Company Background and History
FOXO Technologies Inc. (NYSE:FOXO) has embarked on a transformative journey, navigating through a challenging landscape with resilience and strategic foresight. This bioscience company, founded in 2015, has set its sights on commercializing epigenetic biomarker technology to support groundbreaking scientific research and disruptive next-generation business initiatives.
Rooted in a rich history, FOXO's story began with a pivotal discovery in the field of longevity science. In 2014, a groundbreaking article published in the scientific journal Nature revealed that epigenetics could be used to develop measures of health, including biological aging. FOXO's mission has been to leverage this scientific breakthrough and provide data-driven insights based on numerous health measures that can be determined through this unique dimension of biology.
FOXO Technologies Inc. was originally formed in April 2020 as Delwinds Insurance Acquisition Corp., a publicly traded special purpose company. In February 2022, Delwinds entered into a definitive agreement to merge with FOXO Technologies Operating Company. The transaction closed in September 2022, at which point Delwinds changed its name to FOXO Technologies Inc. Prior to the merger, FOXO Technologies Operating Company was already working on commercializing epigenetic biomarker technology to support scientific research and business initiatives. The company applied automated machine learning and artificial intelligence (AI) technologies to discover epigenetic biomarkers of human health, wellness, and aging. FOXO Technologies Operating Company maintained two wholly-owned subsidiaries, FOXO Labs Inc. and FOXO Life, LLC.
Strategic Decisions and Acquisitions
Over the years, FOXO has faced its share of challenges, including market conditions that did not materialize as anticipated, and the inability to satisfy state regulations and regulatory bodies to issue new life insurance policies through its subsidiary, FOXO Life Insurance Company. Undeterred, the company made the strategic decision to divest FOXO Life Insurance Company in February 2023, gaining access to the cash held as statutory capital and surplus, which it used to fund a portion of its operations.
The turning point for FOXO came in 2024 with the transformative acquisitions of Myrtle Recovery Centers, Inc. and Rennova Community Health, Inc., including its critical access hospital, Scott County Community Hospital, Inc. (d/b/a Big South Fork Medical Center). These strategic moves not only expanded FOXO's footprint in the healthcare sector but also provided a natural complement to its epigenetic biomarkers of human health, wellness, and aging.
Myrtle, acquired in June 2024, is a behavioral health services provider offering substance abuse treatments and services on an inpatient, residential, and outpatient basis. The facility, located in Oneida, Tennessee, commenced operations in August 2023 and has since maintained an occupancy rate of 75% or greater, with occasional periods of full capacity. Myrtle has also successfully secured in-network contracts with major managed care organizations, positioning it for continued growth.
The acquisition of Rennova Community Health, Inc. in September 2024 added another significant asset to FOXO's portfolio – the Scott County Community Hospital, Inc. (d/b/a Big South Fork Medical Center), a critical access hospital in Oneida, Tennessee. This 25-bed facility, with a 24/7 emergency department and ancillary services, including laboratory, radiology, respiratory, and pharmacy, has become a key part of FOXO's healthcare segment.
These strategic acquisitions have been transformative for FOXO, not only expanding its presence in the healthcare sector but also providing significant revenue streams. In the third quarter of 2024, FOXO reported net revenues of $1.20 million, with the healthcare segment contributing $1.19 million, a testament to the impact of these acquisitions.
Challenges and Compliance
However, FOXO's journey has not been without its challenges. The company has faced a series of events that have tested its resilience, including noncompliance with NYSE American continued listing standards, which it has since addressed through various restructuring and capital-raising transactions.
Despite these obstacles, FOXO has remained steadfast in its commitment to regaining compliance with the NYSE American continued listing standards. In December 2024, the company announced that recent transactions had led to it having stockholders' equity greater than $4 million, enabling it to regain compliance with the exchange's requirements.
Future Outlook
Looking ahead, FOXO's future appears promising. The company's healthcare segment, bolstered by the Myrtle and Rennova acquisitions, is expected to generate over $20 million in annual revenue, positioning FOXO for accelerated growth. Additionally, the company's epigenetic biomarker technology continues to be a core focus, with potential commercialization opportunities in the pipeline.
Financials
FOXO's financial performance has shown signs of improvement, with the company reporting a reduction in net loss attributable to FOXO from $3.66 million in the third quarter of 2023 to $1.95 million in the third quarter of 2024. However, the company's liquidity position remains a concern, as it reported a working capital deficit of $31.44 million and a total stockholders' deficit of $17.55 million as of September 30, 2024.
For the nine months ended September 30, 2024, FOXO reported total net revenues of $1.23 million, a significant increase from $35,000 in the prior year period. This growth was primarily driven by the addition of the Healthcare segment. The company's net loss attributable to FOXO for this period was $5.61 million, a substantial improvement from a net loss of $22.59 million in the prior year period.
The Healthcare segment, which began with the acquisition of Myrtle on June 14, 2024, and expanded through the acquisition of RCHI on September 10, 2024, generated net revenues of $1.21 million for the nine months ended September 30, 2024. This segment reported a loss of $114,000, which included $423,000 in losses from Myrtle and $309,000 in income from RCHI.
The Labs and Life segment, which focuses on commercializing proprietary epigenetic biomarker technology, generated net revenues of $23,000 for the nine months ended September 30, 2024. This segment reported a loss of $1.25 million, driven by lower employee-related expenses and a $251,000 loss on the sale of FOXO Life Insurance Company in the prior year period, partially offset by minimum royalties and maintenance fees due under the KR8 Agreement.
Liquidity
To address these liquidity challenges, FOXO has been actively pursuing additional funding through a combination of equity or debt financings and strategic acquisitions. The company's recent execution of a non-binding acquisition agreement for two assisted-living facilities in Florida, valued at $60 million, underscores its commitment to diversifying its revenue streams and strengthening its financial position.
As of September 30, 2024, FOXO reported a cash balance of $34,000. The company's debt-to-equity ratio, current ratio, and quick ratio are not available due to the reported stockholders' deficit. Information on available credit lines or credit facilities has not been provided.
Business Overview
FOXO operates primarily in two reportable business segments: Healthcare and Labs and Life. The Healthcare segment, which began with the acquisition of Myrtle and expanded through the acquisition of RCHI, offers behavioral health services, including substance abuse treatments on an inpatient, residential, and outpatient basis. Myrtle has been granted two licenses from the Tennessee Department of Mental Health and Substance Abuse Services, effective August 1, 2024, for 12 months. These licenses authorize the provision of services for alcohol and drug residential detoxification treatment, alcohol and drug residential rehabilitation treatment, and non-residential office-based opiate treatment.
RCHI's wholly-owned subsidiary, SCCH, operates as Big South Fork Medical Center (BSF), a critical access hospital in Oneida, Tennessee. BSF consists of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. The facility has 25 inpatient beds, a 24/7 emergency department, and provides ancillary services including laboratory, radiology, respiratory, and pharmacy services.
The Labs and Life segment focuses on commercializing FOXO's proprietary epigenetic biomarker technology for use in underwriting risk classification in the global life insurance industry. The company's research demonstrates that epigenetic biomarkers, collected from saliva or blood, provide meaningful measures of health and lifestyle factors. This segment 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.
Despite the ongoing challenges, FOXO's transformative journey has been marked by resilience, strategic vision, and a relentless pursuit of growth. As the company continues to navigate the evolving healthcare and bioscience landscape, investors will closely watch FOXO's ability to capitalize on its recent acquisitions, secure additional funding, and drive sustainable profitability.