SHARECARE, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

The following discussion and analysis of the financial condition and results of
operations of Sharecare, Inc. (for purposes of this section, "the Company,"
"Sharecare," "we," "us," and "our") should be read together with the Company's
consolidated financial statements as of and for the years ended December 31,
2021, 2020, and 2019, in each case together with the accompanying notes thereto,
included elsewhere in this Annual Report on Form 10-K. This discussion contains
forward-looking statements and involves numerous risks and uncertainties,
including, but not limited to, those described under the section entitled "Risk
Factors." Actual results may differ materially from those contained in any
forward-looking statements.

Caution Regarding Forward-Looking Statements

This Annual Report on Form 10-K includes forward-looking statements regarding,
among other things, the plans, strategies and prospects, both business and
financial, of Sharecare. These statements are based on the beliefs and
assumptions of our management. Although we believe that our plans, intentions
and expectations reflected in or suggested by these forward-looking statements
are reasonable, we cannot assure you that we will achieve or realize these
plans, intentions or expectations. Forward-looking statements are inherently
subject to risks, uncertainties and assumptions. Generally, statements that are
not historical facts, including statements concerning possible or assumed future
actions, business strategies, events or results of operations, are
forward-looking statements. These statements may be preceded by, followed by or
include the words "believes,"
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"estimates," "expects," "forecasts," "may," "will," "should," "seeks," "plans,"
"scheduled," "anticipates," "possible," "continue," "might," "potential" or
"intends" or similar expressions. Forward-looking statements contained in this
report include, but are not limited to, statements regarding our expectations as
to:

•our ability to realize the expected benefits of the Business Combination;

•our success in retaining or recruiting, or changes required in, our officers
key employees or directors, including our ability to increase our headcount as
we expand our business following the consummation of the Business Combination;

• our ability to maintain the listing of our common stock and public warrants on the Nasdaq;

• our business, operations and financial performance, including:

• expectations regarding our financial and business performance, including financial projections and business metrics and any underlying assumptions arising therefrom;

•future business plans and growth opportunities, including revenue opportunities available from new or existing customers and expectations regarding enhanced platform capabilities and the addition of new solution offerings;

• developments and projections relating to our competitors and the digital health industry;

•the impact of the COVID-19 pandemic on our business and the measures we may take in response;

•expectations regarding our future acquisitions, partnerships or other relationships with third parties;

• our future capital requirements and our sources and uses of liquidity, including our ability to obtain additional capital in the future and to fully access our revolving credit facility; and

• our ability to recognize revenue based on performance;

• our status as an EGC and our intention to take advantage of the accommodations available for EGCs under the JOBS law; and

•the other estimates and matters described in this Annual Report on Form 10-K in
the sections entitled "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

These forward-looking statements are based on information available as of the
date of this report, and current expectations, forecasts and assumptions, and
involve a number of judgments, risks and uncertainties. Important factors could
cause actual results to differ materially from those indicated or implied by
forward-looking statements include, but are not limited to, those set forth in
the section entitled "Risk Factors" in this Annual Report on Form 10-K.
Accordingly, forward-looking statements should not be relied upon as
representing our views as of any subsequent date, and we do not undertake any
obligation to update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.

Should one or more of these risks or uncertainties materialize, or should any of
the underlying assumptions prove incorrect, actual results may vary in material
respects from those expressed or implied by these forward-looking statements.
You should not place undue reliance on these forward-looking statements.

Overview

We are a leading digital healthcare platform company that helps members
consolidate and manage various components of their health in one place,
regardless of where they are on their health journey. Our comprehensive platform
is a health and well-being digital hub that unifies elements of individual and
community health into one experience in order to enable members to live better,
longer lives. We are driven by our philosophy that we are "All Together Better"
as well as our goal to turn individual progress into community transformation.
Given a unique blend of expertise across technology, media, and healthcare, we
have, through a number of strategic acquisitions and integration of key
technologies and capabilities over the last ten years, built our platform into
what we believe is the most comprehensive and seamless experience currently
available in the digital healthcare space.

Our business combines business-to-business and direct-to-consumer sales models
and functions on a more distinctive business-to-business-to-person model.
Focusing on the individual, we aim to provide a solution that we believe is more
comprehensive than other digital platforms by bringing together scientifically
validated clinical programs and engaging content
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to provide a personalized experience for our members, whether they come to us through the workplace, exam room or lounge.

We derive net revenue from multiple stakeholders and while we are focused on the
individual's unique experience, our platform is purpose-built to seamlessly
connect stakeholders to the health management tools they need to drive
engagement, establish sustained participation, increase satisfaction, reduce
costs, and improve outcomes. As we expand our offerings and look to further
develop our technologies, we continue to consider the distinct needs of each
client channel as well as opportunities to better connect and cross-sell while
we grow and integrate our solutions into one seamless platform.

Our operations are mostly domestic to the United States, but we do derive some
revenue from international operations, mostly from Brazil. The revenue for 2021
from international operations was $19.5 million, or approximately 5% of total
revenues.

Our one platform can be disaggregated into three client channels. The consumer
solutions channel (as referenced in previous filings) was renamed the life
sciences channel in order to more accurately portray the customer base of the
channel.

•Enterprise: Our enterprise channel includes a range of clients - from large
employers and healthcare systems to government agencies and health plans - that
use our platform to engage with their population, dynamically measure the impact
of that engagement, and efficiently deliver health and wellness services.

•Provider: Our suite of data and information-driven solutions for healthcare
providers are tailored to improve productivity and efficiency and enhance
patient care and management while upholding the latest compliance, security, and
privacy standards.

•Life Sciences: Our robust platform and suite of digital products and medical
expert knowledge provides members with personalized information, programs, and
resources to improve their health and well-being, and affords sponsors the
opportunity to integrate their brands into Sharecare's consumer experience in a
highly contextual, relevant, and targeted environment.

Recent developments affecting comparability

Impact of COVID-19

The continued global impact of COVID-19 has prompted various emergency measures to combat the spread of the virus. With the emergence of COVID-19 variants and increasing vaccination rates, the status of ongoing measures varies widely by country and locality.

While Sharecare is an essential business for its customers, the pandemic has not
had a significant negative impact to our consolidated financial position,
results of operations, and cash flows related to this matter. As a result of the
broader economic impact and the prolonged disruption to the economy, customers
may be facing liquidity issues and may be slower to pay or altogether withdraw
from their commitments; however, the long-term financial impact related to the
pandemic remains uncertain.

Given the volatility of the circumstances surrounding the pandemic, Sharecare
has evaluated potential risks to its business plan. Further economic slowdown
could delay Sharecare's sales objectives for new business for its digital
product; the decline in non-urgent medical appointments could lessen the demand
for medical record transfers in the release-of-information business; and Blue
Zone communities may see a decrease in spending due to social distancing. In
addition, Sharecare may be impacted by currency fluctuations, as the U.S. Dollar
has gained strength during the pandemic, with the biggest impact thus far being
to the Brazilian Real.

Main factors and trends affecting our operating performance

Our financial condition and results of operations have been, and will continue
to be, affected by a number of factors, including our success with respect to
the following:

•Expanding our Footprint. We believe that our current client base represents a
small fraction of potential clients that could benefit from our highly
differentiated solutions. We will continue to invest in our sales and marketing
efforts and leverage our partner relationships to continue to acquire new
clients, including individuals, providers, employers, health plans, government
organizations, and communities.

• Develop our relationships with existing customers. We also believe there is significant opportunity to generate growth by maintaining and expanding our relationships with existing customers, including:

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•increasing engagement and enrollment of eligible members with our existing
enterprise clients through continued sales and marketing efforts, including
targeted next-generation digital modeling and marketing, and capitalizing on
insights from claims ingestion (the process by which we receive and process
information from our clients), population risk stratification and incentives
management;

•promoting our marketplace of existing targeted digital therapeutics to close
gaps in care in high-cost areas (with incremental fee per enrollee), which we
believe represents a $1 billion revenue opportunity within our currently
contracted clients; and

•expanding our relationships with our top 25 supplier customers with the ability to extend our supplier products and services to over 7,000 additional healthcare sites.

•Offering Additional Solutions. We believe there is significant opportunity to
cross-sell our provider solutions to existing accounts, including deploying our
value-based care and payment integrity solutions to approximately 6,000 health
system clients.

•Growing our Platform. We are constantly evaluating the marketplace for ways to
broaden and enhance our client and member experience, improve clinical results,
and increase revenue through product innovation, partnerships, and acquisitions.
We intend to continue to leverage our expertise through adding digital
therapeutics partnerships as well as the acquisition of products and services
that are directly relevant to our existing clients. Additionally, we believe our
strong and embedded client relationships provide us with unique perspectives
into their evolving needs and the needs of their populations.

•Evolving our Products to Cater to an Evolving Industry. As the digital
healthcare industry grows, we closely monitor evolving consumer trends and
organizations' needs so that we may adapt our platform to better suit our
clients' demands. Since March 2020, the COVID-19 pandemic has greatly
accelerated the demand for virtual care solutions and resulted in rapid growth
and increased adoption of digital health technologies, which Sharecare was in a
unique position to undertake. By building on our deep expertise in handling and
managing mass health data, we launched a suite of distinct but complementary
digital tools and programs to address the evolving emotional, educational,
clinical, and operational challenges introduced by the pandemic. We intend to
continue to look for opportunities to leverage our platform and expertise to
provide first-mover solutions to evolving and future demands in the digital
healthcare industry.

•Acquisitions. We believe that our proven track record of successful
acquisitions coupled with the flexibility and capabilities of our platform
positions us to continue opportunistically pursuing attractive M&A
opportunities. We believe this potential is further accentuated by our multiple
client channels and constantly expanding member base. Future acquisitions could
drive value and growth in a host of ways, including access to new customers and
potential cross-sell opportunities; unlocking new customer channels or
geographies; adding new solutions to serve our existing client base; and adding
new capabilities to enhance our existing solution offering or the efficiency of
our platform. In addition, we believe our acquisition track record demonstrates
our ability to realize synergies and optimize performance of potential M&A
partners.

Components of our operating results

Income

The enterprise channel provides employers and health plans with health
management programs for large populations, including digital engagement,
telephonic coaching, incentives, biometrics, digital therapeutics, home health
offerings, and subscriptions to the Sharecare platform. Revenue is recognized on
a per member per month ("PMPM") basis or as services are provided. Provider
revenue is primarily based on health document requests filled in the health data
services business line, as well as subscription fees for various technology
related services that assist providers with performance and maximizing
reimbursement. Life sciences revenue is generated mostly through ad sponsorships
to Sharecare's extensive member database.

Revenue costs

Costs of revenue primarily consists of costs incurred in connection with
delivering our various revenue generating activities, including personnel
related expenses. Costs are primarily driven by volumes related to requests,
engagement, and incentive fulfillment. The major components that make up our
cost of revenue are personnel costs to support program delivery as well as
customer service along with share-based compensation for employees engaged in
delivering products and services to customers, data management fees related to
file processing, and variable fees to deliver specific services that may require
third party vendors, direct marketing, fulfillment, transaction fees, or other
costs that can be reduced to offset a decline in revenue.
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Because our growth strategy includes substantial opportunity to scale
low-personnel cost products, we would anticipate future revenue to grow at a
faster rate than cost of revenue as those low-personnel cost products mature.
Costs of revenue do not include depreciation or amortization, which are
accounted for separately.

Sales and marketing expenses

Sales and marketing expenses consist primarily of employee-related expenses,
including salaries, benefits, commissions, employment taxes, travel, and
share-based compensation costs for our employees engaged in sales, account
management, marketing, public relations and related support. In addition, these
expenses include marketing sponsorships and engagement marketing spend. These
expenses exclude any allocation of occupancy expense and depreciation and
amortization.

We expect our sales and marketing expenses to increase as we strategically
invest to expand our business. We expect to hire additional sales personnel and
related account management, marketing, public relations and related support
personnel to capture an increasing amount of our market opportunity and
upsell/cross-sell within our existing client base. As we scale our sales and
marketing personnel in the short- to medium-term, we expect these expenses to
increase in both absolute dollars and as a percentage of revenue.

Product and technology expenses

Product and technology expenses include personnel and related expenses for software engineering, information technology infrastructure, business intelligence, technical account management, project management, safety, product development and equity compensation. Product and technology expenses also include indirect hosting and related costs to support our technology, outsourced software and engineering services. Our technology and development costs exclude any allocation of occupancy costs and depreciation and amortization.

We expect our technology and development expenses to increase for the
foreseeable future as we continue to invest in the development of our technology
platform. Our technology and development expenses may fluctuate as a percentage
of our total revenue from period to period partially due to the timing and
extent of our technology and development expenses.

General and administrative expenses

General and administrative expenses include personnel and related expenses for
our executive, finance, legal, and human resources departments plus all indirect
staff in the divisions not attributable to Sales, Marketing or Product and
Technology. They also include professional fees, share-based compensation, rent,
utilities and maintenance related costs. Our general and administrative expenses
exclude any allocation of depreciation and amortization.

We expect our general and administrative expenses to increase for the
foreseeable future following the completion of the Business Combination due to
the additional legal, accounting, insurance, investor relations, and other costs
that we will incur as a public company, as well as costs associated with
continuing to grow our business. Our general and administrative expenses may
fluctuate as a percentage of our total revenue from period to period partially
due to the timing and extent of our general and administrative expenses.

Depreciation and amortization

Amortization mainly includes the amortization of fixed assets, the amortization of software, the amortization of capitalized software development costs and the amortization of intangible assets related to acquisitions.

Interest charges

Interest expense primarily relates to interest incurred on our debt and amortization of debt issuance costs.

Other income (expenses)

Other income (expense) relates primarily to changes in the fair value of contingent consideration and warrant liabilities.

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Results of Operations

Comparison of the years ended December 31, 20212020 and 2019

The following table presents our audited consolidated statement of income for the years ended December 31, 20212020 and 2019, and the dollar and percentage change between the three years:

                                                        Year Ended December 31,                      2020 to 2021          2019 to 2020
(in thousands)                                 2021               2020               2019              % Change              % Change
Revenue                                    $ 412,815          $ 328,805          $ 339,541                    26  %                 (3) %
Costs and operating expenses:
Costs of revenue (exclusive of
amortization and depreciation below)         203,218            160,911            179,967                    26  %                (11) %
Sales and marketing                           51,407             33,335             33,993                    54  %                 (2) %
Product and technology                        74,438             44,078             45,855                    69  %                 (4) %
General and administrative                   136,594             83,238             65,824                    64  %                 26  %
Depreciation and amortization                 32,601             24,684             23,782                    32  %                  4  %
Total costs and operating expenses           498,258            346,246            349,421                    44  %                 (1) %
Loss from operations                         (85,443)           (17,441)            (9,880)                  390  %                 77  %
Other income (expense)
Interest income                                   96                 71                149                    35  %                (52) %
Interest expense                             (27,662)           (31,037)           (28,685)                  (11) %                  8  %
Loss on extinguishment of debt                (1,148)                 -                  -                   100  %                  -  %
Other income (expense)                        27,007             (9,709)              (808)                 (378) %               1102  %
Total other expense                           (1,707)           (40,675)           (29,344)                  (96) %                 39  %
Net loss before taxes and loss from
equity method investment                     (87,150)           (58,116)           (39,224)                   50  %                 48  %
Income tax benefit (expense)                   2,021              1,557               (213)                   30  %               (831) %
Loss from equity method investment                 -             (3,902)                 -                     n.m.                  n.m.
Net loss                                   $ (85,129)         $ (60,461)         $ (39,437)                   41  %                 53  %
Net (loss) income attributable to
noncontrolling interest in
subsidiaries                                    (129)              (443)               543                   (71) %               (182) %
Net loss attributable to Sharecare,
Inc.                                       $ (85,000)         $ (60,018)         $ (39,980)                   42  %                 50  %


____________

nm – Percent change not significant

Comparison of the years ended December 31, 2021 and 2020

Income

Revenue increased $84.0 million, or 26%, from $328.8 million for the year ended
December 31, 2020 to $412.8 million for the year ended December 31, 2021.
Revenue growth of $115.0 million was driven by contributions from new product
lines, including digital therapeutics and health security programs, and newly
acquired products, such as home health, as well as organic growth in existing
lines. Offsetting this growth was a negative impact of $30.3 million
attributable to COVID-19, which includes reduced services and the attrition of
one contract related to a previous acquisition. The COVID-19 impact is primarily
attributable to customers' overall concern about the economy that affected
long-term contract decisions.

The channel revenue changed as follows: enterprise channel increased by
$55.1 million (from $188.3 million for 2020 to $243.4 million for 2021), the
provider channel increased by $11.6 million (from $79.3 million for 2020 to
$90.9 million for 2021) and the life sciences channel increased by $17.4 million
(from $61.1 million for 2020 to $78.5 million for 2021). Increases in the
enterprise channel (29%) were attributable to a combination of new product and
client gains in the digital, digital therapeutics, health security, home health
and community programs, partially offset by the aforementioned impact of
COVID-19 and contract attrition from a previous acquisition. The Provider
channel increase (15%) was attributable to new products in the payment integrity
area, continued recovery in demand for our services as compared to the prior
year, and
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increased volumes and new customers within our existing product lines. The increase in the life sciences channel (28%) is due to the addition of new client brands and increased pharmaceutical ad spend.

Costs and expenses

Revenue costs

Costs of revenue increased $42.3 million, or 26%, from $160.9 million for the
year ended December 31, 2020 to $203.2 million for the year ended December 31,
2021. The increase was due to the corresponding increase in sales.

Sales and Marketing

Sales and marketing expense increased $18.1 million, or 54%, from $33.3 million
for the year ended December 31, 2020 to $51.4 million for the year ended
December 31, 2021. The increase was primarily related to a $10.6 million
increase in salaries and commissions as we ramp sales efforts and $4.7 million
in consulting and sponsorship expenses to advance engagement metrics and provide
sales and marketing support for growth and new product rollout. Also
contributing to the increase was $1.4 million in additional non-cash share-based
compensation expense and $1.1 million of additional non-recurring expense
related to our transition to being a public company.

Product and technology

Product and technology expenses increased $30.4 million, or 69%, from $44.1
million for the year ended December 31, 2020 to $74.4 million for the year ended
December 31, 2021. The largest variance was non-cash share-based compensation
expense of $12.1 million, mostly related to acquisitions. The continued
investment in product and technology staffing and outside contract services
accounted for $9.0 million of the increase, of which $5.7 million derived from
acquisitions. The remaining increase includes a non-operational expense of $4.7
million along with incremental platform and consulting fees of $4.5 million as
we ramp new technologies and user volume increases.

General and administrative

General and administrative expense increased $53.4 million, or 64%, from $83.2
million for the year ended December 31, 2020 to $136.6 million for the year
ended December 31, 2021. The increase was due mostly to non-recurring costs of
becoming a public company, acquisition-related expenses and non-cash share-based
compensation expenses totaling $37.7 million. Personnel expenses increased $11.7
million related to compensation restoration for employees who had previously
accepted salary reductions in connection with prior period COVID-19 related cost
reductions and increased headcount to support public company processes in the
current period. The remainder of the increase is mostly related to business
insurance and other cost increases, associated with being a public company.

Depreciation and amortization

Depreciation and amortization increased $7.9 million, or 32%, from $24.7 million
for the year ended December 31, 2020 to $32.6 million for the year ended
December 31, 2021. The increase was related to our continued investment in
product enhancements and new products, as well as amortization expense incurred
on recently acquired intangible assets.

Interest charges

Interest expense decreased $3.4 million, or 11%, from $31.0 million for the year
ended December 31, 2020 to $27.7 million for the year ended December 31, 2021.
The decrease is attributable to the retirement of our debt either through the
conversion to common stock or through its repayment during the year ended
December 31, 2021.

Other income (expenses)

Other income and expense fluctuated $36.7 million from $9.7 million of expense
for the year ended December 31, 2020 to $27.0 million of income for the year
ended December 31, 2021. This activity was mostly related to non-cash
mark-to-market adjustments to contingent consideration and warrant liabilities
where the adjustment is tied to the change in the per share price of the
Company's common stock. See Note 1 to Sharecare's consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.

Comparison of the years ended December 31, 2020 and 2019

Income

Revenue decreased $10.7 million, or 3%, from $339.5 million for the year ended
December 31, 2019 to $328.8 million for the year ended December 31, 2020.
Overall, COVID-19 substantially impacted multiple product lines with an impact
on
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revenues of $26.5 million from delayed new revenue starts, cancellations and
reduced services. More specifically, biometric screenings and gym memberships
for our clients employees/members were cut back, release-of-information requests
slowed down due to less doctor visits overall and community events, diabetes and
heart health programs were canceled or limited. We continued our shift away from
clients with low margin products inherited from a previous acquisition,
accounting for a decline of $9.7 million. Currency translation fluctuations,
mostly from our Brazil operations, negatively impacted revenues by $4.4 million.
In addition, non-cash warrant value for revenue contracts increased by $0.7
million, resulting in a corresponding decrease to revenue.

On the growth side, we saw gains in our new digital and digital therapeutics
products of $12.2 million; or 39%, and grew or added new customers across
multiple product lines of $18.2 million. On the new digital therapeutics growth,
we upsold 14 customers, with several buying multiple products.

The channel revenue changed as follows: enterprise channel decreased by $14.3
million (from $202.6 million for 2019 to $188.3 million for 2020), the provider
channel decreased by $1.4 million (from $80.7 million for 2019 to $79.3 million
for 2020) and the life sciences channel increased by $5.0 million (from $56.2
million for 2019 to $61.1 million for 2020).

The enterprise channel decline came from a combination of the impact of
COVID-19, inherited client attrition and currency translation losses offset by
new product and client gains. The provider channel decline was a combination of
COVID-19 impacts offset by new client gains, of which $1.2 million was from the
acquisition of Visualize Health in 2020. The life sciences channel increase was
due to a strong fourth quarter of 2020 which saw client spend on pharma
advertising ramp up, offset by a COVID-19 impact on the non-pharma clients who
reduced advertising spend in the second and third quarters of 2020.

Costs and expenses

Revenue costs

Costs of revenue decreased $19.1 million, or 11%, from $180.0 million for the
year ended December 31, 2019 to $160.9 million for the year ended December 31,
2020. The cost reductions resulted from several of the revenue shifts mentioned
above, specifically, the termination of acquired enterprise clients and the
decline in several of the COVID-19 impacted products (release-of-information,
diabetes and heart health management, biometric screenings and gym memberships).
Additionally, we reduced direct staffing across multiple product lines in
response to the COVID-19 slowdown and used these reductions to make efficiency
improvements.

Sales and Marketing

Sales and marketing expense decreased $0.7 million, or 2%, from $34.0 million
for the year ended December 31, 2019 to $33.3 million for the year ended
December 31, 2020. The sales and marketing costs increased by $1.2 million for
additional staff and related variable compensation tied to additional staff and
$1.2 million for outside sales consulting services in the fourth quarter of
2020. Several components of sales and marketing expenses decreased due to travel
and trade show reductions caused by COVID-19 limitations on face-to-face
interactions ($1.7 million), reduced marketing sponsorships ($0.7 million),
lower stock compensation expense ($0.4 million) and reduced severance ($0.4
million).

Product and technology

Product and technology expenses decreased $1.8 million, or 4%, from $45.9
million for the year ended December 31, 2019 to $44.1 million for the year ended
December 31, 2020. Three main areas of the product and technology expense caused
the decrease: reduced travel due to COVID-19 restrictions ($0.5 million), lower
employee cell phone and internet charges ($0.5 million) and lower severance
($0.8 million).

General and administrative

General and administrative expense increased $17.4 million, or 26%, from $65.8
million for the year ended December 31, 2019 to $83.2 million for the year ended
December 31, 2020. The biggest factor for the increase was the additional
non-cash stock option expense tied to executive and senior management option
issuances in 2020 ($15.6 million). Excluding this non-cash impact, the general
and administrative expense increased 3%. Professional fees tied to legal, audit
and valuation service fees from several acquisitions and public company
readiness activities caused an increase in professional fees ($2.5 million).
Additionally, bad debt expense increased $3.7 million tied to clients in the
release-of-information and life sciences service lines and correlated to
tightened budgets from COVID-19 impacts.

Offsetting the increases mentioned above, salary reductions in response to the
revenue impacts of COVID-19 ($2.2 million) and reduced travel ($1.5 million) in
response to COVID-19 restrictions, resulted in expense savings. In addition,
work-
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work-from-home policies for most of the workforce beginning late in the first quarter of 2020 in response to COVID-19 and reduced office space in several locations resulted in a decrease in $0.7 million.

Depreciation and amortization

Depreciation increased $0.9 millioni.e. 4%, of $23.8 million
for the year ended December 31, 2019 for $24.7 million for the year ended
December 31, 2020.

Interest charges

Interest expense increased $2.4 million, or 8%, from $28.7 million for the year
ended December 31, 2019 to $31.0 million for the year ended December 31, 2020.
In the first quarter of 2020, we moved from a cash-based interest arrangement
with a majority of our convertible debt holders to a non-cash payment-in-kind
("PIK") arrangement at a higher interest rate, resulting in the higher expense.

Other expenses

Other expenses increased $8.9 millionfrom $0.8 million for the year ended
December 31, 2019 for $9.7 million for the year ended December 31, 2020. The increase is mainly related to the increase in expenses for $6.2 million revaluation of the contingent consideration and $3.4 million revaluation of warrant liabilities during the year December 31, 2020.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we
believe the non-GAAP measures, adjusted EBITDA, adjusted net income (loss), and
adjusted earnings (loss) per share ("adjusted EPS"), are useful in evaluating
our operating performance. We use adjusted EBITDA, adjusted net income (loss),
and adjusted EPS to evaluate our ongoing operations and for internal planning
and forecasting purposes. We believe that these non-GAAP financial measures,
when taken together with the corresponding GAAP financial measures, provide
meaningful supplemental information regarding our performance by excluding
certain items that may not be indicative of our business, results of operations,
or outlook. In particular, we believe that the use of adjusted EBITDA, adjusted
net income (loss), and adjusted EPS is helpful to our investors as they are
metrics used by management in assessing the health of our ongoing business and
our operating performance. However, non-GAAP financial information is presented
for supplemental informational purposes only, has limitations as an analytical
tool, and should not be considered in isolation or as a substitute for financial
information presented in accordance with GAAP. In addition, other companies,
including companies in our industry, may calculate similarly-titled non-GAAP
measures differently or may use other measures to evaluate their performance,
all of which could reduce the usefulness of our non-GAAP financial measures as a
tool for comparison. The reconciliations of adjusted EBITDA, adjusted net income
(loss), and adjusted EPS to net income (loss), the most directly comparable
financial measures stated in accordance with GAAP, are provided below. Investors
are encouraged to review the reconciliations and not to rely on any single
financial measure to evaluate our business.

Adjusted EBITDA

Adjusted EBITDA is a key performance measure that management uses to assess our
operating performance. Because adjusted EBITDA facilitates internal comparisons
of our historical operating performance on a more consistent basis, we use this
measure for business planning purposes.

We calculate adjusted EBITDA as net income (loss) adjusted to exclude
(i) depreciation and amortization, (ii) interest income, (iii) interest expense,
(iv) income tax (benefit) expense, (v) loss on extinguishment of debt, (vi)
other expense (income) (non-operating), (vii) loss on equity method investments,
(viii) share-based compensation, (ix) severance, (x) warrants issued with
revenue contracts, and (xi) transaction and closing costs. We do not view the
items excluded as representative of our ongoing operations.
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The following table provides a reconciliation of Adjusted EBITDA to the most comparable GAAP measure, net loss, for each of the years ended December 31, 20212020 and 2019 (in thousands):

                                                         Year Ended December 31,
                                                   2021           2020           2019
Net loss                                        $ (85,129)     $ (60,461)     $ (39,437)
Add:
Depreciation and amortization                      32,601         24,684         23,782
Interest income                                       (96)           (71)          (149)
Interest expense                                   27,662         31,037         28,685
Income tax (benefit) expense                       (2,021)        (1,557)   

213

Loss on extinguishment of debt                      1,148              -    

–

Other expense (income)                            (27,007)         9,709    

808

Loss from equity method investments                     -          3,902              -
Share-based compensation                           46,780         19,160          3,532
Severance                                           1,278          2,553          4,378
Warrants issued with revenue contracts(a)              79          1,188    

485

Transaction and closing costs(b)                   31,733          2,187          2,675
Adjusted EBITDA(c)                              $  27,028      $  32,331      $  24,972


____________

(a) Represents the non-monetary value of warrants issued to customers to meet specific revenue thresholds.

(b)Represents costs related to the business combination and transaction and post-closing costs related to acquisitions made in 2021 and prior years.

(c) Includes non-cash amortization associated with contract liabilities recognized in connection with acquired businesses.

Adjusted net profit (loss)

Adjusted net income (loss) is a key performance measure that management uses to
assess our operating performance. Because adjusted net income (loss) facilitates
internal comparisons of our historical operating performance on a more
consistent basis, we use this measure for business planning purposes and to
evaluate our performance.

We calculate adjusted net income (loss) as net income (loss) attributable to
Sharecare, Inc. adjusted to exclude (i) amortization of acquired intangibles,
(ii) amortization of deferred financing fees, (iii) change in fair value of
warrant liability and contingent consideration, (iv) loss from equity method
investments, (v) share-based compensation, (vi) severance, (vii) warrants issued
with revenue contracts, (viii) transaction and closing costs, and (ix) the
related income tax adjustments. We do not view the items excluded as
representative of our ongoing operations.

Adjusted EPS

Adjusted EPS is a key performance measure that management uses to assess our
operating performance. Because adjusted EPS facilitates internal comparisons of
our historical operating performance on a more consistent basis, we use this
measure for business planning purposes and to evaluate our performance.

We calculate Adjusted EPS as Adjusted net income, as defined above, divided by the weighted average number of common shares outstanding – basic and diluted. We do not consider the excluded items to be representative of our ongoing operations.

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The following table presents a reconciliation of adjusted net income (loss) and
adjusted EPS from the most comparable GAAP measure, net loss, for each of the
years ended December 31, 2021, 2020 and 2019 (in thousands, except share numbers
and per share amounts):

                                                                     Year Ended December 31,
                                                        2021                   2020                   2019

Net loss attributable to Sharecare, Inc. $(85,000) $

    (60,822)         $     (39,980)
Add:
Amortization of acquired intangibles(a)                   5,321                  3,851                  4,225
Amortization of deferred financing fees                  15,537                  6,801                  6,747
Change in fair value of warrant liability and
contingent consideration                                (26,123)                 9,647                    566
Loss from equity method investments                           -                  3,902                      -
Share-based compensation                                 46,780                 19,160                  3,532
Severance                                                 1,278                  2,553                  4,378
Warrants issued with revenue contracts(b)                    79                  1,188                    485
Transaction and closing costs(c)                         31,733                  2,187                  2,675
Adjusted net loss(d)                              $     (10,395)         $  

(11,533) ($17,372)

Weighted-average common shares outstanding, basic
and diluted                                         281,026,365            215,094,037            205,888,637

Loss per share                                    $       (0.30)         $       (0.28)         $       (0.19)
Adjusted loss per share                           $       (0.04)         $       (0.05)         $       (0.08)


____________

(a) Represents non-cash charges related to amortization of intangible assets related to acquired businesses.

(b) Represents the non-monetary value of warrants issued to customers to meet specific revenue thresholds.

(c) Represents costs related to the business combination and transaction and post-closing costs related to acquisitions made in 2021 and prior years.

(d)The income tax effect of the Company's non-GAAP reconciling items are offset
by valuation allowance adjustments of the same amount, because the Company is in
a full valuation allowance position for all periods presented.

Cash and capital resources

We measure liquidity in terms of our ability to fund the cash requirements of
our business operations, including working capital and capital expenditure
needs, contractual obligations and other commitments, with cash flows from
operations and other sources of funding. Our ability to expand and grow our
business will depend on many factors, including our working capital needs and
the evolution of our operating cash flows.

We had $271.1 million in cash and cash equivalents as of December 31, 2021. Our
principal commitments as of December 31, 2021, consist of operating leases, and
purchase commitments. The Company maintains its Senior Secured Credit Agreement.
As of December 31, 2021, there was $50.7 million available for borrowing under
the Revolving Facility. See Note 7 and Note 12 to Sharecare's consolidated
financial statements included elsewhere in this Annual Report on Form 10-K.

We believe our operating cash flows, together with our cash on hand, which
includes the cash we obtained as a result of the Business Combination, will be
sufficient to meet our working capital and capital expenditure requirements in
the short-term, i.e., the 12 months from the date of this Annual Report on Form
10-K. Our long-term liquidity needs include cash necessary to support our
business growth and contractual commitments. We believe that the potential
financing capital available to us in the future is sufficient to fund our
long-term liquidity needs, however, we are continually reviewing our capital
resources to determine whether we can meet our short- and long-term goals and we
may require additional capital to do so. We may also need additional cash
resources due to potential changes in business conditions or other developments,
including unanticipated
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regulatory developments, significant acquisitions, and competitive pressures. We
expect our capital expenditures and working capital requirements to continue to
increase in the immediate future as we seek to expand our solution offerings. To
the extent that our current resources are insufficient to satisfy our cash
requirements, we may need to seek additional equity or debt financing. If the
needed financing is not available, or if the terms of financing are less
desirable than we expect, we may be forced to decrease our level of investment
in new product offerings and related marketing initiatives or to scale back our
existing operations, which could have an adverse impact on our business and
financial prospects. See Note 1 to Sharecare's audited consolidated financial
statements and the "Risk Factors - Risks Related to Financing and Tax - We may
require additional capital to support business growth, and this capital might
not be available on acceptable terms, if at all." included elsewhere in this
Annual Report on Form 10-K

The following table summarizes our cash flow activities for the periods
presented:

                                                                  Year Ended December 31,
(in thousands)                                               2021           2020           2019

Net cash (used in)/provided by operating activities $(54,103) $14,761 $2,577
Net cash used in investing activities

                    $ (112,387)     $ (19,171)     $ (16,644)
Net cash provided by financing activities                $  415,220      $   3,770      $  20,797


Operating Activities

Net cash used in operating activities for the year ended December 31, 2021 was
$54.1 million. Cash used during this period included the $85.1 million net loss
for the year ended December 31, 2021, offset by non-cash items of $58.5 million
which were primarily attributable to depreciation and amortization expense,
write-off of deferred financing fees and debt discount, amortization of contract
liabilities, change in fair value of warrant liability and contingent
consideration, share-based compensation, and payment of PIK interest. In
addition, changes in operating assets and liabilities of $27.4 million resulted
in net cash used, primarily attributable to increases in accounts receivable and
other receivables, prepaid expense and other assets. Accounts receivable
increased primarily due to increased revenue. Prepaid expense and other assets
increased primarily due to non-cash payment for upfront research and development
costs related to the issuance of shares of Series D Preferred Stock (see Note 9
to Sharecare's consolidated financial statements included elsewhere in this
Annual Report on Form 10-K).

Net cash provided by operating activities for the year ended December 31, 2020
was $14.8 million, an increase of $12.2 million from $2.6 million of cash
provided by operating activities for the year ended December 31, 2019. Cash
provided during this period included the $60.5 million net loss for the year
ended December 31, 2020, net of non-cash items (which increased $40.1 million
between periods). This was partially offset by net cash used in changes in
operating assets and liabilities of $6.9 million between periods, primarily
attributable to deferred revenue, accounts receivable and other receivables, and
accounts payable and accrued expenses.

For the year ended December 31, 2020 compared to 2019, deferred revenue
decreased due to the recognition of revenue that was deferred as of the
beginning of the period related to a contract that was executed in the previous
year where payment was received in advance of services being delivered. Accounts
receivable decreased between periods due to a decrease in the enterprise channel
revenue attributable to the impact of COVID-19 as discussed above. Accrued
expenses increased as a result of increased PIK interest, accrued payroll taxes
due to the passage of The Coronavirus Aid, Relief, and Economic Security Act in
2020, and an increase of accrued bonuses and professional fees. These increases
in accrued expenses were offset by the timing of payments of accounts payable as
of December 31, 2020.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2021 was
$112.4 million compared to $19.2 million of net cash used in investing
activities for the year ended December 31, 2020. The increase in cash outflows
was primarily due to cash paid for our acquisitions of CareLinx and doc.ai and
cash paid for capitalized internal-use software costs.

Net cash used in investing activities for the year ended December 31, 2020 was
$19.2 million compared to $16.6 million of net cash used in investing activities
in 2019. The increase in cash outflows was primarily due to cash paid for our
acquisition of Visualize Health.

Net cash used in investing activities for the year ended December 31, 2019 was
$16.6 million primarily due to cash paid for internal-use software and property
and equipment.



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Fundraising activities

Net cash provided by financing activities for the year ended December 31, 2021
has been $415.2 millionprimarily due to cash received from the reverse recapitalization of our merger with FCAC.

Net cash provided by financing activities for the year ended December 31, 2020
was $3.8 million, primarily due to cash received from the drawdown on our Senior
Secured Credit Agreement, offset by the partial repayment of our outstanding
indebtedness.

Net cash provided by financing activities for the year ended December 31, 2019
was $20.8 million, which was primarily due to cash received from the issuance of
Series C convertible preferred stock, partially offset from debt repayments
during the period.

Contractual obligations

There were no material changes to contractual obligations since last presented
as of December 31, 2020 except for the Company settling substantially all of its
existing indebtedness during July 2021, totaling $178.4 million in connection
with the consummation of the Business Combination. The Company still maintains
its Senior Secured Credit Agreement. Additionally, we have contractual
obligations related to leases and purchase obligations with certain service
providers. See Note 12 to Sharecare's consolidated financial statements included
elsewhere in this Annual Report.

Financing modalities

In March 2017, we refinanced our existing debt through the execution of that
certain Credit Agreement, dated as of March 9, 2017 (which we refer to herein
as, the "Senior Secured Credit Agreement"), among Legacy Sharecare, certain
subsidiaries of Legacy Sharecare (together with Legacy Sharecare, the
"Borrowers"), the lenders named therein (the "Lenders") and Wells Fargo Bank,
National Association, as administrative agent (the "Administrative Agent").The
Senior Secured Credit Agreement provides for the Revolving Facility with total
commitments of $60.0 million. Availability under the Revolving Facility is
generally subject to a borrowing base based on a percentage of applicable
eligible receivables. Borrowings under the Revolving Facility generally bear
interest at a rate equal to, at the applicable Borrower's option, either (a) a
base rate or (b) a rate based on LIBOR, in each case, plus an applicable margin.
The applicable margin is based on a fixed charge coverage ratio and ranges from
(i) 1.75% to 2.25% for U.S. base rate loans and (ii) 2.75% to 3.25% for LIBOR.
The Credit Agreement matures on February 10, 2023.

In connection with the consummation of the Business Combination, Legacy
Sharecare, the other Borrowers, the Lenders and the Administrative Agent entered
into the Sixth Amendment. Pursuant to the Sixth Amendment, the Administrative
Agent and Lenders provided certain consents with respect to the consummation of
the Business Combination and related transactions and certain amendments were
made to the terms of the Senior Secured Credit Agreement to reflect the Business
Combination and related transactions. The Company and certain other subsidiaries
of Legacy Sharecare executed joinders to become a party to the Senior Secured
Credit Agreement as required by the Sixth Amendment in July 2021.

In connection with the consummation of the Business Combination, we repaid all
outstanding amounts under the Senior Secured Credit Agreement. In the future, we
may incur additional borrowings under the Senior Secured Credit Agreement. See
Note 7 to Sharecare's consolidated financial statements included elsewhere in
this Annual Report on Form 10-K.

The Senior Secured Credit Agreement contains a number of customary affirmative
and negative covenants, and we were in compliance with those covenants as of
December 31, 2021. As of December 31, 2021, there were approximately $0.4
million of borrowings outstanding under the Revolving Facility.

Critical accounting estimates

Our financial statements are prepared in accordance with GAAP. The preparation
of the consolidated financial statements in conformity with GAAP requires
management to make a number of estimates and assumptions relating to the
reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. We evaluate our significant estimates on an ongoing basis,
including, but not limited to, revenue recognition, the valuation of assets and
liabilities acquired in business combinations, the valuation of common stock
prior to the Business Combination, stock-based compensation, and income taxes.
We base our estimates on historical experience, known trends, and other
market-specific or other relevant factors that we believe to be reasonable under
the circumstances. Changes in estimates are recorded in the period in which they
become known. Actual results may differ from those estimates or assumptions.

We believe that the accounting policies described below involve a significant
degree of judgment and complexity. Accordingly, we believe these are the most
critical to aid in fully understanding and evaluating our consolidated financial
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condition and results of operations. For further information, see Note 1 to the
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K.

Revenue Recognition

Revenue is recognized when control of the promised good or service is
transferred to the client, in an amount that reflects the consideration we
expect to be entitled to in exchange for that good or service. Sales and
usage-based taxes are excluded from revenue. We serve a diverse group of
clients. We are the principal in all outstanding revenue arrangements except for
CareLinx. CareLinx has B2C and B2B2C service lines for which CareLinx is the
agent and we recognize the commission revenue based on the amount billed using
the "as-invoiced" practical expedient.

business income

The enterprise channel provides employers and health plans with health
management programs for large populations, including digital engagement,
telephonic coaching, incentives, biometrics, digital therapeutics, home care
health offerings, and subscriptions to the Sharecare platform. Revenue is
recognized on a PMPM basis or as services are provided. Member participation
fees are generally determined by multiplying the contractually negotiated member
rate by the number of members eligible for services during the month. Member
participation rates are established during contract negotiations with clients,
often based on a portion of the value the programs are expected to create.
Contracts with health plans, health care systems and government organizations
generally range from three to five years with several comprehensive strategic
agreements extending for longer periods. Contracts with larger employer clients
typically have two to four year terms.

Health management program contracts often include a fee for the subscription of
the Sharecare digital platform and various other platforms under doc.ai, which
may also be sold on a stand-alone basis. These services allow members to access
Sharecare's proprietary mobile application with a comprehensive suite of health
and wellness management programs, content, and tools. Revenue is recognized on a
per member or a fixed fee basis as the services are provided.

Sharecare's Blue Zones Project is a community well-being improvement initiative
designed to change the way people experience the world around them by
encouraging and promoting better lifestyle choices, such as commuting, eating,
and social habits. Because healthier environments naturally nudge people toward
healthier choices, Blue Zones Project focuses on influencing the Life Radius®,
the area close to home in which people spend 90% of their lives. Blue Zones
Project best practices use people, places, and policy as levers to transform
those surroundings. These contracts normally include two performance
obligations, the discovery period and the subsequent content delivery, for each
year of engagement. The revenue is recognized based on the relative standalone
selling price of the performance obligations evenly over time. These contracts
do not include termination clauses and often have two to four year terms.

Sharecare's doc.ai unlocks the value of health data through licensing artificial
intelligence modules and through the creation of products for a portfolio of
clients including payors, pharma, and providers. These contracts generally
include two performance obligations. The software license and
maintenance/support are considered one series of distinct performance
obligations and professional services is considered a separate distinct
performance obligation. Revenue is recognized for all identified performance
obligations as services are delivered.

Certain contracts place a portion of fees at risk based on achieving certain
performance metrics, such as cost savings, and/or clinical outcomes improvements
(performance-based). We use the most likely amount method to estimate variable
consideration for these performance guarantees. We include in the transaction
price some or all of an amount of variable consideration only to the extent that
it is probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. We utilize customer data in order to
measure performance.

If performance levels are not achieved by the end of the assessment period, usually one year, some or all of the performance-based fees must be refunded. During the settlement process under a contract, which typically takes place six to eight months after the end of a contract year, performance-based fees are reconciled and settled.

Clients are generally billed monthly for the entire amount of the fees
contractually due for the prior month's enrollment, which typically includes the
amount, if any, that is performance-based and may be subject to refund should
performance targets not be met. Fees for participation are typically billed in
the month after the services are provided. Deferred revenues arise from
contracts that permit upfront billing and collection of fees covering the entire
contractual service period, generally six months to a year. A limited number of
contracts provide for certain performance-based fees that cannot be billed until
after they are reconciled with the client.

Supplier revenue

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Our provider channel revenue is primarily based on the volume of health document
requests fulfilled and recognized upon satisfactory delivery to the client. In
addition, provider revenue is derived from subscription fees for various
technology-related services that assist providers with efficiency and
productivity and enhanced patient care. Subscription fees are recognized ratably
over the contractual period.

Life Sciences Revenue

Our life sciences channel generates revenue mostly through ad sponsorships and
content delivery. Content delivery revenue is recognized when the content is
delivered to the client. Ad sponsorship revenue is recognized when the
contractual page views or impressions are delivered and the transaction has met
the criteria for revenue recognition.

Certain customer transactions may contain multiple performance obligations that
may include delivery of content, page views, and ad sponsorship over time. To
account for each of these elements separately, the delivered elements must be
capable of being distinct and must be distinct in the context of the contract.
Revenue is allocated based on the stand-alone or unbundled selling price for
each performance obligation as the services are provided.

Business combinations

We account for business acquisitions in accordance with ASC Topic 805, Business
Combinations. We measure the cost of an acquisition as the aggregate of the
acquisition date fair values of the assets transferred and liabilities assumed
and equity instruments issued. Transaction costs directly attributable to the
acquisition are expensed as incurred. We record goodwill for the excess of (i)
the total costs of acquisition and fair value of any noncontrolling interests
over (ii) the fair value of the identifiable net assets of the acquired
business.

The acquisition method of accounting requires us to exercise judgment and make
estimates and assumptions based on available information regarding the fair
values of the elements of a business combination as of the date of acquisition,
including the fair values of identifiable intangible assets, deferred tax asset
valuation allowances, liabilities related to uncertain tax positions, and
contingencies. We must also refine these estimates within a one-year measurement
period, to reflect any new information obtained about facts and circumstances
that existed as of the acquisition date that, if known, would have affected the
measurement of the amounts recognized as of that date. Estimates and assumptions
that we must make in estimating the fair value of acquired technology, user
lists, and other identifiable intangible assets include future cash flows that
we expect to generate from the acquired assets. If the subsequent actual results
and updated projections of the underlying business activity change compared with
the assumptions and projections used to develop these values, we could record
impairment charges. In addition, we have estimated the economic lives of certain
acquired assets and these lives are used to calculate depreciation and
amortization expense. If our estimates of the economic lives change,
depreciation or amortization expenses could be accelerated or slowed, which
could materially impact our results of operation.

New accounting statements

See Note 1 to Sharecare’s consolidated financial statements included elsewhere in this annual report.

Accounting Election for Emerging Growth Companies

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being
required to comply with new or revised financial accounting standards until
private companies are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can choose not to
take advantage of the extended transition period and comply with the
requirements that apply to non-emerging growth companies, and any such election
to not take advantage of the extended transition period is irrevocable.
Following the consummation of the Business Combination, we expect to remain an
emerging growth company at least through the end of the 2022 fiscal year and
expect to continue to take advantage of the benefits of the extended transition
period. This may make it difficult or impossible to compare our financial
results with the financial results of another public company that is either not
an emerging growth company or is an emerging growth company that has chosen not
to take advantage of the extended transition period exemptions for emerging
growth companies because of the potential differences in accounting standards
used. For additional information, see "Risk Factors - Risks Related to Being a
Public Company - We are an 'emerging growth company,' and our election to comply
with the reduced disclosure requirements as a public company may make our common
stock less attractive to investors." included elsewhere in this Annual Report on
Form 10-K.
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