What happened

Shares of digital healthcare company Sharecare (SHCR -0.72%) were down 28% as of early Wednesday afternoon after the company announced fourth-quarter and year-end earnings. The stock is down more than 5% so far in 2023 and more than 54% over the past 12 months.

So what

The company's earnings were underwhelming. While the company saw a quarterly rise of 4% in revenue to $123.05 million, an improvement upon the analysts' consensus of $120.25 million, the company had an earnings-per-share (EPS) loss in the quarter of $0.07, compared to the analysts' consensus of an EPS loss of $0.05. Sharecare reported yearly revenue of $442.4 million, up 7%, but a net loss of $118.7 million, compared to a loss of $85 million in 2021. The company's 2022 EPS loss was $0.34, compared to an EPS loss of $0.30 in 2021.

What was more concerning was the company's guidance. Sharecare said it expected a sequential drop in the first quarter, with revenue landing between $111 million and $113 million with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $1 million and $2 million. For the year, the company said it expected revenue to be between $450 million and $460 million and adjusted EBITDA between $25 million and $30 million.

Now what

Sharecare CEO Jeff Arnold, who is also the founder of medical news portal WebMD, also may have been hinting Sharecare might be willing to look at merger and acquisition possibilities, saying in the release: "Last year, we announced plans to conduct a strategic review to clearly understand all of the potential options to maximize our shareholder value. We have expanded the review to include potential business combinations to complement our thriving Enterprise channel." The key for investors is whether the company can continue to increase revenue while keeping costs in line.