RADNOR, Pa., Oct. 26, 2017 /PRNewswire/ -- Safeguard
Scientifics, Inc. (NYSE: SFE) ("the Company") today announced
financial results for the three months and nine months ended
September 30, 2017, as well as
continued achievement of developmental milestones for its 26
partner companies. For the three months ended September 30, 2017, Safeguard's net loss was
$18.7 million, or $0.91 per share, compared with net loss of
$24.1 million, or $1.18 per share, for the same period in 2016. For
the nine months ended September 30,
2017, the Company's net loss was $69.8 million, or $3.42 per share, compared with net loss of
$0.6 million, or $0.03 per share, for the same period in 2016.
![Safeguard Scientifics, Inc. provides capital and relevant expertise to fuel the growth of technology-driven businesses in healthcare, financial services and digital media. Safeguard targets companies that are capitalizing on the next wave of enabling technologies with a particular focus on the Internet of Everything, enhanced security and predictive analytics. Safeguard typically deploys between $5 million and $25 million over the course of its partnership with a company, initially investing in a Series A or B Round and opportunistically in a Seed Round. (PRNewsFoto/Safeguard Scientifics, Inc.) Safeguard Scientifics, Inc. provides capital and relevant expertise to fuel the growth of technology-driven businesses in healthcare, financial services and digital media. Safeguard targets companies that are capitalizing on the next wave of enabling technologies with a particular focus on the Internet of Everything, enhanced security and predictive analytics. Safeguard typically deploys between $5 million and $25 million over the course of its partnership with a company, initially investing in a Series A or B Round and opportunistically in a Seed Round. (PRNewsFoto/Safeguard Scientifics, Inc.)](https://mma.prnewswire.com/media/590994/Safeguard_Scientifics.jpg)
"The vast majority of Safeguard's portfolio of growth-stage,
technology-driven businesses in healthcare, financial services and
digital media continues to meet or exceed developmental goals for
2017," said Stephen T. Zarrilli, Safeguard's President and CEO. "We
now expect comparable aggregate annual partner company revenue to
increase between 23% and 26% for 2017. These achievements continue
to support the Company's primary strategic objectives of executing
exit transactions and driving shareholder value."
THIRD QUARTER 2017 HIGHLIGHTS
- Good Start Genetics was acquired by Invitae Corporation (NYSE:
NVTA). The Company received shares of Invitae common stock valued
at $3.9 million as of September 30, 2017. Additional shares of Invitae
with a value of $1.3 million will be
held in escrow for approximately one year.
- Deployed $7.1 million in
follow-on funding during the third quarter to support the growth of
seven partner companies. For the nine months ended September 30, 2017, the Company deployed
$27.7 million in follow-on capital in
15 partner companies.
- Repurchased $2.6 million in face
value of outstanding 5.25% convertible senior debentures due
May 2018, bringing the total
repurchased to $14.0 million and
reducing the outstanding balance to $41.0
million.
AGGREGATE PARTNER COMPANY REVENUE
Aggregate partner
company revenue for 2017 is now projected to increase between 23%
and 26% from $360 million to
$370 million. This revised revenue
projection excludes Nexxt, Inc. (formerly known as Beyond.com),
Good Start Genetics and Pneuron, which were exited or written off
during 2017. Aggregate revenue for the same partner companies
was $292 million in 2016 and
$265 million in 2015. Aggregate
revenue guidance for 2017 and prior years reflects revenue on a net
basis. Revenue figures utilized for certain companies pertain to
periods prior to Safeguard's involvement with said companies and
are based solely on information provided to Safeguard by those
companies. Safeguard reports the revenue of its equity and cost
method partner companies on a one-quarter lag basis.
PARTNER COMPANY HIGHLIGHTS
This section provides
highlights on significant accomplishments achieved by several of
Safeguard's partner companies during the third quarter of 2017. For
a complete list of milestones achieved during this period, please
visit www.safeguard.com/PartnerNews.
~ Product Launches / Regulatory Approvals
~
AdvantEdge Healthcare Solutions was recertified in HIPAA
and HITECH data privacy and security requirements by 360 Advanced
for the fifth consecutive year. In addition, AdvantEdge received
SOC 1 Type 2 and SOC 2 Type 1 certifications, validating the
company's commitment to deliver high-quality services and
informational security to its clients by operating at the highest
level of transparency and standards.
~ Major Customer Wins / Strategic
Partnerships ~
CloudMine and digital innovation studio, Modus, announced
a partnership to help companies improve patient experiences,
clinical applications, internal workflows, telemedicine, systems
integration and cloud transformation to accelerate digital
transformation and remove barriers to innovation.
MediaMath and IBM announced a partnership to develop a
cognitive-bidding system for digital, programmatic
marketing.
Propeller Health announced the expansion of its 2015
collaboration with GSK, enabling both companies to prepare for and
undertake commercial activities using the Propeller clip-on sensor
and software platform for use with GSK's ELLIPTA Inhaler.
QuanticMind added Peddle, ClearOne Advantage and Patriot
Gold Group to its roster of digital advertising clients.
Zipnosis announced that Vanguard Medical Group, with
seven clinics in northern and central New
Jersey, launched Vanguard eCare, an online diagnosis and
treatment service powered by Zipnosis. The Zipnosis platform
allows patients to seek care from their smartphones, tablets or
computers for an array of common health conditions for a set
fee.
~ Industry Awards ~
CloudMine was honored as a 2017 Health Care Innovator in
the Greater Philadelphia region by
the Philadelphia Business Journal. Additionally, CloudMine
was cited as a leader in The Forrester Wave™: Enterprise Health
Clouds, Q3 2017; was named 'Best Healthcare Technology Solution' by
CODiE Awards; and was included as a representative vendor in
Gartner's Market Guide for Mobiel Back-End Services.
Prognos was awarded the Frost & Sullivan 2017
Visionary Innovation Leadership Award. Formerly known as
Medivo, Prognos and its artificial intelligence-based platform
allow U.S. diagnostic laboratories to analyze more than 12 billion
clinical results for 175 million patients, generating improved
insight into disease patterns, effective treatments and health
outcomes. The addressable market for Prognos products is
estimated to grow at a compound annual rate of 40% to $6.7 billion by 2021.
WebLinc's Workarea Commerce Platform was listed in the
Gartner 2017 Digital Commerce Vendor Guide.
~ Other Milestones ~
InfoBionic announced that since introducing its
disruptive model in key U.S. regions at the beginning of 2017, the
company has averaged a month over month subscription growth rate in
excess of 35% and surpassed the 7,000 mark for patients monitored
using MoMe® Kardia. In addition, the Company appointed Gene Cattarina to the board of directors. Mr.
Cattarina brings over 40 years of experience in numerous senior
executive positions at companies in healthcare information systems,
products, medical devices, and professional services.
QuanticMind raised a $20
million Series B financing round, led by new investor,
Foundation Capital, with participation from Safeguard and Cervin
Ventures. Proceeds will be used for strategic growth investments in
hiring and in product development. In addition, the company will
accelerate the artificial intelligence, predictive advertising,
data science and machine learning capabilities of its data platform
to conquer the increasingly complex challenges marketers face
across digital's constantly evolving channels – including Search,
Shopping, Social and cross-channel customer journeys.
T-REX Group hired seasoned sales and business development
professional Scott G. Miller as
Chief Business Development Officer. Previously, Miller held senior
executive positions with global sales responsibilities at FactSet
Research Systems and Bloomberg LP.
WebLinc established a $5
million venture loan facility with Horizon Technology
Finance Corporation. Proceeds will be used to grow WebLinc's
e-commerce offerings for online retailer clients, as well as for
general working capital purposes.
PARTNER COMPANY HOLDINGS AT SEPTEMBER
30, 2017
Partner Company
Revenue Stages
|
Development
Stage
- Pre-revenue
- Proving out
technology
- Developing
prototype
- Beta stage
customers
|
Initial Revenue
Stage
- Up to $5M in
revenue
- Initial
customers
- Early market
penetration
- Management team
forming
- Infrastructure
being built
|
Expansion
Stage
- $5M to $20M in
revenue
- Commercial grade
solution
- Growing market
penetration
- Management team
built out
- Infrastructure
in place
|
High Traction
Stage
- $20M+ in
revenue
- Significant
commercial traction
|
Partner
Companies
|
Stage
|
Category
|
Acquisition
Year
|
Primary
Ownership%
|
Carrying
Value
(in
millions)
|
Cost
(in
millions)
|
AdvantEdge Healthcare
Solutions
|
High
Traction
|
Healthcare
|
2006
|
40%
|
$4.8
|
$16.3
|
Aktana
|
Initial
Revenue
|
Healthcare
|
2016
|
25%
|
4.9
|
9.7
|
Apprenda
|
Expansion
|
Other
|
2013
|
29%
|
8.5
|
22.1
|
Brickwork
|
Initial
Revenue
|
Digital
Media
|
2016
|
20%
|
3.6
|
4.2
|
Cask Data
|
Initial
Revenue
|
Other
|
2015
|
31%
|
7.4
|
12.6
|
CloudMine
|
Initial
Revenue
|
Healthcare
|
2015
|
47%
|
3.7
|
7.5
|
Clutch
Holdings
|
Expansion
|
Digital
Media
|
2013
|
43%
|
8.8
|
16.3
|
Full Measure
Education
|
Initial
Revenue
|
Digital
Media
|
2015
|
42%
|
6.7
|
11.0
|
Hoopla
Software
|
Initial
Revenue
|
Digital
Media
|
2011
|
26%
|
0.2
|
5.1
|
InfoBionic
|
Initial
Revenue
|
Healthcare
|
2014
|
40%
|
1.9
|
19.4
|
Lumesis
|
Initial
Revenue
|
Financial
Services
|
2012
|
44%
|
1.7
|
6.3
|
MediaMath
|
High
Traction
|
Digital
Media
|
2009
|
20.4%
|
3.2
|
25.5
|
meQuilibrium
|
Initial
Revenue
|
Healthcare
|
2015
|
37%
|
6.1
|
10.5
|
Moxe
Health
|
Initial
Revenue
|
Healthcare
|
2016
|
32%
|
3.9
|
4.5
|
NovaSom
|
High
Traction
|
Healthcare
|
2011
|
32%
|
2.1
|
23.6
|
Prognos (fka
Medivo)
|
Expansion
|
Healthcare
|
2011
|
35%
|
4.2
|
11.6
|
Propeller
Health
|
Initial
Revenue
|
Healthcare
|
2014
|
24%
|
7.2
|
14.0
|
QuanticMind
|
Initial
Revenue
|
Digital
Media
|
2015
|
25%
|
8.1
|
11.5
|
Sonobi
|
Expansion
|
Digital
Media
|
2015
|
22%
|
5.8
|
8.4
|
Spongecell
|
Expansion
|
Digital
Media
|
2012
|
23%
|
6.5
|
18.0
|
Syapse
|
Initial
Revenue
|
Healthcare
|
2014
|
26%
|
3.4
|
13.3
|
T-REX
|
Initial
Revenue
|
Financial
Services
|
2016
|
21%
|
5.4
|
6.0
|
Transactis
|
Expansion
|
Financial
Services
|
2014
|
24%
|
9.5
|
14.5
|
Trice
Medical
|
Initial
Revenue
|
Healthcare
|
2014
|
25%
|
4.1
|
10.2
|
WebLinc
|
Expansion
|
Digital
Media
|
2014
|
38%
|
8.0
|
14.0
|
Zipnosis
|
Initial
Revenue
|
Healthcare
|
2015
|
25%
|
4.2
|
7.0
|
|
|
|
|
TOTAL:
|
$133.9
|
$323.1
|
CONFERENCE CALL AND WEBCAST DETAILS
Please call
10-15 minutes prior to the call to register.
Date: Thursday, October 26, 2017
Time: 9:00am ET
Webcast: www.safeguard.com/results
Live Number: 844-579-6824 // (International)
763-488-9145
Replay Number: 855-859-2056 // (International)
404-537-3406
Access Code: 71988474
Speakers: President and Chief Executive
Officer, Stephen T. Zarrilli; and Senior Vice President and
Chief Financial Officer, Jeffrey B. McGroarty.
Format: Discussion of third quarter 2017 financial
results followed by Q&A.
Replay will be available through November
26, 2017 at 11:59pm ET. For
more information please contact IR@safeguard.com.
About Safeguard Scientifics
Safeguard Scientifics
(NYSE: SFE) provides capital and relevant expertise to fuel the
growth of technology-driven businesses in healthcare, financial
services and digital media. Safeguard targets companies that are
capitalizing on the next wave of enabling technologies with a
particular focus on the Internet of Everything, enhanced security
and predictive analytics. Safeguard typically deploys between
$5 million and $25 million over the
course of its partnership with a company, initially participating
in a Series A or B Round and opportunistically in a Seed Round.
Safeguard has a distinguished track record of fostering innovation
and building market leaders that spans more than six decades. For
more information, please visit www.safeguard.com or
follow us on Twitter @safeguard.
Forward-looking Statements
Except for the
historical information and discussions contained herein, statements
contained in this release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Our forward-looking statements are subject to
risks and uncertainties. The risks and uncertainties that could
cause actual results to differ materially include, among others,
our ability to make good decisions about the deployment of capital,
the fact that our partner companies may vary from period to period,
our substantial capital requirements and absence of liquidity from
our partner company holdings, fluctuations in the market prices of
our publicly traded partner company holdings, competition, our
inability to obtain maximum value for our partner company holdings,
our ability to attract and retain qualified employees, market
valuations in sectors in which our partner companies operate, our
inability to control our partner companies, our need to manage our
assets to avoid registration under the Investment Company Act of
1940, and risks associated with our partner companies, including
the fact that most of our partner companies have a limited history
and a history of operating losses, face intense competition and may
never be profitable, the effect of economic conditions in the
business sectors in which Safeguard's partner companies operate,
and other uncertainties described in our filings with the
Securities and Exchange Commission. Many of these factors are
beyond the Company's ability to predict or control. As a result of
these and other factors, the Company's past financial performance
should not be relied on as an indication of future performance. The
Company does not assume any obligation to update any
forward-looking statements or other information contained in this
press release.
SAFEGUARD CONTACT:
John E.
Shave III, IRC
Senior Vice President, Investor Relations and Corporate
Communications
610.975.4952
jshave(at)safeguard(dot)com
Safeguard
Scientifics, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Cash, cash
equivalents and marketable securities
|
|
$
|
39,488
|
|
$
|
30,442
|
Other current
assets
|
|
|
7,572
|
|
2,109
|
|
Total current
assets
|
|
47,060
|
|
32,551
|
Ownership interests
in and advances to partner companies
|
|
|
138,698
|
|
183,470
|
Long-term marketable
securities
|
|
249
|
|
7,302
|
Long-term restricted
cash equivalents
|
|
6,336
|
|
6,336
|
Other
assets
|
|
1,942
|
|
2,169
|
Total
Assets
|
|
$
|
194,285
|
|
$
|
231,828
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Other current
liabilities
|
|
$
|
5,510
|
|
$
|
5,861
|
Convertible senior
debentures - current
|
|
40,148
|
|
—
|
|
Total current
liabilities
|
|
45,658
|
|
5,861
|
Other long-term
liabilities
|
|
3,504
|
|
3,630
|
Credit
facility
|
|
44,911
|
|
—
|
Convertible senior
debentures
|
|
—
|
|
52,560
|
Total
equity
|
|
100,212
|
|
169,777
|
Total Liabilities
and Equity
|
|
$
|
194,285
|
|
$
|
231,828
|
|
|
|
|
|
|
Safeguard
Scientifics, Inc.
|
Condensed
Consolidated Statements of Operations
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
Operating
expenses
|
|
$
|
3,758
|
|
$
|
4,687
|
|
$
|
13,191
|
|
$
|
14,764
|
Operating
loss
|
|
(3,758)
|
|
(4,687)
|
|
|
(13,191)
|
|
(14,764)
|
|
|
|
|
|
|
|
|
|
Other loss
|
|
(379)
|
|
(2,405)
|
|
(219)
|
|
(1,746)
|
Interest,
net
|
|
(1,639)
|
|
(648)
|
|
(3,061)
|
|
(2,005)
|
Equity income
(loss)
|
|
(12,874)
|
|
(16,345)
|
|
(53,373)
|
|
17,954
|
|
|
|
|
|
|
|
|
|
Net loss before
income taxes
|
|
(18,650)
|
|
(24,085)
|
|
(69,844)
|
|
(561)
|
Income tax benefit
(expense)
|
|
—
|
|
—
|
|
—
|
|
—
|
Net loss
|
|
$
|
(18,650)
|
|
$
|
(24,085)
|
|
$
|
(69,844)
|
|
$
|
(561)
|
|
|
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.91)
|
|
$
|
(1.18)
|
|
$
|
(3.42)
|
|
$
|
(0.03)
|
Diluted
|
|
$
|
(0.91)
|
|
$
|
(1.18)
|
|
$
|
(3.42)
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
20,455
|
|
20,387
|
|
20,416
|
|
20,390
|
Diluted
|
|
20,455
|
|
20,387
|
|
20,416
|
|
20,390
|
|
|
|
|
|
|
|
|
|
Safeguard
Scientifics, Inc.
|
|
Partner Company
Financial Data
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Financial Information
|
|
To assist investors
in understanding Safeguard and our 26 partner companies as of
September 30, 2017, we are providing
additional financial information on our partner companies,
including the aggregate cost and carrying value for all of our
partner companies and other holdings. Carrying value of an
equity method partner company represents the original
acquisition cost and any follow-on funding, plus or minus our share
of the earnings or losses of each company, reduced by any
impairment charges. The carrying value and cost data reflect
our percentage holdings in the partner companies and reflect
both equity ownership interests in and advances to those partner
companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Value
|
|
Cost
(including
transaction
costs)
|
|
Safeguard Carrying
Value and Cost
|
|
|
|
|
|
Equity method partner
companies
|
|
|
|
|
|
|
|
$
|
133,908
|
|
|
$
|
323,284
|
|
|
Other
holdings
|
|
|
|
|
|
|
|
4,790
|
|
|
37,899
|
|
|
|
|
|
|
|
|
|
|
|
$
|
138,698
|
|
|
$
|
361,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Safeguard Scientifics, Inc.