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Case Study

Establishing Long-Term Forecasting and Annual Budgeting to Support a SPAC Transaction

Team Size
1 Managing Director, 1 Director, 1 Vice President, 1 Associate
Project Duration
6+ months

The Situation

One of the fastest growing Medicare Advantage insurance providers was planning to go public through a traditional IPO process. The Company’s finance team was lean, and they required assistance developing a three-statement investor model with a 5-year company outlook and a 13-week cash flow forecast model to help manage the operations of the business. At the start of the project, the Company was approached by investors to go public through a SPAC transaction which accelerated the timeline for select deliverables and created additional workstreams.


Budgeting & Forecasting Process Improvement

IPO Readiness

13-Week Cash Flow Forecasting

The Execution

  • Worked with strategic finance, actuary, and select operational cost center leaders to establish the Company’s key business drivers.
  • Built a robust five-year, three-statement forecast model which included a detailed membership growth and market penetration analysis. The model was constructed based on Medicare Advantage economics and captures MER, risk score, PMPM metrics, and other items by geographic cohort.
  • Ensured that the forecast model facilitated and enabled an investment decision by the SPAC sponsor under a highly accelerated timeline.
  • Iterated on the model and validated assumptions between LOI and signing of the agreement with the SPAC sponsor:
    • Stress tested assumptions vs. key industry benchmarks.
    • Built a lifetime value per customer-to-customer acquisition cost (LTV/CAC) analysis.
    • Used the forecast model to support the projections included in the S-4 filing upon finalization.
  • Utilized 2021 projections from the investor model and operationalized into a detailed 2021 budget model to ensure consistency in projections:
    • Created standardized data input templates at the individual employee and vendor level for each cost center.
    • Conducted detailed review sessions with each cost center leader to ensure alignment with the assumptions in the long-term forecast.
    • Structured the income statement by general ledger account for easy upload into the Company’s accounting system.
  • Reviewed and analyzed cash receipts (mainly driven by capitated payments from CMS) and disbursements to build a 13-week cash flow forecast model with dynamic drivers and update capabilities.

The Results

To meet tight deadlines for a SPAC merger transaction, Accordion helped a leanly staffed finance team move with speed and flexibility to accomplish all required tasks. Our team partnered with the CFO and FP&A function to a) facilitate agreement between company management and new investors on a long-term growth plan; b) work with operational leaders to build a detailed 2021 budget that aligned with the company’s long-term objectives; and c) implement a weekly mechanism to monitor and optimize cash flow.