, which was acquired on June 14, 2024, and RCHI, which was acquired on September 10, 2024. Our healthcare segment began with the acquisition of Myrtle.
Previous wording
***Net revenues.***Net revenues were $8 for the three months ended June 30, 2024 compared to $12 for the three months ended June 30, 2023. The decrease was due to lower royalty revenue and reduced life insurance commissions earned as we ceased placing policies from our legacy agency business.
Current wording
***Net revenues.***Net revenues were $8 for the three months ended September 30, 2024 compared to $10 for the three months ended September 30, 2023. The decrease was due to lower royalty revenue and reduced life insurance commissions earned as we ceased placing policies from our legacy agency business.
Previous wording
***Segment Losses.***Segment losses decreased from $557 for the three months ended June 30, 2023 to $503 for the three months ended June 30, 2024. The decrease was driven by lower employee-related expenses, partially offset by minimum royalties due under the KR8 Agreement.
Current wording
***Segment Loss.***Segment loss decreased from $408 for the three months ended September 30, 2023 to $382 for the three months ended September 30, 2024. The decrease was driven by lower employee-related expenses, partially offset by minimum royalties and maintenance fees due under the KR8 Agreement in the three months ended September 30, 2024.
Previous wording
***Net revenues.***Net revenues were $35 for the six months ended June 30, 2024, compared to $25 for the six months ended June 30, 2023. Myrtle, acquired on June 14,2024, contributed $20 of the increase, partially offset by decreases in FOXO Labs and FOXO Life revenues of $10.
Current wording
***Net revenues.***Net revenues were $1,231 for the nine months ended September 30, 2024, compared to $35 for the nine months ended September 30, 2023, an increase of $1,196. Myrtle, acquired on June 14,2024, and RCHI, acquired on September 10, 2024, contributed $1,208 of the increase, partially offset by decreases in Labs and Life revenues of $12.
Previous wording
***Direct Costs of Revenues.***Direct costs of revenues were $31 for the six months ended June 30, 2024, compared to no direct costs of revenues for the six months ended June 30, 2023. The increase resulted from the acquisition of Myrtle on June 14, 2024.
Current wording
***Direct Costs of Revenues.***Direct costs of revenues were $572 for the nine months ended September 30, 2024, compared to direct costs of revenues of $70 for the nine months ended September 30, 2023. The increase resulted from the direct costs of Myrtle and RCHI, which were acquired on June 14, 2024 and September 10, 2024, respectively.
Previous wording
***Research and Development.***Research and development expenses were $269 for the six months ended June 30, 2024, compared to $642 for the six months ended June 30, 2023. The decrease was driven by lower employee-related expenses and professional services as well as research and development projects that are no longer ongoing, which also contributed to the period over period decrease in research and development expenses.
Current wording
***Research and Development.***Research and development expenses were $312 for the nine months ended September 30, 2024, compared to $925 for the nine months ended September 30, 2023. The decrease was driven by lower employee-related expenses and professional services as well as research and development projects that are no longer ongoing, which also contributed to the period over period decrease in research and development expenses.
Previous wording
***Impairment of Intangible Assets and Cloud Computing Arrangements.***During the three months ended June 30, 2023, we determined that the cash flows would no longer support the digital insurance platform, underwriting API, and longevity API and recognized impairment losses of $1,425, $630, and $578, respectively or $2,633 in total.
Current wording
***Impairment of Intangible Assets and Cloud Computing Arrangements.***During the nine months ended September 30, 2023, we determined that the cash flows would no longer support the digital insurance platform, underwriting API, and longevity API and recognized impairment losses of $1,425, $630, and $578, respectively or $2,633 in total.
Previous wording
***Selling, General and Administrative.***Selling, general and administrative expenses were $1,474 for the three months ended June 30, 2024 compared to $4,003 for the three months ended June 30, 2023. The decrease of $2,529, or 63%, was driven by the completion of a consulting agreement as we recognized $519 less compensation costs associated with the amortization of consulting agreements in the current period compared to the prior period. Also contributing to the decrease were lower: employee related expenses due to headcount reductions, legal fees, amortization of intangible assets and professional fees, among other items. Partially offsetting the decrease in selling, general and administrative expenses were expenses of $37 associated with Myrtle, which was acquired on June 14, 2024.
Current wording
***Selling, General and Administrative.***Selling, general and administrative expenses were $4,195 for the nine months ended September 30, 2024 compared to $15,052 for the nine months ended September 30, 2023. The decrease of $10,857, or 72%, was driven by the completion of a consulting agreement as we recognized $2,370 less compensation costs associated with the amortization of consulting agreements in the current period compared to the prior period. Also contributing to the decrease were lower: employee related expenses due to headcount reductions, legal fees, amortization of intangible assets, insurance expense, software license fees and professional fees, among other items. Partially offsetting the decrease in selling, general and administrative expenses were expenses of $396 associated with Myrtle, which was acquired on June 14, 2024 and $303 associated with RCHI, which was acquired on September 10, 2024.
Previous wording
Non-operating Expense. Non-operating expense was $575 for the three months ended June 30, 2024, compared to $3,688 for the three months ended June 30, 2023. The decrease is primarily related to the loss from PIK Note Amendment and 2022 Debenture Release of $3,521 during the three months ended June 30, 2023.
Current wording
Non-operating Expense. Non-operating expense was $1,848 for the nine months ended September 30, 2024, compared to $4,088 for the nine months ended September 30, 2023. The decrease is primarily related to the loss from PIK Note Amendment and 2022 Debenture Release of $3,521 during the nine months ended September 30, 2023. Also, contributing to the decrease was a reduction in the fair value of warrant liability of $243. Partially offsetting the decrease was an increase of interest expense of $935.
Previous wording
***Net Loss.***was $3,668 for the six months ended June 30, 2024, an improvement of $15,264 or 81% compared to net loss of $18,932 for the six months ended June 30, 2023. The decrease in net loss was primarily related to the decrease in the loss from operations of $12,229, and the decrease in other non-operating expenses of $3,035. Additionally, a deemed dividend of $966 related to the trigger of the down round provisions and the extension of the Smithline Assumed Warrants was recognized in the six months ended June 30, 2024 compared to a deemed dividend of $2,466 related to the Exchange Offer during the six months ended June 30, 2023. The deemed dividends resulted in net loss to common stockholders of $4,633 and $21,398 for the six months ended June 30, 2024 and 2023, respectively.
Current wording
***Net Loss Attributable to FOXO.***Net loss attributable to FOXO was $5,613 for the nine months ended September 30, 2024, an improvement of $16,979 or 75% compared to net loss of $22,592 for the nine months ended September 30, 2023. The decrease in net loss was primarily related to the decrease in the loss from operations of $14,731, and the decrease in other non-operating expenses of $2,240. Additionally, a deemed dividend of $1,054 related to the trigger of the down round provisions and the extension of the Smithline Assumed Warrants was recognized in the nine months ended September 30, 2024 compared to deemed dividends of $3,378 related to the Exchange Offer and the trigger of the down round provisions of the Smithline Assumed Warrants during the nine months ended September 30, 2023. The deemed dividends resulted in net loss to common stockholders of $6,667 and $25,970 for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
The following is an analysis of our results by reportable segment for the six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. The primary earnings/loss measure used for assessing reportable segment performance is earnings/loss before interest, income taxes, depreciation, amortization, and stock-based compensation. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
Current wording
The following is an analysis of our results by reportable segment for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The primary earnings/loss measure used for assessing reportable segment performance is segment loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
Previous wording
***Net revenues.***Net revenues were $20 or the three months ended June 30, 2024 and represent the net revenue of Myrtle, which was acquired on June 14, 2024. Our healthcare segment began with the acquisition of Myrtle.
Current wording
***Net revenues.***Net revenues were $1,208 or the nine months ended September 30, 2024 and represent the net revenue of Myrtle, which was acquired on June 14, 2024, and of RCHI, which was acquired on September 10, 2024. Our healthcare segment began with the acquisition of Myrtle.
Previous wording
***Net revenues.***Net revenues were $15 for the six months ended June 30, 2024 compared to $25 for the six months ended June 30, 2023. The decrease was due to lower royalty revenue and reduced life insurance commissions earned as we ceased placing policies from our legacy agency business.
Current wording
***Net revenues.***Net revenues were $23 for the nine months ended September 30, 2024 compared to $35 for the nine months ended September 30, 2023. The decrease was due to lower royalty revenue and reduced life insurance commissions earned as we ceased placing policies from our legacy agency business.
Previous wording
***Segment Losses.***Segment losses decreased from $1,494 for the six months ended June 30, 2023 to $870 for the six months ended June 30, 2024. The decrease was driven by lower employee-related expenses and a $251 loss on the sale of FOXO Life Insurance Company in the six months ended June 30, 2023, partially offset by minimum royalties due under the KR8 Agreement.
Current wording
***Segment Loss.***Segment loss decreased from $1,902 for the nine months ended September 30, 2023 to $1,252 for the nine months ended September 30, 2024. The decrease was driven by lower employee-related expenses and a $251 loss on the sale of FOXO Life Insurance Company in the nine months ended September 30, 2023, partially offset by minimum royalties and maintenance fees due under the KR8 Agreement in the nine months ended September 30, 2024.
Previous wording
Adjusted EBITDA provides additional insight into our underlying, ongoing operating performance and facilitates period-to-period comparisons by excluding the earnings impact of interest, tax, depreciation and amortization, non-cash change in fair value of convertible debentures and warrants, stock-based compensation, and impairment. Management believes that presenting Adjusted EBITDA is more representative of our operational performance and may be more useful for investors. Adjusted EBITDA along with a reconciliation to net loss is shown in Other Operating Data within the Results of Operations below.
Current wording
Adjusted EBITDA provides additional insight into our underlying, ongoing operating performance and facilitates period-to-period comparisons by excluding the earnings impact of interest income and expense, income taxes, depreciation and amortization, non-cash change in fair value of convertible debentures and warrants, stock-based compensation, impairment and certain other infrequent and/or unpredictable non-cash charges or benefits. Management believes that presenting Adjusted EBITDA is more representative of our operational performance and may be more useful for investors.
Previous wording
We had cash and cash equivalents of $33 and $38 as of June 30, 2024 and December 31, 2023, respectively. We have incurred net losses since our inception. For the six months ended June 30, 2024 and 2023, we incurred net losses available to common stockholders of $4,633 and $21,398, respectively. At June 30, 2024, had a working capital deficit and a total stockholders’ deficit of $20,817 and $16,167, respectively. While cash of $551 was provided by operating activities for the six months ended June 30, 2024, our operations used cash of $5,300 for the six months ended June 30, 2023. We have generated limited revenue to date and expect to incur losses from our existing business in future periods.
Current wording
We had cash and cash equivalents of $34 and $38 as of September 30, 2024 and December 31, 2023, respectively. We have incurred net losses since our inception. For the nine months ended September 30, 2024 and 2023, we incurred net losses available to common stockholders of $6,667 and $25,970, respectively. At September 30, 2024, had a working capital deficit and a total stockholders’ deficit of $31,439 and $17,554, respectively. Our operations used cash of $995 and $6,165 for the nine months ended September 30, 2024 and 2023, respectively. We are expecting the Myrtle and RCHI businesses to be cash flow neutral through the remainder of 2024.
Previous wording
Our current revenue is not adequate to fund our operations in the next twelve months and requires us to fund our business through other avenues until the time we achieve adequate scale. Securing additional capital is necessary to execute on our business strategy.
Current wording
Our current revenue is not adequate to fund our operations in the next twelve months and requires us to fund our business through other avenues until the time we achieve adequate scale. Securing additional capital is necessary to execute on our business strategy. We are currently negotiating additional funding with multiple sources.
Previous wording
During the fourth quarter of 2024, we entered into a Strata Purchase Agreement (the “Strata Purchase Agreement”) with ClearThink, as supplemented by that certain Supplement to Strata Purchase Agreement, dated as of October 13, 2023, by and between us and ClearThink. During the fourth quarter of 2023, we completed two tranches of private placements under the terms of the Strata Purchase Agreement with ClearThink that provided gross proceeds of $200 and $256. After deducting finder’s fees and other offering expenses, the net proceeds from the private placements were of $186 and $246.
Current wording
During the fourth quarter of 2023, we entered into the Strata Purchase Agreement with ClearThink, as supplemented by that certain Supplement to Strata Purchase Agreement, dated as of October 13, 2023, by and between us and ClearThink. During the fourth quarter of 2023, we completed two tranches of private placements under the terms of the Strata Purchase Agreement with ClearThink that provided gross proceeds of $200 and $256. After deducting finder’s fees and other offering expenses, the net proceeds from the private placements were of $186 and $246. On August 13, 2024, the Company entered into Amendment No. 1 to the Strata Purchase Agreement pursuant to which the commitment amount was increased from $2,000 to $5,000.
Previous wording
On January3, 2024, we issued to ClearThink a promissory note in the principal amount of $75, less an original issue discount of $25, on January 30, 2024, we issued to ClearThink a promissory note in the principal amount of up to $750, less an original issue discount of $250 and on May 15, 2024, we issued ClearThink a promissory note in the principal amount of $300, less an original issue discount of $100. We receive net proceeds totaling $658 during the six months ended June 30, 2024 from the issuances of the notes payable. We are in negotiations to extend the maturity date of the May 15, 2024 promissory note.
Current wording
On January 3, 2024, we issued to ClearThink a promissory note in the principal amount of $75, less an original issue discount of $25, on January 30, 2024, we issued to ClearThink a promissory note in the principal amount of up to $750, less an original issue discount of $250, on May 15, 2024, we issued ClearThink a promissory note in the principal amount of $300 and on August 16, 2024, under the terms of an extension, the principal balance was increased to $350, the discount was increased to $175 and we agreed to issue ClearThink 100,000 shares of our Class A Common Stock. In addition, on August 16, 2024, we issued ClearThink a promissory note in the principal amount of $40 and we received proceeds of $27. We received net cash proceeds totaling $656 during the nine months ended September 30, 2024 from the issuances of these notes payable.
Previous wording
On April 30, 2024, we entered into a Securities Purchase Agreement with IG pursuant to which we issued IG a promissory note in the principal amount of $150 and we agreed to issue 100,000 shares of our Class A Common Stock as inducement shares to IG. We received cash of $100 from the issuance of the promissory note. We are in negotiations to extend the maturity date.
Current wording
On April 30, 2024, we entered into a Securities Purchase Agreement with IG pursuant to which we issued IG a promissory note in the principal amount of $150 and we agreed to issue 100,000 shares of our Class A Common Stock as inducement shares to IG. We received cash of $100 from the issuance of the promissory note. On August 16, 2024, the note was extended to September 30, 2024. Under the extension, we agreed to increase the principal balance by $25 and to issue IG 50,000 shares of our Class A Common Stock. During the period November 1, 2024 to November 15, 2024, the full principal balance and associated accrued interest of the IG promissory note of $195 was converted into 415,000 shares of the Company’s Class A Common Stock.
Previous wording
Pursuant to the acquisition of Myrtle, a note payable to RHI due on December 31, 2024 in the amount of $1,611 was transferred to us and we issued a non-interest bearing note payable due on demand to RHI in the amount of $265 for a portion of the purchase price of Myrtle.
Current wording
Pursuant to the acquisition of Myrtle, we issued a non-interest bearing note payable to RHI due on December 31, 2024 in the original principal amount of $1,611. As of September, the principal balance was $707. In addition, we issued a non-interest bearing promissory note due on demand to RHI in the amount of $265 for a portion of the purchase price of Myrtle.
Previous wording
Our primary uses of cash are to fund our operations as we continue to grow our business. We expect to continue to incur operating losses to support the growth of our business until we finalize the acquisition of RCHI. Capital expenditures have historically not been material to our consolidated operations, and we do not anticipate making material capital expenditures in 2024 or beyond. We expect that our liquidity requirements will continue to consist of working capital, including payments of outstanding debt and accrued liabilities and general corporate expenses associated with the growth of our business. Based on our current operations, we do not have sufficient capital to fund our operations for at least 12 months from the date hereof. We expect to address our liquidity needs through the pursuit of additional funding through a combination of equity or debt financings and strategic acquisitions to enable us to fund our operations.
Current wording
Our primary uses of cash are to fund our operations as we continue to grow our business, as well as to service our debt. We finalized the acquisition of Myrtle on June 14, 2024 and the acquisition of RCHI on September 10, 2024. We are expecting the Myrtle and RCHI businesses to be cash flow neutral through the remainder of 2024. Capital expenditures have historically not been material to our consolidated operations, and we do not anticipate making material capital expenditures in the remainder of 2024 or in 2025. We expect that our liquidity requirements will continue to consist of working capital, including payments of outstanding debt and accrued liabilities and general corporate expenses associated with the growth of our business. Based on our current operations, we do not have sufficient capital to fund our operations for at least 12 months from the date hereof. We expect to address our liquidity needs through the pursuit of additional funding through a combination of equity or debt financings and additional strategic acquisitions to enable us to fund our operations.
Previous wording
We have taken various actions to bolster our cash position, including raising funds through the private placements and transactions with ClearThink, LGH and the Purchaser described above and conserving cash by issuing shares of our Class A Common Stock under license agreements, legal settlements, consulting agreements, finder’s fees related to equity and debt financing and consulting agreements, among other transactions. As more fully discussed above under “Recent Developments,” on June 10, 2024, we entered into two stock exchange agreements, each with RHI. Under the RCHI Agreement, we intend to acquire Big South Fork Medical Center, RHI’s critical care hospital, which we hope and anticipate will provide us with positive operating cash flows, although there can be no assurance that we will close the transaction or that it will provide us with positive cash flows.
Current wording
We have taken various actions to bolster our cash position, including raising funds through the private placements and transactions with ClearThink, LGH, IG, 1800 Diagonal Lending LLC, the Purchaser described above, as well as other lenders, and conserving cash by issuing shares of our Class A Common Stock under license agreements, legal settlements, consulting agreements, finder’s fees related to equity and debt financing and consulting agreements, among other transactions. We are also looking at conserving cash by issuing shares of our preferred stock, subject to shareholder approval.
Previous wording
Based on our current operating plan, our cash position as of June 30, 2024, and after taking into account the actions described above, we expect to be able to fund our operations through December 31, 2024. Even if our current operating plan is successful, we expect to need additional financing or other increase in our cash and cash equivalents balance to enable us to fund our future operations.
Current wording
Based on our current operating plan, our cash position as of September 30, 2024, and after taking into account the actions described above, we expect to be able to fund our operations through the second quarter of 2025. Even if our current operating plan is successful, we expect to need additional financing or other increase in our cash and cash equivalents balance to enable us to fund our future operations.
Previous wording
The following table summarizes our cash flow data for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table summarizes our cash flow data for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
Net cash provided by operating activities in the six months ended June 30, 2024 was $551 compared to cash of $5,300 used in operating activities in the six months ended June 30, 2023, an improvement of $5,851. The improvement was primarily the result of the $15,264 reduction in the net loss, including noncontrolling interest, in the six months ended June 30, 2024 compared to the prior period. The improvement in the six months ended June 30, 2024 was partially offset by certain noncash items in the 2023 period, including: (i) the loss from PIK Note Amendment and 2022 Debenture Release of $3,521, (ii) increased stock-based compensation of $1,486, (iii) an increase in amortization of consulting fees paid in common stock of $2,120 and (iv) impairment of assets of $2,633, among other items.
Current wording
Net cash of $995 and $6,164 was used in operating activities in the nine months ended September 30, 2024 and 2023, respectively. The improvement was primarily the result of the $16,979 reduction in the net loss attributable to FOXO, in the nine months ended September 30, 2024 compared to the prior period. The improvement in the nine months ended September 30, 2024 was partially offset by certain noncash items in the 2023 period, including: (i) the loss from PIK Note Amendment and 2022 Debenture Release of $3,521, (ii) higher amortization of consulting fees paid in common stock of $1,719 and (iii) impairment of assets of $2,633, among other items.
Previous wording
Investing activity in the six months ended June 30, 2024 used cash of $2,381. Cash of $2,221 was used to acquire an epigenetic software APP under the KR8 Agreement and the cash of $259, net of cash acquired, was used to purchase of Myrtle. No cash was used or provided by investing activities in the three months ended June 30, 2023.
Current wording
Investing activity in the nine months ended September 30, 2024 provided cash of $14, which represented the cash acquired from the purchases of Myrtle and RCHI. No cash was used or provided by investing activities in the nine months ended September 30, 2023.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Healthcare generates revenues from hospital and auxiliary services as well as substance abuse treatments, including inpatient and outpatient services. Labs currently recognizes revenue from providing epigenetic testing services and collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array. Life primarily had residual commission revenues from its legacy insurance agency business.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On February 3, 2023, we consummated the sale of FOXO Life Insurance Company to Security National pursuant to the Security National Merger Agreement. As a result of the merger, we were no longer required to hold cash and cash equivalents required to be held as statutory capital and surplus, as required under the Arkansas Insurance Code (the “Arkansas Code”).
Previous report — wording carried elsewhere
***Impairment of Intangible Assets and Cloud Computing Arrangements.***During the six months ended June 30, 2023, we determined that the cash flows would no longer support the digital insurance platform, underwriting API, and longevity API and recognized impairment losses of $1,425, $630, and $578, respectively or $2,633 in total.