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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from      to        

Commission file number: 001-39877

BuzzFeed, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

85-3022075

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

111 East 18th Street New York, New York

10003

(Address of principal executive offices)

(Zip Code)

(646) 589-8592

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value per share

BZFD

The Nasdaq Stock Market LLC

Redeemable warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share

BZFDW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes No

As of August 5, 2022, there were 125,426,598 shares of the registrant’s Class A common stock outstanding, 6,683,694 shares of the registrant’s Class B common stock outstanding and 6,478,031 shares of the registrant’s Class C common stock outstanding.

Table of Contents

BUZZFEED, INC.

TABLE OF CONTENTS

Page

PART I

FINANCIAL INFORMATION

5

Item 1

Financial Statements (unaudited)

5

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Comprehensive Loss

7

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

8

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements

10

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4

Controls and Procedures

43

PART II

OTHER INFORMATION

44

Item 1

Legal Proceedings

44

Item 1A

Risk Factors

44

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3

Defaults Upon Senior Securities

48

Item 4

Mine Safety Disclosures

48

Item 5

Other Information

48

Item 6

Exhibits

49

SIGNATURES

50

2

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Our forward-looking statements include, but are not limited to, statements regarding our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:

anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
demand for products and services and changes in traffic;
changes in the business and competitive environment in which we operate;
developments and projections relating to our competitors and the digital media industry;
the impact of national and local economic and other conditions and developments in technology, each of which could influence the levels (rate and volume) of our advertising, the growth of our business and the implementation of our strategic initiatives;
poor quality broadband infrastructure in certain markets;
technological developments;
our success in retaining or recruiting, or changes required in, officers, key employees or directors;
our business, operations and financial performance, including expectations with respect to our financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder and future business plans and growth opportunities;
our future capital requirements and sources and uses of cash, including our ability to obtain additional capital in the future;
expectations regarding future acquisitions, partnerships or other relationships with third parties;
government regulation, including revised foreign content and ownership regulations;
the continued impact of the COVID-19 pandemic and evolving strains of COVID-19 on our business and the actions we may take in the future in response thereto;
our ability to maintain the listing of our Class A common stock and warrants on Nasdaq; and
other factors detailed under the section entitled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021.

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The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the section entitled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

This Quarterly Report on Form 10-Q contains estimates and information concerning our industry, our business, and the market for our products and services, including our general expectations of our market position, market growth forecasts, our market opportunity, and size of the markets in which we participate, that are based on industry publications, surveys, and reports that have been prepared by independent third parties. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. Although we have not independently verified the accuracy or completeness of the data contained in these industry publications, surveys, and reports, we believe the publications, surveys, and reports are generally reliable, although such information is inherently subject to uncertainties and imprecision. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021. These and other factors could cause results to differ materially from those expressed in these publications and reports.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (https://investors.buzzfeed.com), U.S. Securities and Exchange Commission (“SEC”) filings, webcasts, press releases, and conference calls. We use these mediums to communicate with investors and the general public about our company, our products and services, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors, the media, and others interested in our company to review the information that we post on our investor relations website.

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PART I: FINANCIAL INFORMATION

ITEM 1: Financial Statements (unaudited)

BUZZFEED, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

June 30, 

2022

December 31,

    

(Unaudited)

    

2021

Assets

Current assets

Cash and cash equivalents

$

68,189

$

79,733

Accounts receivable (net of allowance for doubtful accounts of $1,648 as at June 30, 2022 and $1,094 as at December 31, 2021)

 

89,781

 

142,909

Prepaid and other current assets

 

31,521

 

29,017

Total current assets

 

189,491

 

251,659

Property and equipment, net

 

21,175

 

23,052

Right-of-use assets

68,022

Capitalized software costs, net

 

18,737

 

16,554

Intangible assets, net

128,920

136,513

Goodwill

194,556

194,881

Prepaid and other assets

 

16,363

 

14,555

Total assets

$

637,264

$

637,214

Liabilities and Equity

Current liabilities

Accounts payable

$

15,963

$

16,025

Accrued expenses

 

25,523

 

31,386

Deferred rent

 

 

4,894

Deferred revenue

 

2,954

 

1,676

Accrued compensation

 

29,620

 

37,434

Current lease liabilities

24,865

Other current liabilities

 

1,555

 

2,731

Total current liabilities

 

100,480

 

94,146

Deferred rent

 

 

12,504

Noncurrent lease liabilities

59,438

Debt

 

149,404

 

141,878

Derivative liability

1,650

4,875

Warrant liabilities

1,579

4,938

Other liabilities

 

3,627

 

3,992

Total liabilities

 

316,178

 

262,333

Commitments and contingencies

Redeemable noncontrolling interest

 

 

2,294

Stockholders’ equity

Class A Common stock, $0.0001 par value; 700,000 shares authorized; 125,424 and 116,175 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

12

 

11

Class B Common stock, $0.0001 par value; 20,000 shares authorized; 6,686 and 12,397 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

1

 

1

Class C Common stock, $0.0001 par value; 10,000 shares authorized; 6,478 issued and outstanding at June 30, 2022 and December 31, 2021

 

1

 

1

Additional paid-in capital

 

709,818

 

695,869

Accumulated deficit

 

(390,765)

 

(322,106)

Accumulated other comprehensive loss

 

(2,378)

(3,233)

Total BuzzFeed, Inc. stockholders’ equity

 

316,689

 

370,543

Noncontrolling interests

4,397

2,044

Total stockholders’ equity

321,086

372,587

Total liabilities and equity

$

637,264

$

637,214

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUZZFEED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (In thousands, except per share amounts)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Revenue

$

106,760

$

89,104

$

198,318

$

161,752

Costs and Expenses

Cost of revenue, excluding depreciation and amortization

 

61,529

 

44,943

 

122,347

 

87,066

Sales and marketing

 

18,688

 

11,574

 

36,491

 

22,952

General and administrative

 

32,565

 

21,743

 

65,127

 

45,445

Research and development

 

10,253

 

6,900

 

17,445

 

13,599

Depreciation and amortization

 

8,613

 

4,357

 

17,094

 

9,626

Total costs and expenses

 

131,648

 

89,517

 

258,504

 

178,688

Loss from operations

 

(24,888)

 

(413)

 

(60,186)

 

(16,936)

Other (expense) income, net

 

(3,440)

 

155

 

(2,578)

 

815

Interest expense, net

(5,032)

(373)

(9,821)

(651)

Change in fair value of warrant liabilities

6,775

3,359

Change in fair value of derivative liability

4,800

3,225

Loss before income taxes

 

(21,785)

 

(631)

 

(66,001)

 

(16,772)

Income tax provision (benefit)

 

1,796

 

158

 

2,146

 

(4,658)

Net loss

 

(23,581)

 

(789)

 

(68,147)

 

(12,114)

Net income attributable to the redeemable noncontrolling interest

 

 

85

 

164

 

145

Net income (loss) attributable to noncontrolling interests

184

(292)

348

(310)

Net loss attributable to BuzzFeed, Inc.

$

(23,765)

$

(582)

$

(68,659)

$

(11,949)

Net loss per Class A, Class B and Class C common share:

Basic

$

(0.17)

$

(0.03)

$

(0.50)

$

(0.71)

Diluted

$

(0.17)

$

(0.03)

$

(0.50)

$

(0.71)

Weighted average common shares outstanding:

Basic

137,381

18,550

136,906

16,878

Diluted

 

137,381

18,550

 

136,906

 

16,878

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUZZFEED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited) (In thousands)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Net loss

$

(23,581)

$

(789)

$

(68,147)

$

(12,114)

Other comprehensive loss

 

 

 

 

Foreign currency translation adjustment

 

505

 

105

 

402

 

(224)

Other comprehensive income (loss)

 

505

 

105

 

402

 

(224)

Comprehensive loss

 

(23,076)

 

(684)

 

(67,745)

 

(12,338)

Comprehensive income attributable to the redeemable noncontrolling interest

 

 

85

 

164

 

145

Comprehensive income (loss) attributable to noncontrolling interests

 

184

 

(292)

 

348

 

(310)

Foreign currency translation adjustment attributable to noncontrolling interests

(453)

(453)

Comprehensive loss attributable to BuzzFeed, Inc.

$

(22,807)

$

(477)

$

(67,804)

$

(12,173)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUZZFEED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited) (In thousands)

Six Months Ended June 30, 2022

Accumulated

Total

Common Stock –

Common Stock –

Common Stock –

Additional

other

BuzzFeed, Inc.

Total

Class A

    

Class B

Class C

paid-in

Accumulated

comprehensive

stockholders’

Noncontrolling

stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

capital

    

deficit

    

loss

equity

    

interests

    

equity

Balance at January 1, 2022

116,175

$

11

12,397

$

1

6,478

$

1

$

695,869

$

(322,106)

$

(3,233)

$

370,543

$

2,044

$

372,587

Net loss

(44,894)

(44,894)

164

(44,730)

Stock-based compensation

3,940

3,940

3,940

Issuance of common stock in connection with share-based plans

411

1

358

359

359

Other comprehensive loss

(103)

(103)

(103)

Conversion of Class B common stocks to Class A common stock

103

(103)

Balance at March 31, 2022

116,689

$

12

12,294

$

1

6,478

$

1

$

700,167

$

(367,000)

$

(3,336)

$

329,845

$

2,208

$

332,053

Net loss

(23,765)

(23,765)

184

(23,581)

Stock-based compensation

11,284

11,284

11,284

Issuance of common stock in connection with share-based plans

3,561

2

2

2

Shares withheld for employee taxes

(434)

(1,635)

(1,635)

(1,635)

Other comprehensive income

958

958

(453)

505

Reclassification of noncontrolling interest (see Note 10)

2,458

2,458

Conversion of Class B common stock to Class A common stock

5,608

(5,608)

Balance at June 30, 2022

125,424

$

12

6,686

$

1

6,478

$

1

$

709,818

$

(390,765)

$

(2,378)

$

316,689

$

4,397

$

321,086

    

Six Months Ended June 30, 2021

Accumulated 

Total

Common Stock –

Common Stock –

Common Stock –

Additional

other

BuzzFeed, Inc.

Total

Class A

Class B

Class C

paid-in

Accumulated

 comprehensive 

stockholders’

Noncontrolling

stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

capital

    

deficit

    

loss

    

 (deficit) equity

    

interests

    

(deficit) equity

Balance at January 1, 2021

1,540

$

 

10,439

$

1

 

$

$

36,373

$

(346,818)

$

(3,359)

$

(313,803)

$

$

(313,803)

Net loss

 

 

 

 

 

 

 

(11,367)

 

 

(11,367)

 

(18)

 

(11,385)

Issuance of common stock

 

 

 

 

3,839

 

1

 

34,999

 

 

 

35,000

 

 

35,000

HuffPost Acquisition

 

 

 

 

2,639

 

 

24,064

 

 

 

24,064

 

2,122

 

26,186

Stock-based compensation

 

 

 

 

 

 

138

 

 

 

138

 

 

138

Issuance of common stock upon exercise of stock options

6

 

 

49

 

 

 

 

142

 

 

 

142

 

 

142

Other comprehensive loss

 

 

 

 

 

 

 

 

(329)

 

(329)

 

(329)

Balance at March 31, 2021

1,546

$

 

10,488

$

1

 

6,478

$

1

$

95,716

$

(358,185)

$

(3,688)

$

(266,155)

$

2,104

$

(264,051)

Net loss

(582)

(582)

(292)

(874)

Stock-based compensation

209

209

209

Issuance of common stock upon exercise of stock options

9

55

145

145

145

Merger of BuzzFeed Japan and HuffPost Japan

(510)

(510)

Other comprehensive income

105

105

105

Balance at June 30, 2021

1,555

$

10,543

$

1

6,478

$

1

$

96,070

$

(358,767)

$

(3,583)

$

(266,278)

$

1,302

$

(264,976)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUZZFEED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

Six Months Ended June 30, 

    

2022

    

2021

Operating activities:

Net loss

$

(68,147)

$

(12,114)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

17,094

9,626

Unrealized loss (gain) on foreign currency

2,811

(254)

Stock based compensation

15,224

347

Change in fair value of warrants

(3,359)

Change in fair value of derivative liability

(3,225)

Amortization of debt discount and deferred issuance costs

2,527

Deferred income tax

2,088

(4,299)

Provision for doubtful accounts

 

554

(613)

Unrealized gain on investment

(1,260)

Non-cash lease expense

9,727

Changes in operating assets and liabilities:

Accounts receivable

 

51,831

33,793

Prepaid expenses and other current assets and prepaid expenses and other assets

 

(3,216)

(7,778)

Accounts payable

 

(1,167)

588

Deferred rent

 

(1,147)

Accrued compensation

 

(7,242)

351

Accrued expenses, other current liabilities and other liabilities

 

(7,733)

(2,997)

Lease liabilities

(11,592)

Deferred revenue

 

1,284

(248)

Cash (used in) provided by operating activities

 

(3,801)

15,255

Investing activities:

Capital expenditures

 

(2,828)

(970)

Capitalization of internal-use software

 

(6,646)

(4,286)

Cash from acquired business, net

 

 

5,200

Cash (used in) provided by investing activities

(9,474)

(56)

Financing activities:

Proceeds from issuance of common stock

35,000

Proceeds from exercise of stock options

360

287

Payment for shares withheld for employee taxes

(1,635)

Borrowings (payments) on revolving credit facilities

5,000

(1,304)

Deferred reverse recapitalization costs

(585)

 

Cash provided by (used in) financing activities

3,140

33,983

Effect of currency translation on cash and cash equivalents

(1,409)

(499)

Net (decrease) increase in cash, cash equivalents and restricted cash

(11,544)

48,683

Cash and cash equivalents and restricted cash at beginning of period

79,733

106,126

Cash and cash equivalents and restricted cash at end of period

$

68,189

$

154,809

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUZZFEED, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Tabular amounts in thousands, except per share amounts)

1. Description of the Business

BuzzFeed, Inc. (referred to herein, collectively with its subsidiaries, as “BuzzFeed” or the “Company”) is a global media company with social, content-driven publishing technology. BuzzFeed provides breaking news, original reporting, entertainment, and video across its owned and operated brands and the social web to its global audience. BuzzFeed derives its revenue primarily from content, advertising and commerce sold to leading brands. The Company has one reportable segment.

On December 3, 2021 (the “Closing Date”), the Company consummated the previously announced business combinations in connection with (i) that certain Agreement and Plan of Merger, dated June 24, 2021 (as amended, the “Merger Agreement”), by and among 890 5th Avenue Partners, Inc. (“890”), certain wholly-owned subsidiaries of 890, and BuzzFeed, Inc., a Delaware corporation (“Legacy BuzzFeed”); and (ii) the Membership Interest Purchase Agreement, dated as of March 27, 2021 (as amended, the “C Acquisition Purchase Agreement”), by and among Legacy BuzzFeed, CM Partners, LLC, Complex Media, Inc., Verizon CMP Holdings LLC and HDS II, Inc., pursuant to which the Company acquired 100% of the membership interests of CM Partners, LLC. CM Partners, LLC, together with Complex Media, Inc., is referred to herein as “Complex Networks.” The transactions contemplated by the Merger Agreement, including the acquisition of Complex Networks, are hereinafter referred to as the “Business Combination.” In connection with the consummation of the Business Combination, 890 was renamed “BuzzFeed, Inc.”

The shares and corresponding capital amounts and earnings per share related to Legacy BuzzFeed redeemable convertible preferred stock (other than Series F Preferred Stock and Series G Preferred Stock) and Legacy BuzzFeed common stock prior to the Business Combination have been retroactively recast as shares reflecting the Exchange Ratio of 0.306 established in the Business Combination. Shares of Legacy BuzzFeed Series F Preferred Stock and Series G Preferred Stock have been restated based on the exchange into 30,880,000 shares of BuzzFeed Class A common stock established in the Business Combination.

In addition, pursuant to subscription agreements entered into in connection with the Merger Agreement, the Company issued, and certain investors purchased, $150.0 million aggregate principal amount of unsecured convertible notes due 2026 concurrently with the closing of the Business Combination (the “Notes”).

Liquidity

As of and for the six months ended June 30, 2022, the Company had cash and cash equivalents of $68.2 million. However, the Company has a history of losses, and had an accumulated deficit of $390.8 million as of June 30, 2022. The Company has cash available on hand and management believes its existing capital resources will be sufficient to support the Company’s operations and meet its obligations as they become due within one year from the date these condensed consolidated financial statements are issued.

COVID-19

In March 2020, the World Health Organization declared the viral strain of COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting economic contraction has resulted in increased business uncertainty and significantly impacted the Company’s business and results of operations.

The Company believes the COVID-19 pandemic drove a shift in commerce from offline to online, including an increase in online shopping, which we believe contributed to the rapid growth we experienced in our commerce revenue for fiscal 2020. However, the growth of the Company’s commerce revenue decelerated during 2021 and continued to decelerate in the first half of 2022 as shelter-in-place orders were lifted, consumers returned to shopping in stores, and retailers struggled with supply chain disruptions and labor shortages.

The continued duration and severity of the COVID-19 pandemic and evolving strains of COVID-19 is uncertain, rapid