Care1st Health Plan Arizona, Inc. and One Care by Care1st ...

Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan Arizona, Inc.

Combined Financial Statements as of and for the years ended December 31, 2020 and 2019, Supplemental Schedules as of and for the years ended December 31, 2020 and 2019, and Independent Auditors' Report

Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan Arizona, Inc.

TABLE OF CONTENTS

Independent Auditors' Report........................................................................................................ 3

Financial Statements as of and for the years ended December 31, 2020 and 2019:...................... Combined Balance Sheets......................................................................................................... 5 Combined Statements of Income............................................................................................... 6 Combined Statements of Comprehensive Income..................................................................... 7 Combined Statements of Changes in Stockholder's Equity...................................................... 8 Combined Statements of Cash Flows........................................................................................ 9

Notes to Combined Financial Statements....................................................................................... 10 Supplemental Information.............................................................................................................. 29

KPMG LLP Suite 900 10 South Broadway St. Louis, MO 63102-1761

Independent Auditors' Report

The Audit Committee of the Board of Directors Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan Arizona, Inc.:

We have audited the accompanying combined financial statements of Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan Arizona, Inc. (the Company) which comprise the combined balance sheet as of December 31, 2020, and the related combined statements of income, comprehensive income, changes in stockholder's equity, and cash flows for the year then ended, and the related notes to the combined financial statements.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

Other Matters U.S. generally accepted accounting principles require that the incurred and paid claims development information, and the historical claims duration information for the years ended December 31, 2019 and December 31, 2018 on page 25 be presented to supplement the basic combined financial statements. Such

KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

information, although not a part of the basic combined financial statements, is required by the Financial Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic combined financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic combined financial statements, and other knowledge we obtained during our audit of the basic combined financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The accompanying combined financial statements of the Company as of December 31, 2019 and for the year then ended were audited by other auditors whose report thereon, dated May 11, 2020, was restricted to the use of the board of directors and the management of the Company and for the filing with state insurance departments to whose jurisdiction the Company is subject, expressed an unmodified opinion on those financials statements in accordance with U.S. Generally Accepted Accounting Principles. Our audit was conducted for the purpose of forming an opinion on the combined financial statements as a whole. The supplemental information included in Supplemental Detailed Balance Sheet as of December 31, 2020 and Supplemental Income Statement for the Year Ended December 31, 2020, is presented for purposes of additional analysis. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the combined financial statements as a whole.

St. Louis, Missouri August 12, 2021

4

CARE1ST HEALTH PLAN ARIZONA, INC. AND ONE CARE BY CARE1ST HEALTH PLAN ARIZONA, INC. COMBINED BALANCE SHEETS AS OF DECEMBER 31, 2020 AND 2019

($ in Thousands) ASSETS Current assets

Cash and cash equivalents Investments Income tax receivable Other receivables from government partners Due from affiliates Premiums receivable Prepaid expenses and other Total current assets

Other assets Restricted deposits Investments - Long Term Deferred tax assets Property and equipment, net Goodwill Other intangibles, net

Total assets

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities Medical claims payable Accounts payable and accrued expenses Income tax payable Due to affiliates

Total current liabilities

Long-term liabilities Other payables to government partners

Other long-term liabilities Total long-term liabilities

Stockholder's equity: Common stock, $0 par value, 2,000 shares authorized, issued and outstanding Additional paid-in capital Retained earnings

Total stockholder's equity Total liabilities and stockholder's equity

2020

2019

$

71,417 $

14,084

1

1,226

--

11,229

12,065

110,022

40,493 12,741 2,060 1,219

411 1,886 17,891 76,701

5

5

120,439

123,088

898

992

118

230

8,330

8,330

2,149

2,817

$

241,961 $

212,163

$

79,211 $

18,428

2,338

4,174

104,151

35,555 738

36,293

82,816 10,129

1 -- 92,946

39,319 --

39,319

-- 12,614 88,903 101,517

-- 12,614 67,284 79,898

$

241,961 $

212,163

See notes to combined financial statements 5

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