false000186179500018617952024-08-052024-08-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

August 5, 2024

 

Definitive Healthcare Corp.

(Exact name of Registrant as Specified in Its Charter)

Commission File Number 001-40815

 

 

 

Delaware

 

86-3988281

(State
of Incorporation)

 

(IRS Employer
Identification No.)

 

492 Old Connecticut Path, Suite 401

 

 

Framingham, Massachusetts 01701

 

 

(Address of Principal Executive Offices)

 

508 720-4224

Registrant’s telephone number, including area code

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of Each Class

Trading
Symbol

Name of Each Exchange on Which Registered

Class A Common Stock, $0.001 par value

DH

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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.



 

Item 2.02 Results of Operations and Financial Condition.

On August 5, 2024, Definitive Healthcare Corp. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information furnished in this Item 2.02 on this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1

Press Release Dated August 5, 2024 (furnished herewith pursuant to Item 2.02)

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

DEFINITIVE HEALTHCARE CORP.

 

 

 

By:

/s/ Richard Booth

 

Name:

Richard Booth

 

Title:

Chief Financial Officer

 

 

 

 

Date: August 5, 2024

 


Exhibit 99.1

 

 

Definitive Healthcare Reports Financial Results for Second Quarter Fiscal Year 2024

Second quarter revenue grew 5% year-over-year to $63.7 million

Framingham, MA (August 5, 2024) – Definitive Healthcare Corp. (“Definitive Healthcare” or the “Company”) (Nasdaq: DH), an industry leader in healthcare commercial intelligence, today announced financial results for the quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights:

Revenue was $63.7 million, an increase of 5% from $61.0 million in Q2 2023.

 

Net Loss, inclusive of goodwill impairment charges of $363.6 million, was $(306.2) million, or (480%) of revenue, up 2,538% compared to $(11.6) million, or (19%) of revenue in Q2 2023.

 

Adjusted Net Income was $14.2 million, compared to $12.4 million in Q2 2023.

 

Adjusted EBITDA was $20.9 million, up 21% from Q2 2023, and 33% of revenue, compared to $17.2 million, or 28% of revenue in Q2 2023.

 

Cash Flow from Operations was $14.0 million in the quarter.

 

Unlevered Free Cash Flow was $21.5 million in the quarter.

 

“Financial performance in the quarter underscored our commitment to operational efficiency and profitability,” said Kevin Coop, CEO of Definitive Healthcare. “In my first month as CEO, I’m even more confident that this is a business with strong fundamentals. We have a great team with deep domain expertise and a differentiated set of data and technology assets that deliver great value to our customers.”

 

 


 

Recent Business and Operating Highlights:

Customer Wins

In the second quarter, Definitive Healthcare grew its enterprise customer base by 32, or 6% year-over-year, ending the quarter with 537 enterprise customers, defined as those customers with more than $100,000 in annual recurring revenue. Customer wins included:

An AI-software provider of personalized screening and early detection of breast cancer needed to understand complex network relationships, clinical volume by provider and place of service, and executive contact hierarchies. Through integration of our claims data, and proprietary reference and affiliation data, Definitive Healthcare will serve as the foundation for their market intelligence and commercial strategy planning functions.
One of the largest U.S. providers of electronic medical records systems recently expanded their relationship with Definitive Healthcare. Since 2017, their sales organization has relied on Definitive Healthcare’s View Suite of products for competitive intelligence, hospital technology install analysis, and whitespace identification. After they were acquired by a larger multinational software company, their newly formed Go-To-Market organization has expanded their use of our data for their marketing programs in addition to sales. Their marketing team selected Definitive Healthcare for our in depth affiliation data, account data granularity and ease of use of our online portal.
The cardiovascular division of one of the largest providers of diagnostics, medical devices, and pharmaceuticals recently selected our Carevoyance platform for their marketing and field sales teams to understand patient movement for cardiovascular procedures within specific territories, and to support their competitive displacement initiatives focused on the beginning stages of the physician referral funnel.
A large health system on the West coast selected Definitive Healthcare to provide insights into their market opportunity at the service line level, including Neurology, Cardiology, Oncology, Orthopedic, and Maternal Child Health. This analysis will allow to them allocate resources more efficiently, increase referrals, and to reduce outmigration.
The healthcare and life sciences field sales teams of one of the world’s largest software companies will be leveraging our HosptialView and ImagingView data to target hospitals, health systems and imaging centers that utilize Epic Systems EHR platforms. After the initial roll-out to their field teams, they plan to expand their use into additional facility types.

 

 


 

Business Outlook

Based on information as of August 5, 2024, the Company is issuing the following financial guidance.

Third Quarter 2024:

Revenue is expected to be in the range of $61.0 – $62.5 million.
Adjusted Operating Income is expected to be in the range of $16.0 – $17.5 million.
Adjusted EBITDA is expected to be in the range of $17.5 – $19.0 million, and 28-31% adjusted EBITDA margin.
Adjusted Net Income is expected to be $12.0 – $13.0 million.
Adjusted Net Income Per Diluted Share is expected to be $0.07 – $0.08 per share on approximately 156.5 million weighted-average shares outstanding.

Full Year 2024:

Revenue is expected to be in the range of $247 – $251 million.
Adjusted Operating Income is expected to be in the range of $67 – $71 million.
Adjusted EBITDA is expected to be in the range of $74 – $77 million, for a full-year adjusted EBITDA margin of 30-31%.
Adjusted Net Income is expected to be $50 – $53 million.
Adjusted Net Income Per Diluted Share is expected to be $0.32 – $0.34 per share on approximately 156.8 million weighted-average shares outstanding.

We do not provide a quantitative reconciliation of the forward-looking non-GAAP financial measures included in this press release to the most directly comparable GAAP measures due to the high variability and difficulty to predict certain items excluded from these non-GAAP financial measures; in particular, the effects of equity-based compensation expense, taxes and amounts under the tax receivable agreement, deferred tax assets and deferred tax liabilities, and transaction, integration, and restructuring expenses. We expect the variability of these excluded items may have a significant, and potentially unpredictable, impact on our future GAAP financial results.

 

 


 

Conference Call Information

Definitive Healthcare will host a conference call today August 5, 2024, at 5:00 p.m. (Eastern Time) to discuss the Company's full financial results and current business outlook. Participants may access the call at 1-877-358-7298 or 1-848-488-9244. Shortly after the conclusion of the call, a replay of this conference call will be available through September 4, 2024 at 1-800-645-7964 or 1-757-849-6722. The replay passcode is 1765#. A live audio webcast of the event will be available on Definitive Healthcare’s Investor Relations website at https://ir.definitivehc.com/.

About Definitive Healthcare

At Definitive Healthcare, our passion is to transform data, analytics and expertise into healthcare commercial intelligence. We help clients uncover the right markets, opportunities and people, so they can shape tomorrow’s healthcare industry. Learn more at definitivehc.com.

 

 


 

Forward-Looking Statements

This press release includes forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by words or phrases written in the future tense and/or preceded by words such as “likely,” “will,” “should,” “may,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “assumes,” “would,” “potentially” or similar words or variations thereof, or the negative thereof, references to future periods, or by the inclusion of forecasts or projections, but these terms are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding our outlook, financial guidance, the benefits of our healthcare commercial intelligence solutions, our competitive position, customer behaviors and use of our solutions, the market, industry and macroeconomic environment, our plans to improve our operational and financial performance, our business, growth strategies, go-to-market and product development efforts and future expenses, customer growth and statements reflecting our expectations about our ability to execute on our strategic plans, achieve future growth and profitability and achieve our financial goals.

Forward-looking statements in this press release are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following: our inability to realize expected business or financial benefits from acquisitions and the risk that our acquisitions or investments could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our business, financial condition and results of operations; our inability to achieve the anticipated cost savings, operating efficiencies or other benefits of our internal restructuring activities; global geopolitical tension and difficult macroeconomic conditions; actual or potential changes in international, national, regional and local economic, business and financial conditions, including recessions, inflation, high interest rates, volatility in the capital markets and related market uncertainty; the impact of challenging macroeconomic conditions on our new and existing customers; our inability to acquire new customers and generate additional revenue from existing customers; our inability to generate sales of subscriptions to our platform or any decline in demand for our platform and the data we offer; the competitiveness of the market in which we operate and our ability to compete effectively; the failure to maintain and improve our platform, or develop new modules or insights for healthcare commercial intelligence; the inability to obtain and maintain accurate, comprehensive or reliable data, which could result in reduced demand for our platform; the risk that our recent growth rates may not be indicative of our future growth; the

 


 

inability to achieve or sustain GAAP or non-GAAP profitability in the future as we increase investments in our business; the loss of our access to our data providers; the failure to respond to advances in healthcare commercial intelligence; an inability to attract new customers and expand subscriptions of current customers; our ability to successfully transition executive leadership; the risk of cyber-attacks and security vulnerabilities; litigation, investigations or other legal, governmental or regulatory actions; the possibility that our security measures are breached or unauthorized access to data is otherwise obtained; the risk that additional material weaknesses or significant deficiencies that will occur in the future; and the risks of being required to collect sales or other related taxes for subscriptions to our platform in jurisdictions where we have not historically done so.

Additional factors or events that could cause our actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements.

For additional discussion of factors that could impact our operational and financial results, refer to our Quarterly Report on Form 10-Q for the three months ended June 30, 2024 that will be filed following this earnings release, as well as our Current Reports on Form 8-K and other subsequent SEC filings, which are or will be available on the Investor Relations page of our website at ir.definitivehc.com and on the SEC website at www.sec.gov.

All information in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update this information, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

 


 

Website

Definitive Healthcare intends to use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at https://www.definitivehc.com/. Accordingly, you should monitor the investor relations portion of our website at https://ir.definitivehc.com/ in addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section of our investor relations page at https://ir.definitivehc.com/.

 

 


 

Non-GAAP Financial Measures

We have presented supplemental non-GAAP financial measures as part of this earnings release. We believe that these supplemental non-GAAP financial measures are useful to investors because they allow for an evaluation of the Company with a focus on the performance of its core operations, including providing meaningful comparisons of financial results to historical periods and to the financial results of peer and competitor companies. Our use of these non-GAAP terms may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies and are not measures of performance calculated in accordance with GAAP. Our presentation of these non-GAAP financial measures are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures should not be considered as alternatives to loss from operations, net loss, earnings per share, or any other performance measures derived in accordance with GAAP or as measures of operating cash flows or liquidity. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included at the end of this press release. In evaluating our non-GAAP financial measures, you should be aware that in the future, we may incur expenses similar to those eliminated in these presentations.

We refer to Unlevered Free Cash Flow, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and Adjusted Net Income Per Diluted Share as non-GAAP financial measures. These non-GAAP financial measures are not required by or prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). These are supplemental financial measures of our performance and should not be considered substitutes for cash provided by (used in) operating activities, loss from operations, net (loss) income, net (loss) income margin, gross profit, gross margin, or any other measure derived in accordance with GAAP.

We define Unlevered Free Cash Flow as net cash provided by (used in) operating activities less purchases of property, equipment and other assets, plus cash interest expense, and cash payments related to transaction, integration, and restructuring related expenses, earnouts, and other non-core items. Unlevered Free Cash Flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

 

 


 

We define EBITDA as earnings before debt-related costs, including interest expense (income), income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items of a significant or unusual nature, including other income and expense, equity-based compensation, goodwill impairments, transaction, integration, and restructuring expenses and other non-core expenses. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by management and our board of directors to assess the profitability of our operations. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to help investors to assess our operating performance because these metrics eliminate non-core and unusual items and non-cash expenses, which we do not consider indicative of ongoing operational performance. We believe that these metrics are helpful to investors in measuring the profitability of our operations on a consolidated level.

We define Adjusted Gross Profit as gross profit excluding acquisition-related depreciation and amortization and equity-based compensation costs and Adjusted Gross Margin is defined as Adjusted Gross Profit as a percentage of revenue. Adjusted Gross Profit and Adjusted Gross Margin are key metrics used by management and our board of directors to assess our operations. We exclude acquisition-related depreciation and amortization expenses as they have no direct correlation to the cost of operating our business on an ongoing basis. A small portion of equity-based compensation is included in cost of revenue in accordance with GAAP but is excluded from our Adjusted Gross Profit calculations due to its non-cash nature.

We define Adjusted Operating Income as loss from operations plus acquisition related amortization, equity-based compensation, goodwill impairments, transaction, integration, and restructuring expenses and other non-core expenses.

We define Adjusted Net Income as Adjusted Operating Income less interest expense, net, recurring income tax benefit, foreign currency (loss) gain, and tax effects of adjustments. We define Adjusted Net Income Per Diluted Share as Adjusted Net Income divided by diluted outstanding shares.

In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in these presentations.

 

 


 

Investor Contact:

Brian Denyeau

ICR for Definitive Healthcare

brian.denyeau@icrinc.com

646-277-1251

Media Contact:

Bethany Swackhamer
bswackhamer@definitivehc.com

 

 

 


 

 

Definitive Healthcare Corp.

 

Condensed Consolidated Balance Sheets

 

(in thousands, except number of shares and par value; unaudited)

 

 

 

 

 

 

 

 

 

 

June 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

120,901

 

 

$

130,976

 

Short-term investments

 

 

175,612

 

 

 

177,092

 

Accounts receivable, net

 

 

44,180

 

 

 

59,249

 

Prepaid expenses and other assets

 

 

13,927

 

 

 

13,120

 

Deferred contract costs

 

 

13,701

 

 

 

13,490

 

Total current assets

 

 

368,321

 

 

 

393,927

 

Property and equipment, net

 

 

3,526

 

 

 

4,471

 

Operating lease right-of-use assets, net

 

 

7,840

 

 

 

9,594

 

Other assets

 

 

1,946

 

 

 

2,388

 

Deferred contract costs

 

 

15,268

 

 

 

17,320

 

Intangible assets, net

 

 

307,023

 

 

 

323,121

 

Goodwill

 

 

718,496

 

 

 

1,075,080

 

Total assets

 

$

1,422,420

 

 

$

1,825,901

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

6,078

 

 

 

5,787

 

Accrued expenses and other liabilities

 

 

34,229

 

 

 

51,529

 

Deferred revenue

 

 

97,062

 

 

 

97,377

 

Term loan

 

 

13,750

 

 

 

13,750

 

Operating lease liabilities

 

 

2,361

 

 

 

2,239

 

Total current liabilities

 

 

153,480

 

 

 

170,682

 

Long term liabilities:

 

 

 

 

 

 

Deferred revenue

 

 

4

 

 

 

9

 

Term loan

 

 

235,968

 

 

 

242,567

 

Operating lease liabilities

 

 

8,120

 

 

 

9,372

 

Tax receivable agreements liability

 

 

83,391

 

 

 

127,000

 

Deferred tax liabilities

 

 

44,625

 

 

 

67,163

 

Other liabilities

 

 

10,544

 

 

 

9,934

 

Total liabilities

 

 

536,132

 

 

 

626,727

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Class A Common Stock, par value $0.001, 600,000,000 shares authorized, 117,053,339 and 116,562,252 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

117

 

 

 

117

 

Class B Common Stock, par value $0.00001, 65,000,000 shares authorized, 39,489,246 and 39,082,591 shares issued and outstanding, respectively, at June 30, 2024, and 39,762,700 and 39,168,047 shares issued and outstanding, respectively, at December 31, 2023

 

 

 

 

 

 

Additional paid-in capital

 

 

1,094,217

 

 

 

1,086,581

 

Accumulated other comprehensive income

 

 

1,057

 

 

 

2,109

 

Accumulated deficit

 

 

(450,603

)

 

 

(227,450

)

Noncontrolling interests

 

 

241,500

 

 

 

337,817

 

Total equity

 

 

886,288

 

 

 

1,199,174

 

Total liabilities and equity

 

$

1,422,420

 

 

$

1,825,901

 

 

 


 

 

 

Definitive Healthcare Corp.

 

Condensed Consolidated Statements of Operations

 

(in thousands, except share amounts and per share data; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

2023

 

Revenue

 

$

63,737

 

 

$

60,957

 

 

$

127,217

 

$

120,158

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue exclusive of amortization (1)

 

 

9,904

 

 

 

8,078

 

 

 

19,640

 

 

16,630

 

Amortization

 

 

3,379

 

 

 

3,090

 

 

 

6,741

 

 

6,444

 

Gross profit

 

 

50,454

 

 

 

49,789

 

 

 

100,836

 

 

97,084

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing (1)

 

 

21,545

 

 

 

24,702

 

 

 

43,305

 

 

48,125

 

Product development (1)

 

 

10,122

 

 

 

10,229

 

 

 

20,254

 

 

20,113

 

General and administrative (1)

 

 

12,527

 

 

 

13,670

 

 

 

29,410

 

 

27,749

 

Depreciation and amortization

 

 

9,409

 

 

 

9,688

 

 

 

18,731

 

 

19,278

 

Transaction, integration, and restructuring expenses

 

 

2,851

 

 

 

3,571

 

 

 

11,385

 

 

6,161

 

Goodwill impairment

 

 

363,641

 

 

 

-

 

 

 

363,641

 

 

-

 

Total operating expenses

 

 

420,095

 

 

 

61,860

 

 

 

486,726

 

 

121,426

 

Loss from operations

 

 

(369,641

)

 

 

(12,071

)

 

 

(385,890

)

 

(24,342

)

Other (expense) income, net

 

 

 

 

 

 

 

 

 

 

 

Interest (expense) income, net

 

 

(46

)

 

 

(221

)

 

 

65

 

 

(1,001

)

Other income (expense), net

 

 

41,600

 

 

 

(797

)

 

 

44,240

 

 

(4,428

)

Total other income (expense), net

 

 

41,554

 

 

 

(1,018

)

 

 

44,305

 

 

(5,429

)

Net loss before income taxes

 

 

(328,087

)

 

 

(13,089

)

 

 

(341,585

)

 

(29,771

)

Benefit from income taxes

 

 

21,900

 

 

 

1,484

 

 

 

22,680

 

 

2,194

 

Net loss

 

 

(306,187

)

 

 

(11,605

)

 

 

(318,905

)

 

(27,577

)

Less: Net loss attributable to noncontrolling interests

 

 

(92,552

)

 

 

(3,039

)

 

 

(95,752

)

 

(6,948

)

Net loss attributable to Definitive Healthcare Corp.

 

$

(213,635

)

 

$

(8,566

)

 

$

(223,153

)

$

(20,629

)

Net loss per share of Class A Common Stock:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(1.81

)

 

$

(0.08

)

 

$

(1.90

)

$

(0.19

)

Weighted average Class A Common Stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

117,750,392

 

 

 

111,768,782

 

 

 

117,591,956

 

 

110,011,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts include equity-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

2023

 

Cost of revenue

 

$

309

 

 

$

296

 

 

$

580

 

$

554

 

Sales and marketing

 

 

1,686

 

 

 

2,920

 

 

 

3,957

 

 

5,569

 

Product development

 

 

2,949

 

 

 

3,319

 

 

 

5,710

 

 

6,330

 

General and administrative

 

 

3,898

 

 

 

5,828

 

 

 

14,177

 

 

11,038

 

Total equity-based compensation expense

 

$

8,842

 

 

$

12,363

 

 

$

24,424

 

$

23,491

 

 

 

 


 

 

Definitive Healthcare Corp.

 

Condensed Consolidated Statements of Cash Flows

 

(in thousands; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Cash flows provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(306,187

)

 

$

(11,605

)

 

$

(318,905

)

 

$

(27,577

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

603

 

 

 

446

 

 

 

1,157

 

 

 

959

 

Amortization of intangible assets

 

 

12,185

 

 

 

12,332

 

 

 

24,315

 

 

 

24,763

 

Amortization of deferred contract costs

 

 

3,828

 

 

 

3,170

 

 

 

7,520

 

 

 

6,030

 

Equity-based compensation

 

 

8,842

 

 

 

12,363

 

 

 

24,424

 

 

 

23,491

 

Amortization of debt issuance costs

 

 

175

 

 

 

175

 

 

 

351

 

 

 

351

 

Provision for doubtful accounts receivable

 

 

317

 

 

 

444

 

 

 

528

 

 

 

466

 

Non-cash impairment charges related to office leases

 

 

1,047

 

 

 

141

 

 

 

1,047

 

 

 

298

 

Goodwill impairment charge

 

 

363,641

 

 

 

 

 

 

363,641

 

 

 

 

Tax receivable agreement remeasurement

 

 

(41,701

)

 

 

1,146

 

 

 

(43,968

)

 

 

4,698

 

Changes in fair value of contingent consideration

 

 

 

 

 

 

 

 

270

 

 

 

 

Deferred income taxes

 

 

(21,988

)

 

 

(1,651

)

 

 

(22,835

)

 

 

(2,424

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

12,201

 

 

 

6,918

 

 

 

15,200

 

 

 

13,884

 

Prepaid expenses and other assets

 

 

(2,859

)

 

 

225

 

 

 

(4,258

)

 

 

(3,571

)

Deferred contract costs

 

 

(2,980

)

 

 

(5,086

)

 

 

(5,679

)

 

 

(9,107

)

Contingent consideration

 

 

 

 

 

 

 

 

(602

)

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

 

(2,058

)

 

 

832

 

 

 

(10,289

)

 

 

(3,023

)

Deferred revenue

 

 

(11,026

)

 

 

(7,813

)

 

 

(1,288

)

 

 

(2,244

)

Net cash provided by operating activities

 

 

14,040

 

 

 

12,037

 

 

 

30,629

 

 

 

26,994

 

Cash flows (used in) provided by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property, equipment, and other assets

 

 

(410

)

 

 

(740

)

 

 

(676

)

 

 

(2,078

)

Purchases of short-term investments

 

 

(40,120

)

 

 

(42,547

)

 

 

(123,946

)

 

 

(132,799

)

Maturities of short-term investments

 

 

55,464

 

 

 

44,627

 

 

 

129,052

 

 

 

102,747

 

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

(13,530

)

 

 

 

Net cash provided by (used in) investing activities

 

 

14,934

 

 

 

1,340

 

 

 

(9,100

)

 

 

(32,130

)

Cash flows used in financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Repayments of term loans

 

 

(3,437

)

 

 

(1,719

)

 

 

(6,875

)

 

 

(3,438

)

Taxes paid related to net share settlement of equity awards

 

 

(969

)

 

 

(1,085

)

 

 

(6,775

)

 

 

(2,615

)

Repurchases of Class A Common Stock

 

 

(7,003

)

 

 

 

 

 

(7,003

)

 

 

 

Payments of contingent consideration

 

 

 

 

 

 

 

 

(1,000

)

 

 

 

Payments under tax receivable agreement

 

 

 

 

 

 

 

 

(6,950

)

 

 

(246

)

Payments of equity offering issuance costs

 

 

 

 

 

 

 

 

 

 

 

(30

)

Member distributions

 

 

(2,713

)

 

 

(2,827

)

 

 

(2,713

)

 

 

(2,827

)

Net cash used in financing activities

 

 

(14,122

)

 

 

(5,631

)

 

 

(31,316

)

 

 

(9,156

)

Net increase (decrease) in cash and cash equivalents

 

 

14,852

 

 

 

7,746

 

 

 

(9,787

)

 

 

(14,292

)

Effect of exchange rate changes on cash and cash equivalents

 

 

55

 

 

 

(322

)

 

 

(288

)

 

 

(257

)

Cash and cash equivalents, beginning of period

 

 

105,994

 

 

 

124,961

 

 

 

130,976

 

 

 

146,934

 

Cash and cash equivalents, end of period

 

$

120,901

 

 

$

132,385

 

 

$

120,901

 

 

$

132,385

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

3,590

 

 

$

3,616

 

 

$

7,232

 

 

$

7,091

 

Income taxes

 

$

 

 

$

 

 

$

 

 

$

136

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Net assets acquired, net of cash acquired

 

$

 

 

$

 

 

$

13,675

 

 

$

 

Working capital adjustment receivable

 

 

 

 

 

 

 

 

(145

)

 

 

 

Net cash paid for acquisitions

 

$

 

 

$

 

 

$

13,530

 

 

$

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable and accrued expenses and other liabilities

 

$

1,091

 

 

$

60

 

 

$

1,091

 

 

$

60

 

 

 

 


 

Definitive Healthcare Corp.

Reconciliations of Non-GAAP Financial Measures to Closest GAAP Equivalent

 

Reconciliation of GAAP Operating Cash Flow to Unlevered Free Cash Flow

 

(in thousands; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

2023

 

Net cash provided by operating activities

$

14,040

 

 

$

12,037

 

 

$

30,629

 

$

26,994

 

Purchases of property, equipment, and other assets

 

(410

)

 

 

(740

)

 

 

(676

)

 

(2,078

)

Interest paid in cash

 

3,590

 

 

 

3,616

 

 

 

7,232

 

 

7,091

 

Transaction, integration, and restructuring expenses paid in cash (a)

 

1,804

 

 

 

3,430

 

 

 

10,068

 

 

5,863

 

Earnout payment (b)

 

 

 

 

 

 

 

602

 

 

 

Other non-core items (c)

 

2,438

 

 

 

600

 

 

 

1,910

 

 

1,876

 

Unlevered Free Cash Flow

$

21,462

 

 

$

18,943

 

 

$

49,765

 

$

39,746

 

 

 

 

 

 

 

 

 

 

 

 

(a) Transaction and integration expenses paid in cash primarily represent legal, accounting, and consulting expenses related to our acquisitions. Restructuring expenses paid in cash relate to our restructuring plans.
(b) Earnout payment represents final settlement of contingent consideration included in cash flow from operations.
(c) Non-core items represent expenses driven by events that are typically by nature one-time, non-operational, and unrelated to our core operations.

 

 

Reconciliation of GAAP Net Loss to Adjusted Net Income and

 

GAAP Operating Loss to Adjusted Operating Income

 

(in thousands, except share and per share amounts; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

2023

 

Net loss

$

(306,187

)

 

$

(11,605

)

 

$

(318,905

)

$

(27,577

)

Add: Income tax benefit

 

(21,900

)

 

 

(1,484

)

 

 

(22,680

)

 

(2,194

)

Add: Interest expense (income), net

 

46

 

 

 

221

 

 

 

(65

)

 

1,001

 

Add: Other (income) expense, net

 

(41,600

)

 

 

797

 

 

 

(44,240

)

 

4,428

 

Loss from operations

 

(369,641

)

 

 

(12,071

)

 

 

(385,890

)

 

(24,342

)

Add: Amortization of intangible assets acquired through business combinations

 

11,173

 

 

 

11,556

 

 

 

22,384

 

 

22,923

 

Add: Equity-based compensation

 

8,842

 

 

 

12,363

 

 

 

24,424

 

 

23,491

 

Add: Transaction, integration, and restructuring expenses

 

2,851

 

 

 

3,571

 

 

 

11,385

 

 

6,161

 

Add: Goodwill impairment charge

 

363,641

 

 

 

 

 

 

363,641

 

 

 

Add: Other non-core items

 

2,438

 

 

 

600

 

 

 

1,910

 

 

1,876

 

Adjusted Operating Income

 

19,304

 

 

 

16,019

 

 

 

37,854

 

 

30,109

 

Less: Interest (expense) income, net

 

(46

)

 

 

(221

)

 

 

65

 

 

(1,001

)

Less: Recurring income tax (provision) benefit

 

(52

)

 

 

1,484

 

 

 

728

 

 

2,194

 

Less: Foreign currency (loss) gain

 

(101

)

 

 

349

 

 

 

272

 

 

270

 

Less: Tax impacts of adjustments to net loss

 

(4,950

)

 

 

(5,246

)

 

 

(11,722

)

 

(10,104

)

Adjusted Net Income

$

14,155

 

 

$

12,385

 

 

$

27,197

 

$

21,468

 

Shares for Adjusted Net Income Per Diluted Share (a)

 

156,874,506

 

 

 

155,599,967

 

 

 

156,754,602

 

 

155,352,114

 

Adjusted Net Income Per Share

$

0.09

 

 

$

0.08

 

 

$

0.17

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

(a) Diluted Adjusted Net Income Per Share is computed by giving effect to all potential weighted average Class A common stock and any securities that are convertible into Class A common stock, including Definitive OpCo units and restricted stock units. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method assuming proceeds from unrecognized compensation as required by GAAP. Fully diluted shares are 165,731,986 and 161,996,676 as of June 30, 2024 and 2023, respectively.

 

 

 


 

 

 

Reconciliation of GAAP Gross Profit and Margin to Adjusted Gross Profit and Margin

 

(in thousands, except percentages; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

(in thousands)

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

Reported gross profit and margin

 

$

50,454

 

 

 

79

%

 

$

49,789

 

 

 

82

%

 

$

100,836

 

 

 

79

%

 

$

97,084

 

 

 

81

%

Amortization of intangible assets acquired through business
   combinations

 

 

2,367

 

 

 

4

%

 

 

2,314

 

 

 

4

%

 

 

4,810

 

 

 

4

%

 

 

4,604

 

 

 

4

%

Equity compensation costs

 

 

309

 

 

 

0

%

 

 

296

 

 

 

0

%

 

 

580

 

 

 

0

%

 

 

554

 

 

 

0

%

Adjusted gross profit and margin

 

$

53,130

 

 

 

83

%

 

$

52,399

 

 

 

86

%

 

$

106,226

 

 

 

83

%

 

$

102,242

 

 

 

85

%

 

Reconciliation of GAAP Net Loss to Adjusted EBITDA

 

(in thousands, except percentages; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

Net loss and margin

$

(306,187

)

 

 

(480

)%

 

$

(11,605

)

 

 

(19

)%

 

$

(318,905

)

 

 

(251

)%

 

$

(27,577

)

 

 

(23

)%

Interest expense (income), net

 

46

 

 

 

0

%

 

 

221

 

 

 

0

%

 

 

(65

)

 

 

(0

)%

 

 

1,001

 

 

 

1

%

Benefit from income taxes

 

(21,900

)

 

 

(34

)%

 

 

(1,484

)

 

 

(2

)%

 

 

(22,680

)

 

 

(18

)%

 

 

(2,194

)

 

 

(2

)%

Depreciation & amortization

 

12,788

 

 

 

20

%

 

 

12,778

 

 

 

21

%

 

 

25,472

 

 

 

20

%

 

 

25,722

 

 

 

21

%

EBITDA and margin

 

(315,253

)

 

 

(495

)%

 

 

(90

)

 

 

(0

)%

 

 

(316,178

)

 

 

(249

)%

 

 

(3,048

)

 

 

(3

)%

Other (income) expense, net (a)

 

(41,600

)

 

 

(65

)%

 

 

797

 

 

 

1

%

 

 

(44,240

)

 

 

(35

)%

 

 

4,428

 

 

 

4

%

Equity-based compensation (b)

 

8,842

 

 

 

14

%

 

 

12,363

 

 

 

20

%

 

 

24,424

 

 

 

19

%

 

 

23,491

 

 

 

20

%

Transaction, integration, and restructuring expenses (c)

 

2,851

 

 

 

4

%

 

 

3,571

 

 

 

6

%

 

 

11,385

 

 

 

9

%

 

 

6,161

 

 

 

5

%

Goodwill impairment (d)

 

363,641

 

 

 

571

%

 

 

 

 

 

0

%

 

 

363,641

 

 

 

286

%

 

 

 

 

 

0

%

Other non-core items (e)

 

2,438

 

 

 

4

%

 

 

600

 

 

 

1

%

 

 

1,910

 

 

 

2

%

 

 

1,876

 

 

 

2

%

Adjusted EBITDA and margin

$

20,919

 

 

 

33

%

 

$

17,241

 

 

 

28

%

 

$

40,942

 

 

 

32

%

 

$

32,908

 

 

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Primarily represents foreign exchange and TRA liability remeasurement gains and losses.
(b) Equity-based compensation represents non-cash compensation expense recognized in association with equity awards made to employees and directors.
(c) Transaction and integration expenses primarily represent legal, accounting, and consulting expenses and fair value adjustments for contingent consideration related to our acquisitions. Restructuring expenses relate to the 2024 Restructuring Plan and those we committed to during the first and third quarters of 2023, as well as impairment and restructuring charges related to office closures, relocations, and consolidations.

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Merger and acquisition due diligence and transaction costs

 

$

687

 

 

$

2,786

 

 

$

1,296

 

 

$

3,077

 

Integration costs

 

 

294

 

 

 

311

 

 

 

728

 

 

 

331

 

Fair value adjustment for contingent consideration

 

 

 

 

 

 

 

 

270

 

 

 

 

Restructuring charges for severance and other separation costs

 

 

598

 

 

 

333

 

 

 

7,819

 

 

 

2,455

 

Office closure and relocation restructuring charges and impairments

 

 

1,272

 

 

 

141

 

 

 

1,272

 

 

 

298

 

Total transaction, integration and restructuring expenses

 

$

2,851

 

 

$

3,571

 

 

$

11,385

 

 

$

6,161

 

 


 

 

 


 

(d) Goodwill impairment represents a non-cash, pre-tax, goodwill impairment charge of $363.6 million recorded during the three months ended June 30, 2024. We experienced a decline in our market capitalization as a result of a sustained decrease in our stock price, which represented a triggering event requiring our management to perform a quantitative goodwill impairment test as of June 30, 2024. As a result of the impairment test, we determined that the fair value of our single reporting unit was lower than its carrying value and, accordingly, recorded this impairment charge.

 

(e) Other non-core items represent expenses driven by events that are typically by nature one-time, non-operational, and/or unrelated to our core operations. These expenses are comprised of non-core legal and regulatory costs isolated to unique and extraordinary litigation, legal and regulatory matters that are not considered normal and recurring business activity, including sales tax accrual adjustments inclusive of penalties and interest for sales taxes that we may have been required to collect from customers in 2024 and in certain previous years, and other non-recurring legal and regulatory matters. Other non-core items also include non-recurring consulting fees and severance costs associated with strategic transition initiatives, as well as professional fees related to financing, capital structure changes, and other non-recurring costs.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Non-core legal and regulatory

 

$

501

 

 

$

378

 

 

$

(364

)

 

$

1,428

 

Consulting and severance costs for strategic transition initiatives

 

 

1,885

 

 

 

 

 

 

2,215

 

 

 

 

Other non-core expenses

 

 

52

 

 

 

222

 

 

 

59

 

 

 

448

 

Total other non-core items

 

$

2,438

 

 

$

600

 

 

$

1,910

 

 

$

1,876

 

 

 


v3.24.2.u1
Document and Entity Information
Aug. 05, 2024
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0001861795
Document Type 8-K
Document Period End Date Aug. 05, 2024
Entity Registrant Name Definitive Healthcare Corp.
Entity File Number 1-40815
Entity Incorporation State Country Code DE
Entity Tax Identification Number 86-3988281
Entity Address, Address Line One 492 Old Connecticut Path, Suite 401
Entity Address, City or Town Framingham
Entity Address, State or Province MA
Entity Address, Postal Zip Code 01701
City Area Code 508
Local Phone Number 720-4224
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Class A Common Stock, $0.001 par value
Trading Symbol DH
Security Exchange Name NASDAQ
Entity Emerging Growth Company false

Definitive Healthcare (NASDAQ:DH)
Historical Stock Chart
From Sep 2024 to Oct 2024 Click Here for more Definitive Healthcare Charts.
Definitive Healthcare (NASDAQ:DH)
Historical Stock Chart
From Oct 2023 to Oct 2024 Click Here for more Definitive Healthcare Charts.